false000183404500018340452023-10-122023-10-120001834045us-gaap:WarrantMember2023-10-122023-10-120001834045us-gaap:CommonStockMember2023-10-122023-10-12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): October 12, 2023 |
Vintage Wine Estates, Inc.
(Exact name of Registrant as Specified in Its Charter)
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Nevada |
001-40016 |
87-1005902 |
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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937 Tahoe Boulevard Suite 210 |
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Incline Village, Nevada |
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89451 |
(Address of Principal Executive Offices) |
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(Zip Code) |
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Registrant’s Telephone Number, Including Area Code: (877) 289-9463 |
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s) |
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Name of each exchange on which registered
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Common stock, no par value per share |
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VWE |
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The Nasdaq Stock Market LLC |
Warrants to purchase common stock |
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VWEWW |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
As previously disclosed on December 19, 2022, Vintage Wine Estates, Inc. (the “Company”) entered into a Second Amended and Restated Loan and Security Agreement, dated as of December 13, 2022 (as amended from time to time, the “Credit Agreement”), by and among the Company, certain subsidiaries of the Company party thereto from time to time (collectively, the “Borrowers”), certain financial institutions party thereto from time to time (collectively, the “Lenders”), and BMO Bank N.A., as successor in interest to Bank of the West, as administrative agent and collateral agent for the Lenders (in such capacity, “Agent”).
On October 12, 2023, the Company entered into a fourth amendment to the Second Amended and Restated Loan and Security Agreement (the “Amendment”) by and among the Company, the Borrowers, the Lenders party thereto, and Agent. The Amendment, among other things:
•waives certain existing events of default relating to the Company’s failure to comply with the financial covenants and financial reporting requirements set forth in the Credit Agreement for prior fiscal periods;
•reduces the aggregate revolving commitment and the aggregate delayed draw term loan commitment to $200,000,000 and $38,100,000, respectively;
•replaces the maximum debt to capitalization financial covenant with a minimum adjusted EBITDA financial covenant of not less than (1) $4,000,000 for the fiscal quarter ending September 30, 2023, (2) $17,000,000 for the two fiscal quarter period ending December 31, 2023, (3) $27,000,000 for the three fiscal quarter period ending March 31, 2024, (4) $34,000,000 for the four fiscal quarter period ending June 30, 2024, and (5) $35,000,000 for each four fiscal quarter period ending thereafter;
•adds a minimum liquidity covenant of $25,000,000 (or, for fiscal quarters ending in December, $15,000,000), which applies only for the fiscal quarters ending September 30, 2023 through and including December 31, 2024 (the “Covenant Modification Period”);
•suspends the minimum fixed charge coverage ratio covenant for the fiscal quarters ending September 30, 2023 through and including June 30, 2024 and provides for a step-down of the minimum fixed charge coverage ratio to 1.00:1.00 for the remainder of the Covenant Modification Period;
•adds an equity cure right for the Company in the event of future breaches of the financial covenants;
•reduces revolver availability by (1) $15,000,000 during the months of February through September of each year and (2) $10,000,000 during the months of October through January of each year;
•suspends the exercise of incremental facilities during the Covenant Modification Period;
•restricts all permitted acquisitions during the term of the credit facilities, unless previously approved by the required Lenders;
•increases in the applicable margin for all credit facilities to 3.00% for SOFR Loans and 2.00% for ABR Loans, which margins will step-up further if certain prepayments of the Term Loans are not made by certain dates prescribed in the Amendment;
•adds additional mandatory prepayments of (1) $10,000,000 by no later than March 31, 2024, (2) an additional $10,000,000 by no later than June 30, 2024 and (3) an additional $25,000,000 by no later than December 31, 2024;
•adds additional mandatory prepayments in the event that the Borrowers maintain a cash balance in excess of $20,000,000;
•permits additional sales of certain real property with an aggregate appraised value of approximately $60,000,000, in addition to related personal property assets; and
•adds certain additional reporting requirements to Agent and the Lenders.
The foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 2.02 Results of Operations and Financial Condition.
On October 13, 2023, the Company issued a press release announcing its financial results for the three months and fiscal year ended June 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.
The information set forth, or referred to, in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), except as expressly set forth by specific reference in such filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth under Item 1.01 above is incorporated into this Item 2.03 by reference.
Item 7.01 Regulation FD Disclosure
On October 13, 2023, the Company issued a press release relating to the Amendment. A copy of the press release is attached hereto as Exhibit 99.2 and incorporated herein by reference.
A copy of the presentation materials that management will review during the Company’s earnings conference call to be held on October 16, 2023 will be posted in the Investor Relations section of the company’s website at www.vintagewineestates.com.
The information set forth, or referred to, in this Item 7.01, including Exhibit 99.2, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by the Company under the Exchange Act or the Securities Act, except as expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit No. |
Description |
10.1 |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement and Waiver, dated as of October 12, 2023, by and among Vintage Wine Estates, Inc., certain subsidiaries of Vintage Wine Estates, Inc. party thereto, certain financial institutions party thereto, and BMO Bank N.A., as successor in interest to Bank of the West, as Administrative Agent and Collateral Agent.* |
99.1 |
Press release dated October 13, 2023 relating to financial results for the three months and fiscal year ended June 30, 2023 |
99.2 |
Press release dated October 13, 2023 relating to the Credit Agreement Amendment |
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104 |
Cover Page Interactive Data File (embedded within the inline XBRL document) |
*Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish supplementally a copy of any omitted schedules or exhibits to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Vintage Wine Estates, Inc. |
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Date: |
October 13, 2023 |
By: |
/s/ Kristina Johnston |
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Chief Financial Officer |
Exhibit 10.1
AMENDMENT Number four TO Second
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT and waiver
This AMENDMENT NUMBER FOUR TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AND WAIVER (this “Amendment”) is dated as of October 12, 2023 (the “Effective Date”), and is entered into by and among VINTAGE WINE ESTATES, INC., a Nevada corporation (“Holdings”), VINTAGE WINE ESTATES, INC., a California corporation (“Borrower Agent”), each Subsidiary of Borrower Agent party to this Amendment (together with Borrower Agent, each a “Borrower” and, collectively, “Borrowers”), the Lenders party to this Amendment, and BMO BANK N.A., as successor in interest to BANK OF THE WEST (“BMO”), as administrative agent and collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”).
RECITALS
WHEREAS, Holdings, Borrowers, the Lenders, and the Agent are parties to that certain Second Amended and Restated Loan and Security Agreement, dated as of December 13, 2022 (as amended, restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Loan Agreement”).
WHEREAS, Holdings and Borrowers have informed Agent and the Lenders of their intention to restate the unaudited consolidated financial statements for the Fiscal Quarters ended September 30, 2022, December 31, 2022, March 31, 2023 and June 30, 2023.
WHEREAS, certain Events of Default may have occurred arising from, with respect to or otherwise related to the financial statements previously delivered with respect to such periods, the financial condition of Holdings and its Subsidiaries for such periods and related matters, including, without limitation (i) Holdings’ and its Subsidiaries’ failure to be in compliance with the minimum Fixed Charge Coverage Ratio covenant and the maximum Debt to Capitalization Ratio covenant under Section 10.3.1 and Section 10.3.2 of the Loan Agreement, respectively, as of the end of such Fiscal Quarters, (ii) Holdings’ and its Subsidiaries’ failure to deliver substantially accurate unaudited consolidated financial statements under Section 10.1.2(c) of the Loan Agreement and Compliance Certificates under Section 10.1.2(d) for such Fiscal Quarters, (iii) any possible misrepresentations made or deemed made by Holdings or any of its Subsidiaries under the Loan Agreement or any other Loan Document related to any of the foregoing and (iv) Holdings and its Subsidiaries’ failure to provide Agent and the Lenders with written notice of any Event of Default described in clauses (i) – (iii) pursuant to Section 10.1.3 of the Loan Agreement (the Events of Default described in clauses (i) – (iv), collectively, the “Existing Events of Default”).
WHEREAS, Holdings and Borrowers have requested that Required Lenders waive the Existing Events of Default.
WHEREAS, Agent and Required Lenders have agreed to waive the Existing Events of Default subject to Holdings and Borrowers agreeing to certain amendments to the Loan Agreement as set forth in more detail below.
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NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties agree as follows:
1.DEFINITIONS. All terms which are defined in the Loan Agreement shall have the same definition when used herein unless a different definition is ascribed to such term under this Amendment, in which case, the definition contained herein shall govern.
2.AMENDMENT. Effective as of the Effective Date of this Amendment, the Loan Agreement is amended in the following respects:
2.1Add Definitions of “Amendment No. 4 Closing Date”, “Availability Block”, “Covenant Modification Period”, “Curative Equity”, “Cure Expiration Date”, “Financial Covenant Default”, “Financial Covenants”, “Liquidity”, “Test Period”, “13-Week Forecast” and “Transaction”. Section 1.1 of the Loan Agreement is hereby amended by adding the defined terms “Amendment No. 4 Closing Date”, “Availability Block”, “Covenant Modification Period”, “Curative Equity”, “Cure Expiration Date”, “Financial Covenant Default”, Financial Covenants”, “Liquidity”, Test Period”, “13-Week Forecast” and “Transaction” in the appropriate alphabetical order:
Amendment No. 4 Closing Date: October 12, 2023.
Availability Block: means (a) $15,000,000 during the months of February through September of each year, and (b) $10,000,000 during the months of October of any year through January of the following year.
Covenant Modification Period: the period commencing on July 1, 2023, and continuing up to and including December 31, 2024.
Curative Equity: means the net amount of proceeds received by the Borrowers or Holdings from issuances of Equity Interests (or capital contributions in respect thereof) or Subordinated Debt (which Subordinated Debt shall not permit cash payments of interest or principal until Full Payment of the Obligations) in immediately available funds and which are designated “Curative Equity” by such Borrower under Section 10.3.4 at the time it is contributed. For the avoidance of doubt, the forgiveness of antecedent debt (whether Debt, trade payables, or otherwise) shall not constitute Curative Equity.
Cure Expiration Date: as defined in Section 10.3.4(a).
Financial Covenant Default: as defined in Section 10.3.10.3.44(a).
Financial Covenants: the financial covenants set forth in Section 10.3.1, Section 10.3.2, and Section 10.3.3.
Liquidity: as of the date of determination, Availability plus unrestricted (other than restrictions in deposit account control agreements in favor of Agent) cash and Cash Equivalents of Holdings and its Subsidiaries on such date of determination so long as such cash and Cash Equivalents are subject to control agreements in favor of the Agent.
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Test Period: at any date of determination, the most recently completed four consecutive Fiscal Quarters of the Holdings ending on or prior to such date for which financial statements have been (or are required to be) delivered to the Agent pursuant to Section 10.1.2(a) or Section 10.1.2(c).
13-Week Forecast: a 13 week consolidated cash flow forecast for the Borrowers in a weekly format commencing on October 23, 2023, in form and content satisfactory to Agent, together with a comparison report of Borrowers’ actual results for the immediately preceding two week period compared to the cash flow forecast for such two week period (for the avoidance of doubt, the initial 13-week consolidated cash flow forecast shall not include a comparison report of Borrowers’ actual results for the immediately preceding two week period).
Transaction: has the meaning set forth in Borrowers’ 2024 Business Optimization Plan.
2.2Amend Definition of “Applicable Margin”. The definition of “Applicable Margin” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:
Applicable Margin: the per annum margin set forth below, subject to the terms and conditions set forth in this definition:
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Time Period |
Revolver Loans |
Unused Line Fee Rate for Revolver Loans |
Term Loan, Equipment Loan, Capital Expenditure Loans and Delayed Draw Term Loans |
Unused Line Fee Rate for Term Loans and Delayed Draw Term Loans |
SOFR |
Adjusted Base Rate |
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SOFR |
Adjusted Base Rate |
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Amendment No. 4 Closing Date up to and including June 30, 2024 (or thereafter as described below)* |
3.00% |
2.00% |
0.20% |
3.00% |
2.00% |
0.25% |
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July 1, 2024, up to and December 31, 2024 (or thereafter as described below)* |
3.75% |
2.75% |
0.20% |
3.75% |
2.75% |
0.25% |
January 1, 2025, up to and including Full Payment of all Obligations and termination of Loan Documents* |
4.50% |
3.50% |
0.20% |
4.50% |
3.50% |
0.25% |
*Following the Amendment No. 4 Closing Date, if the Term Loans are prepaid by not less than $20,000,000 by no later than June 30, 2024 (the “First Prepayment Date”), which may be from proceeds of Permitted Asset Dispositions, then the 0.75% increase in the Applicable Margin on July 1, 2024, will not be implemented and the Applicable Margin in effect immediately prior to such date shall remain in effect. Following Amendment No. 4 Closing Date, if the Term Loans are prepaid by not less than $45,000,000 (including amounts, if any, that were paid prior to the First Prepayment Date), which may be from proceeds of Permitted Asset Dispositions, then the 0.75% increase in the Applicable Margin on January 1, 2025, will not be implemented and the Applicable Margin in effect immediately prior to such date shall remain in effect. For the avoidance of doubt, if the Applicable Margin is increased 0.75% on July 1, 2024, such increase shall not be reversed, even if the aggregate amount of Term Loan prepayments equals or exceeds $45,000,000 by December 31, 2024.
2.3Amend Definition of “Adjusted EBITDA”. The definition of “Adjusted EBITDA” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:
Adjusted EBITDA: for any applicable period, and determined on a consolidated basis for Holdings and its Subsidiaries, shall be the sum of:
(a)Consolidated Net Income, plus
(b)without duplication, the sum of the following for such applicable period (to the extent deducted in determining Consolidated Net Income for such period)
i.consolidated interest expense;
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ii. provision for federal, state, local and foreign income tax (or similar taxes imposed in lieu of income tax) expenses;
iii.all amounts attributable to depreciation and amortization of assets;
iv.non-cash expenses, losses and charges (including any charges resulting from purchase accounting (including step-ups in basis for inventory and other assets)), mark-to-market adjustments of Swap Contracts, LIFO adjustment reserves or the non-cash write-off or write-down of goodwill, intangibles and long-lived assets), excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period;
v.(a) non-recurring or extraordinary expenses, losses and charges and (b) restructuring and other business optimization expenses (including, without limitation, recruiting expenses and signing costs, retention, relocation, transaction and completion bonuses, costs of inventory optimization programs, re-branding and software, IT and website development expenses, costs and expenses associated with severance and other workforce reduction expenses and associated benefit costs, transition expenses (including temporary duplicative salary expense)), consulting fees and expenses and other expenses associated with the consolidation or closure of facility operations or lines of business or the restructuring or integration of business units, shall not exceed $10,000,000 in Fiscal Year 2024; provided that the aggregate amount of all addbacks pursuant to this clause (v), together with clause (xiv)(y) below, shall not exceed $15,000,000 in Fiscal Year 2024 and 15% of Adjusted EBITDA each Fiscal Year thereafter (calculated after giving effect to all addbacks and adjustments in the calculation of Adjusted EBITDA);
vii.with respect to the Transactions, any Permitted Acquisition or other permitted investment, permitted disposition, equity issuance, dividend, recapitalization, consolidation, restructuring, any casualty or condemnation events, or any incurrence, extension, renewal, refinancing, repayment, prepayment or exchange of Indebtedness permitted to be incurred hereunder including the Transactions, and to any amendment or modification to the terms of any of the foregoing transactions, in each case whether or not consummated, costs, fees, charges, or expenses consisting of out-of-pocket expenses owed by any Borrower or any of its Subsidiaries;
viii.non-cash compensation expense (including deferred non-cash compensation expense), or other non-cash expenses or charges,
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arising from the sale or issuance of equity interests, the granting of stock options, and the granting of stock appreciation rights and similar arrangements (including any repricing, amendment, modification, substitution, or change of any such equity interests, stock option, stock appreciation rights, or similar arrangements), provided that any cash payment made with respect to any non-cash items added back in computing Adjusted EBITDA for any prior period pursuant to this clause (viii) shall be subtracted in computing Adjusted EBITDA for the period in which such cash payment is made;
ix.(a) losses and charges from discontinued operations and from asset sales including up to $7,500,000 in Fiscal Year 2024 related to inventory and stock-keeping unit rationalization initiatives and (b) any losses and charges for such period attributable to early extinguishment of indebtedness;
x.(a) any proceeds of business interruption insurance actually received during such period (to the extent not included in Consolidated Net Income for any reason) and (b) charges, losses or expenses to the extent indemnified or insured or reimbursed or reimbursable by a third party to the extent actually reimbursed or reasonably expected by the Borrowers to be reimbursed within the next four (4) fiscal quarters (it being understood that to the extent such proceeds are not actually received within such four (4) fiscal quarter period, such proceeds shall be deducted in calculating Adjusted EBITDA for such fiscal quarters), including the reimbursement of salaries (or any portion thereof);
xi.any earn-out obligations accrued during such period (including all other accrued items); provided that any cash payment made with respect to any non-cash items added back in computing Adjusted EBITDA for any prior period pursuant to this clause (xi) shall be subtracted in computing Adjusted EBITDA for the period in which such cash payment is made other than with respect to $1,500,000 net working capital accrual recorded in June 2023 related to prior period acquisitions costs;
xii.any fees, costs and expenses incurred in connection with the implementation of ASC 606 and any non-cash charge resulting from the application of ASC 606;
xiv.pro forma adjustments, including “run rate” cost savings, operating expense reductions, operating improvements and other synergies related to (x) the Transactions or (y) mergers and other business combinations, acquisitions, divestitures, restructurings, insourcing
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initiatives, cost savings initiatives, business optimization initiatives, operational changes and other similar initiatives (which, in each case of clauses (x) and (y), may have been undertaken or implemented prior to the consummation of the Transactions (including, for the avoidance of doubt, prior the Closing Date) or other applicable transaction), in each case, projected by the Borrowers in good faith to result from actions either taken or expected to be taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Borrowers) within twelve months after the consummation of the Transactions or other applicable transaction, so long as such cost savings, operating expense reductions, operating improvements and synergies are reasonably identifiable and factually supportable, in each case, net of the amount of cost savings, operating expense reductions, operating improvements and other synergies actually realized as a result thereof during the applicable period shall not exceed $10,000,000 in Fiscal Year 2024; provided that the aggregate amount of all addbacks pursuant to clause (xiv)(y) together with any addbacks and adjustments pursuant to clause (v) above, shall not exceed $15,000,000 in Fiscal Year 2024 and 15% of Adjusted EBITDA each Fiscal Year thereafter (calculated after giving effect to all addbacks and adjustments in the calculation of Adjusted EBITDA);
xv.unrealized foreign exchange losses or charges resulting from the impact of foreign currency changes on the valuation of assets or liabilities on the balance sheet;
xvi.up to $10,000,000 in Public Company Costs, minus
(c)without duplication, the sum of the following for such applicable period
i.nonrecurring and extraordinary gains, and gains from asset sales (to the extent included in determining Consolidated Net Income);
ii.any gains attributable to the early extinguishment of Indebtedness;
iii.any unrealized gains for such period attributable to the application of “mark-to-market” accounting in respect of Swap Contracts; and
iv.unrealized foreign exchange income or gains resulting from the impact of foreign currency changes on the valuation of assets or liabilities on the balance sheet;
provided, that for purposes of calculating Adjusted EBITDA for any period that the Borrowers and their Subsidiaries have consummated a Permitted Acquisition or the Transaction, Adjusted EBITDA for such period shall be calculated after giving pro forma effect thereto.
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2.4Amend Definition of “Borrowing Base”. The definition of “Borrowing Base” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:
Borrowing Base: on any date of determination, an amount equal to the lesser of (a) the aggregate amount of Revolver Commitments, minus the Availability Block, minus the Availability Reserve then in effect; or (b) the sum of the Accounts Formula Amount, plus the Inventory Formula Amount, plus the Permitted Acquisition Inventory Amount (but without duplication of the Inventory Formula Amount), minus the Availability Block, minus the Availability Reserve then in effect.
2.5Amend Definition of “Permitted Asset Disposition”.
A.Clause (n) of the definition of “Permitted Asset Disposition” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:
(n) so long as no Event of Default has occurred and is continuing, an Asset Disposition of any Primary Term Loan Collateral constituting Real Estate; provided, that either (i) the aggregate original appraised “as-is” fair market value (which was used to determine the Term Loan Formula Amount) of all such Real Estate sold under this clause (n), other than Real Property subject to (ii) below, shall not exceed twenty-five (25%) of the aggregate original appraised “as-is” fair market value (which was used to determine the Term Loan Formula Amount) of all Primary Term Loan Collateral constituting Real Estate, or (ii) the Real Property sold under this clause (n) is listed on Schedule 1(N) to this Agreement;
B.Schedule 1(N) attached to this Amendment is deemed to be added to the Loan Agreement.
C.The definition of “Permitted Asset Disposition” in Section 1.1 of the Loan Agreement is hereby amended by (i) deleting “or” at the end of (n) thereof, (ii) replacing “.” with “; or” at the end of clause (o) thereof and (iii) inserting the new clause (p) immediately after clause (o) thereof:
(p) sales of personal property associated with Real Estate sold in reliance of clause (n)(ii) above that are (i) tangible personal property located on such Real Estate, and (ii) are intangible personal property that are uniquely associated with such Real Estate; provided that (x) such sales of personal property shall not include Accounts, and (y) for the purpose of any calculation with respect to related mandatory prepayments, the portion of the purchase price for such Real Estate and personal property (collectively) that is attributed to the Real Estate shall not be less than its original appraised “as-is” fair market value which was used to determine the Term Loan Formula Amount (or, if such aggregate purchase price is less than such appraised value, no less than 75% of such appraised value).
2.6Amend Provisions Related to Permitted Acquisitions.
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A.Amend Definition of “Permitted Acquisition”. The first line of the definition of “Permitted Acquisition” in Section 1.1 of the Loan Agreement is hereby amended and replaced with the following:
Permitted Acquisition: any Acquisition approved by the Required Lenders and satisfying each of the following:
B.Amend Definition of “Restricted Investment” with respect to Permitted Acquisitions. Clause (o) in the definition of “Restricted Investment” in Section 1.1 of the Loan Agreement is hereby amended and replaced with the following:
(o) [reserved] (for the avoidance of doubt, no Acquisitions, including Permitted Acquisitions, shall be permitted prior to (A) the later of (i) the Revolver Termination Date, and (ii) the Term Loan Maturity Date), and (B) the Full Payment of all Obligations.
C.Amend Permitted Debt with respect to Permitted Acquisitions. Clause (o) of Section 10.2.1 of the Loan Agreement is hereby amended and replaced with the following:
(o) Debt incurred by a Borrower or any of its Subsidiaries arising from agreements providing for indemnification, earn-outs, adjustment of purchase price or similar obligations, in connection with Permitted Acquisitions approved by Required Lenders or dispositions of any business, asset or Subsidiary of Borrower or any of its Subsidiaries that are permitted under the Loan Documents.
D.Amend Permitted Liens with respect to Permitted Acquisitions. Clause (x) of Section 10.2.2 of the Loan Agreement is hereby amended and replaced with the following:
(x) Liens on property in existence at the time such property is acquired pursuant to a Permitted Acquisition approved by the Required Lenders or on such property of a Subsidiary of an Obligor in existence at the time such Subsidiary is acquired pursuant to a Permitted Acquisition approved by the Required Lenders; provided that such Liens are not incurred in connection with or in anticipation of such Permitted Acquisition and do not attach to any other assets of any Obligor or any Subsidiary;
2.7Amend Definition of “Trigger Period”. The definition of “Trigger Period” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows:
Trigger Period: means the period (a) commencing on the date that (i) an Event of Default occurs or (ii) for a period of five (5) or more consecutive Business Days, Availability is less than the greater of (x) $20,000,000, or (y) 10.0% of the Borrowing Base; and (b) continuing until a period of thirty (30) consecutive days has elapsed, during which at all times (i) no Event of Default exists and (ii) Availability is more than the greater of (x) $20,000,000, or (y) 10.0% of the Borrowing Base.
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2.8Reduction of DDTL Commitments and Revolver Commitments. The DDTL Commitments and the Revolver Commitments are reduced to the aggregate principal amounts amount shown on Schedule 1.1 attached to this Amendment. The Schedule 1.1 attached to the Loan Agreement is replaced with the Schedule 1.1 attached to this Amendment. For the avoidance of doubt, as of the Amendment No. 4 Closing Date, $9,917,444.00 of unused availability remains under the DDTL Commitments.
2.9Restriction of Incremental Facilities During Covenant Modification Period. Notwithstanding the provisions of Section 2.1.7 of the Loan Agreement to the contrary, during the Covenant Modification Period Borrowers may not request an increase in the Revolver Commitments or an additional term loan commitment. For the avoidance of doubt, the provisions of Section 2.1.7 shall be suspended during the Covenant Modification Period.
2.10Restriction on Additional DDTLs. Section 2.6.1 of the Loan Agreement is hereby amended by adding the following sentence at the end of such section:
Notwithstanding the foregoing, following the Amendment No. 4 Closing Date, all requests for a DDTL shall require the approval of the Required Lenders, in addition to all other conditions for making a DDTL.
2.11Add Required Mandatory Prepayments of Term Loans. Section 5.4.1 of the Loan Agreement is hereby amended and replaced with the following:
5.4.1 Notwithstanding anything herein to the contrary and in addition to the scheduled amortization payments of the Term Loans but less any mandatory prepayments made pursuant to Section 5.4.2 or Section 5.4.3 on or after the Amendment No. 4 Closing Date (but prior to such scheduled mandatory prepayments), Borrower shall make the following mandatory prepayments of the Term Loans which shall be applied to the remaining installments of the Term Loans on a pro rata basis in inverse order of maturity: (i) $10,000,000 by no later than March 31, 2024, (ii) $20,000,000 (inclusive of amounts paid under clause (i) above) by no later than June 30, 2024, and (iii) $45,000,000 (inclusive of amounts paid under clauses (i) and (ii) above) by no later than December 31, 2024. For the avoidance of doubt, the amount of any mandatory prepayments made under Section 5.4.2 or 5.4.3 on or after the Amendment No. 4 Closing Date (but prior to such scheduled mandatory prepayments) shall reduce the amount of mandatory prepayments required to be made under this Section 5.4.1 on a dollar-for-dollar basis.
2.12Amend Mandatory Prepayments Provision for Sales of Real Estate. Section 5.4.3 of the Loan Agreement is hereby amended and replaced with the following:
5.4.3. Notwithstanding anything to the contrary in Section 5.4.2, within five (5) Business Days of receipt of the Net Proceeds of any sale or other disposition of Real Estate pursuant to clause (n) of the definition of “Permitted Asset Disposition”, Borrowers shall repay the outstanding balance of the Term Loans in an amount equal to 75% of the original appraised “as-is” fair market value (which was used to determine the Term Loan Formula Amount) of such Real Estate, less
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any scheduled amortization payments already made, and any excess Net Proceeds of such Permitted Asset Disposition shall be applied, at the Borrowers’ option, to either (i) prepay the then-outstanding principal balance of Revolver Loans pro rata (without a permanent reduction of the Revolver Commitments) or (ii) prepay the outstanding principal balance of the Term Loans pro rata;
2.13Add Required Mandatory Prepayments for Excess Cash. The existing Section 5.4.9 of the Loan Agreement is hereby re-numbered to be Section 5.4.10, and the following new Section 5.4.9 is hereby added to the Loan Agreement in its entirety to read as follows:
5.4.9 Notwithstanding anything herein to the contrary, if any balance sheet furnished to Agent pursuant to Section 10.1.2 reflects that Borrower maintains cash in excess of $20,000,000, then Borrower shall, promptly, but in no event later than two (2) Business Days following delivery of such financial statements to Agent, prepay the Obligations in an amount equal to such excess cash balance;
2.14Amend Mandatory Prepayments Waterfall Provision.
A.The lead-in paragraph to Section 5.4.10 (formerly Section 5.4.9) of the Loan Agreement is hereby amended and replaced with the following:
5.4.10. Other than with respect to mandatory prepayments pursuant to Sections 5.4.1, 5.4.3, 5.4.4, 5.4.7 and 5.4.8, notwithstanding anything else to the contrary contained herein:
B.Clause (a)(i) of Section 5.4.10 (formerly Section 5.4.9) of the Loan Agreement is hereby amended and replaced with the following:
(i) FIRST, to the then-outstanding principal balance of the Revolver Loans (without a permanent reduction of the Revolver Commitments), the Term Loan, the Capital Expenditure Loans, the Equipment Loan and the DDTLs, pro rata in inverse order of maturity with respect to the Term Loan, the Capital Expenditure Loans, the Equipment Loan and the DDTLs; provided, that to the extent the outstanding Revolver Loans, Term Loan, Capital Expenditure Loans, Equipment Loan and DDTLs include Adjusted Base Rate Loans and SOFR Loans, the mandatory prepayments shall first be applied to the Adjusted Base Rate Loans and remaining balance shall be held as cash collateral in Cash Collateral Account until the end of the Interest Periods applicable to such outstanding SOFR Loans and then shall be applied to such SOFR Loans;
2.15Add Monthly Reporting of Rolling 13-Week Forecast. Clause (b) of Section 10.1.2 of the Loan Agreement is hereby amended and replaced with the following:
(b) on the first Business Day of each consecutive two week period, commencing on October 23, 2023, Borrower Agent shall deliver to Agent a 13-Week Forecast for the 13 week period commencing on the first Business Day of such two week period.
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2.16Add Quarterly Update Calls with Lenders. A new Section 10.1.15 is added to the Loan Agreement as follows:
10.1.15 Quarterly Update Calls. Within fifteen (15) Business Days following each release by Holdings of its quarterly earnings report, or more frequently as may be reasonably requested by Agent, Holdings shall host an update call with Agent and not less than three (3) Business Days prior to the scheduled date for each such call Holdings shall issue to Agent a comparison of actual results to the projections delivered to Agent pursuant to Section 10.1.2(h) for such period.
2.17Updated Financial Covenants. Section 10.3 of the Loan Agreement is deleted and is replaced with the following:
10.3 Financial Covenants. Until Full Payment of the Obligations and for the periods set forth below, Holdings and its Subsidiaries on a consolidated basis shall maintain as of the date of determination (and to be certified by a Senior Officer of Borrower Agent in the Compliance Certificate provided in accordance with Section 10.1.2(d)):
10.3.1Minimum Fixed Charge Coverage Ratio. Commencing with the Fiscal Quarter ending September 30, 2024, Fixed Charge Coverage Ratio measured at the end of each Fiscal Quarter of at least (i) 1.00:1.00 for the Fiscal Quarters ending September 30, 2024, and December 31, 2024, and (ii) 1.10:1.00 for the Fiscal Quarter ending March 31, 2025, and for each Fiscal Quarter thereafter.
10.3.2Minimum Liquidity. As of the last day of each Fiscal Quarter during the Covenant Modification Period, Liquidity of not less than $25,000,000; provided, however as of the last day of the Fiscal Quarters ending December 31, 2023, and December 31, 2024, the minimum Liquidity shall be not less than $15,000,000.
10.3.3Minimum EBITDA. (a) For Fiscal Year 2024, Adjusted EBITDA of not less than (i) $4,000,000 for the Fiscal Quarter ending September 30, 2023, (ii) $17,000,000 for the two Fiscal Quarter period ending December 31, 2023, (iii) $27,000,000 for the three Fiscal Quarter period ending March 31, 2024, and (iv) $34,000,000 for the four Fiscal Quarter period ending June 30, 2024, and (b) commencing with Fiscal Quarter ending September 30, 2024, and continuing as of the end of each Fiscal Quarter thereafter, measured for the four consecutive Fiscal Quarters then ended, TTM EBITDA of at least $35,000,000.
(a)Subject to the limitations set forth in clause (d) below, any holder of Equity Interests of any Borrower or any direct or indirect parent of the Borrower Agent shall have the right to cure (and shall be deemed to have cured) an Event of Default arising out of a breach of any Financial Covenant (any such breach a “Financial Covenant Default”) if Borrowers receive the cash proceeds of an investment of Curative Equity within fifteen (15)
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Business Days after the date on which the financial statements referred to in Section 10.1.2(a)Error! Reference source not found. are required to be delivered in respect of the Test Period for which such financial covenant is being measured in accordance with Section 10.1.2 (the “Cure Expiration Date”).
(b)Borrower Agent shall promptly notify Agent of its receipt of any proceeds of Curative Equity (and shall immediately apply the same to the payment of first to the Term Loan, the Capital Expenditure Loans, the Equipment Loan and the DDTLs (on a pro rata basis), second to the Revolver Loans (without reduction of the Revolver Commitment), and third to Cash Collateralize outstanding Letters of Credit, and finally to other Obligations) by any Borrower; provided that failure to notify the Agent thereof shall not affect the validity of any Curative Equity received by any Borrower or Holdings on or before the Cure Expiration Date; provided, further, that Agent may exercise remedies under Section 11.2 after the Cure Expiration Date if Agent has not received notice of the Curative Equity until the Agent is so notified.
(c)The Curative Equity shall be treated on a dollar-for-dollar basis as Adjusted EBITDA or Liquidity, as applicable, of Holdings and the Borrowers for the applicable Fiscal Quarter in which the applicable Event of Default has occurred (and for any subsequent Test Period which includes such Fiscal Quarter) with no further action required by any party to this Agreement. Neither the Agent nor any Lender may take any action to foreclose on, or take possession of, the Collateral, accelerate any Obligations, terminate any Commitments or otherwise exercise any rights or remedies under Section 11.2 (or under any other Loan Document) or under any Applicable Laws on the basis of any actual or purported Financial Covenant Default until the date on which the Cure Expiration Date has occurred without the Curative Equity having been received by any Borrower or Holdings; provided that, during such time, no Lender shall be required to make any Loan hereunder and no L/C Issuer shall be required to issue any Letter of Credit hereunder. Upon receipt by any Borrower or Holdings of the Curative Equity, each applicable Financial Covenant shall be deemed to be satisfied and complied with as of the end of the relevant Fiscal Quarter with the same effect as though there had been no failure to comply with such Financial Covenant and any Financial Covenant Default that would have occurred as a result of the failure to satisfy such Financial Covenant shall be deemed not to have occurred for purposes of the Loan Documents. In the event no Borrower or Holdings receives the Curative Equity on or before the Cure Expiration Date, an applicable Financial Covenant Default shall be deemed to have occurred and will continue unless waived in writing by the Required Lenders in accordance herewith.
(d)Notwithstanding anything to the contrary contained in the foregoing or this Agreement, (i) Holdings’ and Borrowers’ rights under this
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Section 10.3.10.3.44 may be exercised not more than two times during the term of this Agreement; (ii) in each trailing four Fiscal Quarter period there shall be at least two Fiscal Quarters in respect of which no Curative Equity is made, (iii) the amount of any Curative Equity shall not exceed the amount required to cause Holdings and Borrowers to be in compliance with Financial Covenants, (iv) any Curative Equity will be disregarded for purposes of determining the availability of any baskets, pricing or other items governed by reference to Adjusted EBITDA contained in the loan documentation, and (v) no reduction in indebtedness with the proceeds of any Curative Equity shall be considered for purposes of recalculating compliance with the Financial Covenants for the initial quarter during such period. For the avoidance of doubt, Curative Equity which is applied to the calculation of one or more Financial Covenants set forth in Section 10.3 shall be considered a single instance of the exercise of the cure right set forth in this Section 10.3.4.
3.WAIVER. Effective solely upon the satisfaction of each of the conditions precedent set forth in Section 4 below, Agent and the Required Lenders signatory hereto hereby waive the Existing Events of Default. The waiver contained in this Section 3 is a limited waiver and (i) shall only be relied upon and used for the specific purpose set forth herein, (ii) shall not constitute nor be deemed to constitute a waiver, except as otherwise expressly set forth herein, of (a) any Default or other Event of Default or (b) any term or condition of the Loan Agreement and the other Loan Documents, (iii) shall not constitute nor be deemed to constitute a consent by the Agent or any Lender to anything other than the specific purpose set forth herein, and (iv) shall not constitute a custom or course of dealing among the parties hereto.
4.CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective only upon satisfaction in full of the following conditions precedent:
4.1Agent shall have received counterparts to this Amendment, duly executed by the Agent, Holdings, Borrowers, and Lenders constituting Required Lenders, as applicable.
4.2Agent shall have received an Amendment Fee Letter, of even date herewith, duly executed by Borrower Agent, and containing terms and conditions satisfactory to Agent.
4.3Agent shall have received such other documents as the Agent may reasonably request.
5.COVENANT TO ENGAGE CONSULTANT. Prior to the 30th calendar day following the Effective Date, Holdings shall engage a third-party consultant reasonably acceptable to Agent for a period not ending prior to June 30, 2024. The scope of the engagement of such consultant shall include the review and assessment of (i) Borrowers’ business and operational plan, (ii) 13-Week Forecast, (iii) consideration of asset sale value, and (iv) Borrowers’ budget for Fiscal Year 2024.
6.REPRESENTATIONS AND WARRANTIES. Each of the Borrowers hereby affirms to Agent and the Lenders that all of Borrowers’ representations and warranties set forth in the Loan Agreement are true and correct in all material respects (or all respects if already qualified by
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materiality) as of the Effective Date (except for any representations and warranties that expressly relate to an earlier date).
7.LIMITED EFFECT. Except for the specific amendments and waivers contained in this Amendment, the Loan Agreement and other Loan Documents shall remain unchanged and in full force and effect.
8.RELEASE BY BORROWERS AND GUARANTOR. Borrowers and Guarantors (collectively, the “Obligors”), for themselves, and for their respective agents, servants, officers, directors, shareholders, members, employees, heirs, executors, administrators, agents, successors and assigns forever release and discharge Agent and Lenders and their agents, servants, employees, accountants, attorneys, shareholders, subsidiaries, officers, directors, heirs, executors, administrators, successors and assigns from any and all claims, demands, liabilities, accounts, obligations, costs, expenses, liens, actions, causes of action, rights to indemnity (legal or equitable), rights to subrogation, rights to contribution and remedies of any nature whatsoever, known or unknown, which Obligors have, now have, or have acquired, individually or jointly, at any time prior to the date of the execution of this Amendment, including specifically, but not exclusively, and without limiting the generality of the foregoing, any and all of the claims, damages, demands and causes of action, known or unknown, suspected or unsuspected by Obligors which:
8.1Arise out of the Loan Documents;
8.2Arise by reason of any matter or thing alleged or referred to in, directly or indirectly, or in any way connected with, the Loan Documents; or
8.3Arise out of or in any way are connected with any loss, damage, or injury, whatsoever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of Agent or any Lender or any party acting on behalf of Agent or any Lender committed or omitted prior to the date of this Amendment.
As further consideration for the above release, each Obligor specifically agrees, represents, and warrants that the matters released herein are not limited to matters which are known or disclosed, and such Obligor hereby waives any and all rights and benefits which it now has, or in the future may have, by virtue of the provisions of Section 1542 of the Civil Code of the State of California which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE LENDER OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Each Obligor is aware that it may later discover facts in addition to or different from those which it now knows or believes to be true with respect to the releases given herein, and that it is nevertheless such Obligor’s intention to settle, release, and discharge fully, finally, and forever all of these matters, known or unknown, suspected or unsuspected, which previously
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existed, now exist, or may exist. In furtherance of such intention, each Obligor specifically acknowledges and agrees that the releases given in this Amendment shall be and shall remain in effect as full and complete releases of the matters being released, notwithstanding the discovery or existence of any such additional or different facts and that such releases shall not be subject to termination or rescission by reason of any such additional or different facts.
9.LEGAL ADVICE OBTAINED. The advice of legal counsel has been obtained by each party prior to signing this Amendment and each party executes this Amendment voluntarily, with full knowledge of its significance.
10.GOVERNING LAW. This Amendment shall be governed by the laws of the State of California, without giving effect to any conflict of law principles (but giving effect to Federal laws relating to national banks).
11.COUNTERPARTS. This Amendment may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed and delivered shall be deemed to be an original. All such counterparts, taken together, shall constitute but one and the same Amendment.
[Signatures are on the following pages]
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IN WITNESS WHEREOF, this Amendment has been executed and delivered as of the Effective Date set forth above.
HOLDINGS:
VINTAGE WINE ESTATES, INC.,
a Nevada corporation
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Chief Financial Officer |
BORROWERS:
VINTAGE WINE ESTATES, INC.,
a California corporation
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Chief Financial Officer |
GROVE ACQUISITION, LLC,
a California limited liability company
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Chief Financial Officer |
GIRARD WINERY LLC,
a California limited liability company
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Chief Financial Officer |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
MILDARA BLASS INC.,
a California corporation
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Secretary and Treasurer |
SPLINTER GROUP NAPA, LLC,
a California limited liability company
|
|
By: |
/s/ Patrick Roney |
Name: |
Patrick Roney |
Title: |
Manager |
SABOTAGE WINE COMPANY, LLC,
a California limited liability company
|
|
By: |
/s/ Patrick Roney |
Name: |
Patrick Roney |
Title: |
Manager |
VWE CAPTIVE, LLC,
a Nevada limited liability company
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Manager |
CALIFORNIA CIDER CO., INC.,
a California corporation
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Vice President, Secretary and Treasurer |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
THAMES AMERICA TRADING COMPANY LTD.,
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Vice President, Secretary and Treasurer |
VINESSE, LLC,
a California limited liability company
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Manager |
MEIER’S WINE CELLARS, INC.,
an Ohio corporation
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Chief Financial Officer |
MEIER’S WINE CELLARS ACQUISITION, LLC,
a Delaware limited liability company
|
|
By: |
/s/ Kristina Johnston |
Name: |
Kristina Johnston |
Title: |
Secretary and Treasurer |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
AGENT:
BMO BANK N.A., as successor in interest to BANK OF THE WEST,
as Agent
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|
By: |
/s/ Darren Jung |
Name: |
Darren Jung |
Title: |
Vice President |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
LENDERS:
BMO BANK N.A., as successor in interest to BANK OF THE WEST,
as a Lender
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|
By: |
/s/ Tracy Holmes |
Name: |
Tracy Holmes |
Title: |
Managing Director |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
RABO AGRIFINANCE LLC,
as a Lender
|
|
By: |
/s/ Catherine M. Vyenielo |
Name: |
Catherine M. Vyenielo |
Title: |
SVP |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
AGCOUNTRY FARM CREDIT SERVICES, PCA,
as a Lender
|
|
By: |
/s/ Lisa Caswell |
Name: |
Lisa Caswell |
Title: |
Vice President Capital Markets |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
COMPEER FINANCIAL PCA,
as a Lender
|
|
By: |
/s/ Daniel J. Best |
Name: |
Daniel J. Best |
Title: |
Director, Capital Markets |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
HTLF BANK,
as a Lender
|
|
By: |
/s/ Travis Moncada |
Name: |
Travis Moncada |
Title: |
SVP/SRM |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
COMERICA BANK,
as a Lender
|
|
By: |
/s/ Chris Thomson |
Name: |
Chris Thomson |
Title: |
Senior Vice President |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
GREENSTONE FARM CREDIT SERVICES, ACA,
as a Lender
|
|
By: |
/s/ Curtis Flammini |
Name: |
Curtis Flammini |
Title: |
VP of Capital Markets Lending |
GREENSTONE FARM CREDIT SERVICES, FLCA,
as a Lender
|
|
By: |
/s/ Curtis Flammini |
Name: |
Curtis Flammini |
Title: |
VP of Capital Markets Lending |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
FARM CREDIT MID-AMERICA, PCA,
as a Lender
|
|
By: |
/s/ Tabatha Hamilton |
Name: |
Tabatha Hamilton |
Title: |
Vice President Food and Agribusiness |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
FARM CREDIT BANK OF TEXAS,
as a Lender
|
|
By: |
/s/ Evelin Herrera |
Name: |
Evelin Herrera |
Title: |
Director |
Amendment Number Four to Second Amended and Restated Loan and Security Agreement
Exhibit 99.1
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|
|
News Release |
_______________________________________________________________________________________________________________________
937 Tahoe Boulevard, Suite 210 | Incline Village, NV 89451
For Immediate Release
Vintage Wine Estates Reports Fourth Quarter and Fiscal Year 2023 Financial Results
▪Fiscal 2023 revenue of $283 million and 30.1% gross margin
▪Amended credit agreement, expected cash from operations and potential asset sales expected to provide sufficient liquidity to stabilize business and focus on growing revenue and cash flow
▪Continued progress with Five-Point Plan expected to deliver profitability, cash generation and lower debt in fiscal 2024
▪Tightened financial guidance for fiscal 2024
INCLINE VILLAGE, NV, October 13, 2023 – 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-consumer platform, today reported its financial results for its fourth quarter and fiscal year ended June 30, 2023. These financial results reflect the impacts of the restatement of prior fiscal 2023 quarters and the related revisions of fiscal 2022 financial results. Results include Vinesse, LLC ("Vinesse") acquired on October 4, 2021, ACE Cider, acquired on November 16, 2021, and Meier's Wine Cellars, Inc. (“Meier’s”) acquired on January 18, 2022. (Note: all references to revenue are equivalent to net revenue)
Jon Moramarco, Interim Chief Executive Officer, commented, "My objective these last eight months since being appointed as interim CEO has been to stabilize operations and strengthen the foundation of our business to provide a focused enterprise with which our new CEO can drive cash generation and reduce debt while delivering a great customer experience with key brands and leveraging our channels to market and top-tier estate wineries. We have made progress with further improving customer experience in our tasting rooms and maintaining our industry leading retention rates of club members with our estate properties. We have measurably improved efficiencies in our warehousing and bottling operations, meaningfully cleaned out our inventory and strengthened inventory management. Importantly, we have instituted appropriate pricing for many brands and channels. Solid shipments and depletion rates on most of our priority brands reflect the strength of the premiumization trend and our positioning in the market. We have also gained more distribution points for ACE Cider and our depletion rates demonstrate the appeal of our cider with consumers. In addition, Meier's has increased booked business by improving market penetration. We expect additional progress as we advance through our transition year of fiscal 2024.”
He added, "We still have work to do. We are further evaluating profitability of various categories of our business and relationships with certain customers. We have to strengthen brand integrity and make much needed investments in health, safety and efficiency for our facilities. Nevertheless, I am very encouraged by the energy of the VWE team, the focus on driving improvements and the opportunities in front of us."
Five-Point Plan Progress
The Company’s Five-Point Plan is centered around five priorities which include margin expansion through simplification and better execution, measurable cost reduction, disciplined cash management, monetizing assets and reducing debt and growing revenue in its key brands.
Since initiating the plan in the latter half of fiscal 2023 through the first quarter of fiscal 2024 the Company has accomplished the following:
•Restructured the leadership team to better align with the business opportunities and create improved communications and collaboration
•Reduced personnel headcount by a total of 7% for annualized savings of approximately $6 million
•Reduced SKUs over 50% to less than 2,000 and managed parent SKUs from approximately 900 to 600
•Captured approximately 2.8% on average of price
•Improved throughput in the Hopland bottling facility by over 35%
•Simplified warehousing operations and realigned personnel for more efficient pick and pack processes
•Identified and executed on approximately 70% improvement in cost recovery of shipping expenses
•Refocused resources on key brands: ACE Cider, Bar Dog, B.R. Cohn, Cameron Hughes, Cherry Pie, Firesteed, and Kunde
•Maintained industry leading retention rates of estate winery club members
•ACE Cider continues to gain points of distribution and expand its reach into more markets
•Initiating a process to monetize certain assets
Fourth Quarter Fiscal 2023 Highlights and Financial Results Review (compared with revised prior-year period unless noted otherwise)
•Revenue of $62.1 million was down $12.2 million, or 16.4%, reflecting declines in all segments.
oWholesale revenue declined $2.2 million, or 10.3%, to $18.8 million as improved pricing and higher ACE Cider sales did not fully offset 3.5% declines in total wholesale case volume1. Distributor and retailer destocking and lower consumer takeaway were the primary reasons for the volume decline.
oDirect-to-Consumer ("DTC") revenue was $19.9 million down $2.6 million, or 11.7%, as higher sales of the Company's digitally-native Cameron Hughes brand helped to offset weaker e-commerce sales. Total revenue decline was partially offset by higher revenue per case.
oBusiness-to-Business ("B2B") revenue was $23.4 million, down $7.1 million, or 23.4%, due primarily to a $3.4 million decline related to the elimination of a less profitable, private label sales program for a major retailer and $2.1 million reduction in bulk distilled alcohol sales.
•Gross profit was $16.6 million, or 26.8% of sales, compared with $7.5 million, or 10.1% of sales, in the prior-year period. Improvements in productivity and throughput in the Company's largest bottling facility as well as improved pricing, efficiencies gained with supply chain and operational improvements and SKU reductions helped to offset the loss of higher margin bulk distilled spirits sales.
Fiscal 2022's fourth quarter was impacted by $19.1 million of non-cash inventory adjustments.
•Selling, general and administrative expenses ("SG&A") declined $3.0 million, or 9.5%, to $28.3 million. The decline was the result of business realignment efforts in the third quarter of fiscal 2023, as well as other cost containment measures.
•Loss from operations was $50.2 million, compared with loss from operations of $20.1 million in the prior year quarter. Operating loss reflected goodwill impairment charges of $20.7 million, a $9.8 million loss on the sale of assets in the quarter as well as intangible asset impairments of $3.6 million which more than offset improvements in gross profit.
•Interest expense for the quarter was $5.1 million, up $2.0 million from the prior-year period reflecting higher rates resulting from the debt refinancing that occurred in December 2022 and also due to the sale of two interest rate swap agreements in March 2023.
•Net loss available to VWE common shareholders was $47.8 million, compared with net loss of $16.9 million in the prior-year period. On a per diluted share basis, net loss available to VWE common shareholders was $0.81 compared with net loss of $0.28 per diluted share in the prior-year period.
•Adjusted net loss2, which excludes amortization of intangible assets related to acquisitions and other unusual items, was $14.3 million, or $0.24 per diluted share.
•Adjusted EBITDA2 for the quarter was a $10.5 million loss compared with adjusted EBITDA loss of $13.0 million in the prior-year quarter.
1Case Volume is a Key Performance Measure (“KPI”). Please see related disclosures regarding the use of this KPI in this news release.
2As referenced here and throughout the release, adjusted net income and adjusted EBITDA are non-GAAP measures. Please see related disclosures regarding the use of non-GAAP measures in this news release.
Fiscal Year 2023 Highlights and Financial Results Review (compared with revised prior-year results unless noted otherwise)
•Revenue of $283.2 million was down $9.6 million, or 3.3%. The decline was primarily related to the discontinuation of a less profitable custom program. Acquisitions contributed $21.0 million in revenue for the year.
oWholesale revenue increased $2.8 million, or 3.3%, to $86.7 million reflecting $8.3 million in acquired revenue related to
ACE Cider. This was partially offset by slowing consumer discretionary spending trends at retail. Wholesale revenue comprised 31% of total revenue for the year.
oB2B revenue declined $0.7 million, or 0.6%, to $113.2 million. Improved throughput in custom production and the contribution of Meier's for the full year helped to offset the $13.9 million decline related to the elimination of a less profitable bottled distilled spirits program and the $4.2 million reduction in bulk distilled spirits sales. B2B revenue represented 40% of total revenue in
fiscal 2023.
oDTC revenue decreased $8.8 million, or 9.6%, to $83.4 million. Improvements in Cameron Hughes, the Company's digitally-native key brand, was not sufficient to offset the $8.0 million decline in sales through e-commerce and a major television retailer as well as decreased sales through wine clubs and softer tasting room traffic. DTC comprised 29% of total revenue for the year.
•Gross profit declined $3.7 million to $85.2 million, or 30.1% of sales. Improved pricing and increased productivity helped to offset higher cider costs.
•SG&A increased $21.5 million, or 22.1%, to $118.4 million. The increase was primarily related to an increase in nonrecurring expenses related to historic and unconsummated acquisitions of $5.3 million, an increase in payroll-related costs of $3.8 million, an increase in legal and audit fees of $3.6 million, and a $2.1 million increase from business realignment costs.
•Loss from operations was $208.8 million, compared with loss from operations of $7.9 million in the prior year. The loss reflects the impact of $162.2 million in goodwill and intangible assets impairment and $8.3 million loss from the sale of assets.
•Interest expense for fiscal 2023 was $18.4 million, an increase of $4.5 million reflecting increased rates resulting from the debt refinancing that occurred in December 2022 and also due to the sale of interest rate swaps in March 2023
•Net loss available to VWE common shareholders was $189.0 million, compared with net loss of $0.4 million in the prior year. On a per diluted share basis, net loss available to VWE common shareholders was $3.20 compared with net loss of $0.30 per diluted share in the prior year.
•Adjusted net loss2, which excludes amortization of intangible assets related to acquisitions among other adjustments, was
$21.2 million, or $0.36 per diluted share compared with adjusted net loss of $18.7 million, or $0.31 per diluted share in the prior year.
•Adjusted EBITDA2 for the year was an $11.4 million loss compared with adjusted EBITDA of $16.3 million in the prior year.
Strong Balance Sheet with Financial Flexibility
Liquidity
At fiscal year end, the Company had approximately $54 million in liquidity comprised of $18.2 million in cash and approximately $35.9 million available under its revolving line of credit.
During fiscal 2023, the Company reduced total debt by $24.9 million to $303.3 million at June 30, 2023, primarily using the proceeds from the sale of assets. Separately today, the Company announced that it has amended its credit agreement (the "Amended Credit Agreement") to, among other things, waive existing events of default, redefine financial covenants and allow for additional types of asset sales up to $60 million. Collateral underlying the Amended Credit Agreement includes real estate valued at approximately $215 million plus receivables and bulk and cased inventory. The Company intends to market certain assets assuming a return of fair value.
The Company believes that the availability on its revolver, strong working capital management and asset monetization efforts will be sufficient to execute its operating plan and meet required debt service over the next twelve months.
Kristina L. Johnston, Chief Financial Officer, noted, "We believe the Amended Credit Agreement together with our focused cash management and operational improvements to generate cash in fiscal 2024 provide the necessary liquidity to execute on our plans. In addition, we intend to market certain assets at fair value. We believe these efforts during our transition year will support our ability to make the required principal payments in fiscal 2024 to avoid higher interest rates and achieve our goal to reduce debt."
Capital Investments
Capital expenditures were $2.9 million for the fiscal 2023 fourth quarter and $14.2 million for the year. Capital expenditures in the fourth quarter and full year fiscal 2022 were $9.1 million and $24.8 million, respectively. Higher capital expenditures in fiscal 2022 were the result of the expansion of the Hopland bottling operations. Fiscal 2023 capital expenditures included increased barrel capacity, barrels, installment of the solar power system at the Hopland facility, upgrading the Firesteed tasting room, vineyard development and other productivity and safety enhancements. Capital expenditures for fiscal 2024 are expected to be approximately $12 million.
Fiscal Year 2024 Outlook
VWE's expectations for fiscal 2024 have been refined from its preliminary expectations provided on July 20, 2023. The Company expects the following to be driven by execution of its restructuring and Five-Point Plan:
|
|
Revenue: |
Approximately $260 million to $270 million |
Gross margin: |
Approximately 38%, an estimated 800 basis point improvement on lower volume |
SG&A(excludes amortization expense): |
Approximately $98 million, excluding restructuring costs |
Depreciation expense: Non-cash amortization expense: |
Approximately $16 million Approximately $6.1 million |
Estimated restructuring charges: |
$5 million to $6 million |
Lower expected revenue in fiscal 2024 primarily reflects approximately $33 million related to lower sales of aged bulk whiskey inventory due to depleting inventory, $6 million related to the discontinued bottled spirits program and an estimated $9 million related to SKU rationalization. These declines are expected to be somewhat offset by improved pricing and higher volume in select brands. For fiscal 2024, SG&A excludes restructuring costs and executive stock-based compensation awards expected with new leadership.
Conference Call and Webcast
The Company will host a conference call and live webcast Monday, October 16, 2023 at 9:00 AM ET/ 6:00 AM PT, at which time management will review the Company’s financial results, plans and outlook. 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 1.404.975.4839 and providing access code 358700. The listen-only audio webcast can be monitored at https://ir.vintagewineestates.com/events-and-presentations. A telephonic replay will be available through Monday, October 23, 2023, and can be accessed by dialing 1.929.458.6194 and entering the conference ID number 406504. 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 singular focus is producing the best 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 2.2 million nine-liter equivalent cases annually. With approximately
40 brands, key focus brands include ACE Cider, Bar Dog, B.R. Cohn, Cameron Hughes, Cherry Pie, Firesteed, and Kunde, many of which have achieved critical acclaim. 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 private label and custom wine making services. While VWE is diverse across price points and varietals with 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 vintagewineestates.com.
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. Adjusted EBITDA is defined as earnings/(loss) 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 EBTIDA margin is the ratio of adjusted EBITDA to net revenue. Adjusted net income/(loss) is defined as net income/(loss) 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 volumes 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 “actively,” “believe,” “efforts,” “estimate,” “evaluating,” “expect,” “forecast,” “intend,” “may,” “ongoing,” “opportunity,” “outlook,” “plan,” “potential,” “should,” “will,” or other similar expressions that indicate future events or trends. These forward-looking statements include, but are not limited to, statements regarding VWE’s organization restructuring and other cost savings and expected results therefrom, expected results from the implementation of the Company’s Five-Point Plan, expectations reflecting restructuring benefits and business improvements in fiscal 2024, and the appointment of Seth Kaufman as President and CEO. 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: risks relating to the uncertainty of projected financial information; the risk that we are unable to regain and maintain compliance with Nasdaq continued listing requirements and our securities are delisted from Nasdaq; potential reputational harm to VWE’s brands from internal and external sources; 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; inability to achieve some or all of the expected benefits from cost reduction and revenue enhancing initiatives and any future restructuring plans or changes in management may adversely affect our business; declines or unanticipated changes in consumer demand for VWE’s products or a shift in consumer sentiment to purchase less wine through VWE’s direct-to-consumer channel; the effects of competition on VWE’s future business; VWE’s significant reliance on its distribution channels, including independent distributors and their effect on VWE’s wholesale operations and revenue; loss or significant decline of sales to one or more of the Company’s distributors; possible decreases in VWE’s wine quality ratings; VWE’s level of insurance against catastrophic events and losses; VWE’s ability to protect its trademarks and other intellectual property rights; the potential adverse effects of health pandemics, epidemics or contagious diseases; risks associated with new lines of businesses or products; the ability of the Company to retain key personnel; 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; increases in costs or the disruption of supply or shortage of energy; the impact of climate change, environmental catastrophe, natural disasters, disease, pests, weather conditions and inadequate water supply on VWE’s business including the Hopland facility; VWE’s ability to adequately source grapes and other raw materials and any increase in the cost of such materials; risks associated with the Company’s information technology and ability to maintain and protect personal information; VWE’s ability to maintain necessary licenses; the Company’s limited experience operating as a public company and its ability to remediate its material weakness in internal controls over financial reporting and to maintain effective internal controls over financial reporting; integration risks associated with recent and future acquisitions; 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.
Contacts:
|
|
Investors Deborah K. Pawlowski, Kei Advisors LLC dpawlowski@keiadvisors.com Phone: 716.843.3908 |
Media Mary Ann Vangrin MVangrin@vintagewineestates.com |
Vintage Wine Estates, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
18,233 |
|
|
$ |
44,758 |
|
Restricted cash |
|
|
- |
|
|
|
4,800 |
|
Accounts receivable, net |
|
|
24,561 |
|
|
|
37,869 |
|
Other receivables |
|
|
507 |
|
|
|
3,866 |
|
Inventories |
|
|
201,363 |
|
|
|
192,922 |
|
Assets held for sale, net |
|
|
511 |
|
|
|
- |
|
Current interest rate swap asset |
|
|
4,669 |
|
|
|
2,877 |
|
Prepaid expenses and other current assets |
|
|
14,895 |
|
|
|
11,864 |
|
Total current assets |
|
|
264,739 |
|
|
|
298,956 |
|
Property, plant, and equipment, net |
|
|
215,967 |
|
|
|
238,719 |
|
Operating lease right-of-use assets |
|
|
32,945 |
|
|
|
- |
|
Finance lease right-of-use-assets |
|
|
630 |
|
|
|
- |
|
Goodwill |
|
|
- |
|
|
|
154,951 |
|
Intangible assets, net |
|
|
38,994 |
|
|
|
63,097 |
|
Interest rate swap asset |
|
|
4,317 |
|
|
|
6,280 |
|
Other assets |
|
|
3,562 |
|
|
|
3,464 |
|
Total assets |
|
$ |
561,154 |
|
|
$ |
765,467 |
|
Liabilities, redeemable noncontrolling interest, and stockholders' equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Line of credit |
|
$ |
115,444 |
|
|
$ |
144,215 |
|
Accounts payable |
|
|
20,413 |
|
|
|
13,473 |
|
Accrued liabilities and other payables |
|
|
26,286 |
|
|
|
26,997 |
|
Current operating lease liabilities |
|
|
6,243 |
|
|
|
- |
|
Current finance lease liabilities |
|
|
304 |
|
|
|
- |
|
Current maturities of long-term debt |
|
|
14,449 |
|
|
|
14,909 |
|
Total current liabilities |
|
|
183,139 |
|
|
|
199,594 |
|
Other long-term liabilities |
|
|
4,196 |
|
|
|
7,055 |
|
Long-term debt, less current maturities |
|
|
173,409 |
|
|
|
169,095 |
|
Long-term operating lease liabilities |
|
|
26,792 |
|
|
|
- |
|
Long-term finance lease liabilities |
|
|
334 |
|
|
|
- |
|
Deferred tax liability |
|
|
506 |
|
|
|
29,325 |
|
Deferred gain |
|
|
- |
|
|
|
10,666 |
|
Total liabilities |
|
|
388,376 |
|
|
|
415,735 |
|
Commitments and contingencies (Note 14) |
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
262 |
|
|
|
1,494 |
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, no par value, 2,000,000 shares authorized, and none issued and outstanding at June 30, 2023 and June 30, 2022. |
|
|
- |
|
|
|
- |
|
Common stock, no par value, 200,000,000 shares authorized, 62,234,028 issued and 59,362,134 outstanding at June 30, 2023 and 61,691,054 issued and 58,819,160 outstanding at June 30, 2022. |
|
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
|
381,689 |
|
|
|
376,099 |
|
Treasury stock, at cost: 2,871,894 shares held at June 30, 2023 and June 30, 2022, respectively. |
|
|
(26,034 |
) |
|
|
(26,034 |
) |
Accumulated deficit |
|
|
(182,308 |
) |
|
|
(1,092 |
) |
Total Vintage Wine Estates, Inc. stockholders' equity |
|
|
173,347 |
|
|
|
348,973 |
|
Noncontrolling interests |
|
|
(831 |
) |
|
|
(735 |
) |
Total stockholders' equity |
|
|
172,516 |
|
|
|
348,238 |
|
Total liabilities, redeemable noncontrolling interest, and stockholders' equity |
|
$ |
561,154 |
|
|
$ |
765,467 |
|
Vintage Wine Estates, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Year Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Wine, spirits and cider |
|
$ |
42,109 |
|
|
$ |
50,379 |
|
|
$ |
189,361 |
|
|
$ |
208,019 |
|
Nonwine |
|
|
19,987 |
|
|
|
23,877 |
|
|
|
93,867 |
|
|
|
84,816 |
|
|
|
|
62,096 |
|
|
|
74,256 |
|
|
|
283,228 |
|
|
|
292,835 |
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Wine, spirits and cider |
|
|
30,792 |
|
|
|
44,227 |
|
|
|
138,043 |
|
|
|
150,834 |
|
Nonwine |
|
|
14,680 |
|
|
|
22,493 |
|
|
|
60,009 |
|
|
|
53,088 |
|
|
|
|
45,472 |
|
|
|
66,720 |
|
|
|
198,052 |
|
|
|
203,922 |
|
Gross profit |
|
|
16,624 |
|
|
|
7,536 |
|
|
|
85,176 |
|
|
|
88,913 |
|
Selling, general, and administrative expenses |
|
|
28,337 |
|
|
|
31,296 |
|
|
|
118,431 |
|
|
|
96,978 |
|
Amortization expense |
|
|
1,828 |
|
|
|
2,010 |
|
|
|
7,257 |
|
|
|
5,948 |
|
Goodwill impairment losses |
|
|
20,673 |
|
|
|
- |
|
|
|
145,958 |
|
|
|
- |
|
Intangible impairment losses |
|
|
3,553 |
|
|
|
1,281 |
|
|
|
16,196 |
|
|
|
1,281 |
|
Gain on remeasurement of contingent liability |
|
|
3,430 |
|
|
|
(3,570 |
) |
|
|
141 |
|
|
|
(3,415 |
) |
Gain on insurance and litigation proceeds |
|
|
(876 |
) |
|
|
(3,000 |
) |
|
|
(2,290 |
) |
|
|
(3,000 |
) |
Loss (gain) on sale leaseback |
|
|
- |
|
|
|
(334 |
) |
|
|
- |
|
|
|
(1,334 |
) |
Loss (gain) on sale of assets |
|
|
9,846 |
|
|
|
(22 |
) |
|
|
8,300 |
|
|
|
366 |
|
Loss from operations |
|
|
(50,167 |
) |
|
|
(20,125 |
) |
|
|
(208,817 |
) |
|
|
(7,911 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5,085 |
) |
|
|
(3,085 |
) |
|
|
(18,407 |
) |
|
|
(13,910 |
) |
Net gain on interest rate swap agreements |
|
|
1,451 |
|
|
|
3,103 |
|
|
|
6,343 |
|
|
|
22,578 |
|
Loss on modification or extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
(479 |
) |
|
|
- |
|
Other, net |
|
|
(555 |
) |
|
|
(2,681 |
) |
|
|
(229 |
) |
|
|
(736 |
) |
Total other (expense) income, net |
|
|
(4,189 |
) |
|
|
(2,663 |
) |
|
|
(12,772 |
) |
|
|
7,932 |
|
(Loss) income before provision for income taxes |
|
|
(54,356 |
) |
|
|
(22,788 |
) |
|
|
(221,589 |
) |
|
|
21 |
|
Income tax (benefit) provision |
|
|
(6,480 |
) |
|
|
(5,673 |
) |
|
|
(31,360 |
) |
|
|
723 |
|
Net loss |
|
|
(47,876 |
) |
|
|
(17,115 |
) |
|
|
(190,229 |
) |
|
|
(702 |
) |
Net loss attributable to the noncontrolling interests |
|
|
(27 |
) |
|
|
(203 |
) |
|
|
(1,262 |
) |
|
|
(277 |
) |
Net loss attributable to common stockholders |
|
$ |
(47,849 |
) |
|
$ |
(16,912 |
) |
|
$ |
(188,967 |
) |
|
$ |
(425 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share allocable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.81 |
) |
|
$ |
(0.28 |
) |
|
$ |
(3.20 |
) |
|
$ |
(0.01 |
) |
Diluted |
|
$ |
(0.81 |
) |
|
$ |
(0.28 |
) |
|
$ |
(3.20 |
) |
|
$ |
(0.01 |
) |
Weighted average shares used in the calculation of earnings per share allocable to common stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
59,340,325 |
|
|
|
60,374,289 |
|
|
|
59,096,045 |
|
|
|
60,673,789 |
|
Diluted |
|
|
59,340,325 |
|
|
|
60,374,289 |
|
|
|
59,096,045 |
|
|
|
60,673,789 |
|
Vintage Wine Estates, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
Cash flows from operating activities |
|
|
|
|
|
|
Net loss |
|
$ |
(190,229 |
) |
|
$ |
(702 |
) |
Adjustments to reconcile net loss to net cash from operating activities: |
|
|
|
|
|
|
Depreciation expense |
|
|
15,926 |
|
|
|
15,248 |
|
Amortization expense |
|
|
8,702 |
|
|
|
6,343 |
|
Loss on goodwill and intangible assets impairment |
|
|
162,154 |
|
|
|
1,281 |
|
Stock-based compensation expense |
|
|
6,737 |
|
|
|
5,116 |
|
Provision for credit losses |
|
|
369 |
|
|
|
(294 |
) |
Provision for inventory reserves |
|
|
10,828 |
|
|
|
3,667 |
|
Inventory write-down |
|
|
- |
|
|
|
15,433 |
|
Remeasurement of contingent consideration liabilities |
|
|
141 |
|
|
|
(3,415 |
) |
Net gain on interest rate swap agreements |
|
|
(6,343 |
) |
|
|
(22,578 |
) |
Provision for deferred income tax |
|
|
(31,734 |
) |
|
|
643 |
|
Loss on sale of assets |
|
|
8,300 |
|
|
|
366 |
|
Deferred gain on sale leaseback |
|
|
- |
|
|
|
(1,334 |
) |
Loss on modification or extinguishment of debt |
|
|
479 |
|
|
|
- |
|
Deferred rent |
|
|
- |
|
|
|
375 |
|
Change in operating assets and liabilities (net of effect of business combinations): |
|
|
|
|
|
|
Accounts receivable |
|
|
12,939 |
|
|
|
(12,588 |
) |
Other receivables |
|
|
3,459 |
|
|
|
3,624 |
|
Inventories |
|
|
(17,569 |
) |
|
|
18,462 |
|
Prepaid expenses and other current assets |
|
|
(3,031 |
) |
|
|
(3,127 |
) |
Other assets |
|
|
1,565 |
|
|
|
(2,607 |
) |
Accounts payable |
|
|
5,264 |
|
|
|
(7,535 |
) |
Accrued liabilities and other payables |
|
|
5,637 |
|
|
|
297 |
|
Net change in lease assets and liabilities |
|
|
(2,005 |
) |
|
|
- |
|
Other |
|
|
- |
|
|
|
(836 |
) |
Net cash (used in) provided by operating activities |
|
|
(8,411 |
) |
|
|
15,839 |
|
Cash flows from investing activities |
|
|
|
|
|
|
Proceeds from sale of assets |
|
|
20,078 |
|
|
|
153 |
|
Purchases of property, plant and equipment |
|
|
(14,204 |
) |
|
|
(24,835 |
) |
Acquisition of businesses |
|
|
- |
|
|
|
(73,680 |
) |
Net cash provided by (used in) investing activities |
|
|
5,874 |
|
|
|
(98,362 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
Principal payments on line of credit |
|
|
(136,358 |
) |
|
|
(144,706 |
) |
Proceeds from line of credit |
|
|
112,878 |
|
|
|
201,570 |
|
Financing costs incurred |
|
|
(2,710 |
) |
|
|
- |
|
Change in outstanding checks in excess of cash |
|
|
1,676 |
|
|
|
1,025 |
|
Principal payments on long-term debt |
|
|
(76,903 |
) |
|
|
(22,763 |
) |
Proceeds from debt |
|
|
74,635 |
|
|
|
- |
|
Principal payments on finance leases |
|
|
(257 |
) |
|
|
- |
|
Payments of minimum tax withholdings on stock-based payment awards |
|
|
(990 |
) |
|
|
- |
|
Distributions to noncontrolling interest |
|
|
(66 |
) |
|
|
- |
|
Repurchase of common stock |
|
|
- |
|
|
|
(26,034 |
) |
Repurchase of public warrants |
|
|
(172 |
) |
|
|
(270 |
) |
Payments on acquisition payable |
|
|
(521 |
) |
|
|
(420 |
) |
Net cash (used in) provided by financing activities |
|
|
(28,788 |
) |
|
|
8,402 |
|
Net change in cash, cash equivalents and restricted cash |
|
|
(31,325 |
) |
|
|
(74,121 |
) |
Cash, cash equivalents and restricted cash, beginning of year |
|
|
49,558 |
|
|
|
123,679 |
|
Cash, cash equivalents and restricted cash, end of year |
|
$ |
18,233 |
|
|
$ |
49,558 |
|
Vintage Wine Estates, Inc.
Fiscal 2023 and Fiscal 2022 Segment Data
Revenue
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2023 |
Three months ended |
|
|
Year ended |
|
Net Revenue |
September 30, 2022 |
|
|
December 31, 2022 |
|
|
March 31, 2023 |
|
|
June 30, 2023 |
|
|
June 30, 2023 |
|
Wholesale |
$ |
23,987 |
|
|
$ |
23,083 |
|
|
$ |
20,811 |
|
|
$ |
18,837 |
|
|
$ |
86,718 |
|
Direct to Consumer |
|
19,992 |
|
|
|
26,472 |
|
|
|
17,008 |
|
|
|
19,897 |
|
|
|
83,369 |
|
Business to Business |
|
34,180 |
|
|
|
28,814 |
|
|
|
26,831 |
|
|
|
23,358 |
|
|
|
113,183 |
|
Other/ Non-Allocable |
|
(79 |
) |
|
|
32 |
|
|
|
1 |
|
|
|
4 |
|
|
|
(42 |
) |
Total |
$ |
78,080 |
|
|
$ |
78,401 |
|
|
$ |
64,651 |
|
|
$ |
62,096 |
|
|
$ |
283,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2022 |
Three months ended |
|
|
Year ended |
|
Net Revenue |
September 30, 2021 |
|
|
December 31, 2021 |
|
|
March 31, 2022 |
|
|
June 30, 2022 |
|
|
June 30, 2022 |
|
Wholesale |
$ |
16,203 |
|
|
$ |
22,171 |
|
|
$ |
24,549 |
|
|
$ |
20,990 |
|
|
$ |
83,913 |
|
Direct to Consumer |
|
15,263 |
|
|
|
34,806 |
|
|
|
19,595 |
|
|
|
22,537 |
|
|
|
92,201 |
|
Business to Business |
|
24,467 |
|
|
|
25,225 |
|
|
|
33,657 |
|
|
|
30,486 |
|
|
|
113,835 |
|
Other/ Non-Allocable |
|
102 |
|
|
|
1,409 |
|
|
|
1,132 |
|
|
|
243 |
|
|
|
2,886 |
|
Total |
$ |
56,035 |
|
|
$ |
83,611 |
|
|
$ |
78,933 |
|
|
$ |
74,256 |
|
|
$ |
292,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year $ Change |
|
|
Three months ended |
|
|
Year ended |
|
Net Revenue |
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
June 30 |
|
Wholesale |
|
7,784 |
|
|
|
912 |
|
|
|
(3,738 |
) |
|
|
(2,153 |
) |
|
|
2,805 |
|
Direct to Consumer |
|
4,729 |
|
|
|
(8,334 |
) |
|
|
(2,587 |
) |
|
|
(2,640 |
) |
|
|
(8,832 |
) |
Business to Business |
|
9,713 |
|
|
|
3,589 |
|
|
|
(6,826 |
) |
|
|
(7,128 |
) |
|
|
(652 |
) |
Other/ Non-Allocable |
|
(181 |
) |
|
|
(1,377 |
) |
|
|
(1,131 |
) |
|
|
(239 |
) |
|
|
(2,928 |
) |
Total |
$ |
22,045 |
|
|
$ |
(5,210 |
) |
|
$ |
(14,282 |
) |
|
$ |
(12,160 |
) |
|
$ |
(9,607 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year % Change |
|
|
Three months ended |
|
|
Year ended |
|
Net Revenue |
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
June 30 |
|
Wholesale |
|
48.0 |
% |
|
|
4.1 |
% |
|
|
-15.2 |
% |
|
|
-10.3 |
% |
|
|
3.3 |
% |
Direct to Consumer |
|
31.0 |
% |
|
|
-23.9 |
% |
|
|
-13.2 |
% |
|
|
-11.7 |
% |
|
|
-9.6 |
% |
Business to Business |
|
39.7 |
% |
|
|
14.2 |
% |
|
|
-20.3 |
% |
|
|
-23.4 |
% |
|
|
-0.6 |
% |
Other/ Non-Allocable |
|
(177.5 |
%) |
|
|
(97.7 |
%) |
|
|
(99.9 |
%) |
|
|
(98.4 |
%) |
|
|
(101.5 |
%) |
Total |
|
39.3 |
% |
|
|
-6.2 |
% |
|
|
-18.1 |
% |
|
|
-16.4 |
% |
|
|
-3.3 |
% |
Vintage Wine Estates, Inc.
Fiscal 2023 and Fiscal 2022 Segment Data
Operating Income
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2023 |
Three months ended |
|
|
Year ended |
|
Operating Income (Loss) |
September 30, 2022 |
|
|
December 31, 2022 |
|
|
March 31, 2023 |
|
|
June 30, 2023 |
|
|
June 30, 2023 |
|
Wholesale |
$ |
2,288 |
|
|
$ |
(126,896 |
) |
|
$ |
(1,573 |
) |
|
$ |
(4,294 |
) |
|
$ |
(130,475 |
) |
Direct to Consumer |
|
1,969 |
|
|
|
1,424 |
|
|
|
(2,905 |
) |
|
|
(18,774 |
) |
|
|
(18,286 |
) |
Business to Business |
|
10,533 |
|
|
|
(1,167 |
) |
|
|
2,406 |
|
|
|
512 |
|
|
|
12,284 |
|
Other/ Non-Allocable |
|
(18,175 |
) |
|
|
(20,443 |
) |
|
|
(6,110 |
) |
|
|
(27,612 |
) |
|
|
(72,340 |
) |
Total |
$ |
(3,385 |
) |
|
$ |
(147,082 |
) |
|
$ |
(8,182 |
) |
|
$ |
(50,168 |
) |
|
$ |
(208,817 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2022 |
Three months ended |
|
|
Year ended |
|
Operating Income (Loss) |
September 30, 2021 |
|
|
December 31, 2021 |
|
|
March 31, 2022 |
|
|
June 30, 2022 |
|
|
June 30, 2022 |
|
Wholesale |
$ |
3,042 |
|
|
$ |
4,204 |
|
|
$ |
3,256 |
|
|
$ |
(7,471 |
) |
|
$ |
3,031 |
|
Direct to Consumer |
|
2,031 |
|
|
|
10,523 |
|
|
|
1,014 |
|
|
|
2,427 |
|
|
|
15,995 |
|
Business to Business |
|
6,229 |
|
|
|
7,255 |
|
|
|
10,016 |
|
|
|
(5,749 |
) |
|
|
17,751 |
|
Other/ Non-Allocable |
|
(8,093 |
) |
|
|
(12,525 |
) |
|
|
(14,738 |
) |
|
|
(9,332 |
) |
|
|
(44,688 |
) |
Total |
$ |
3,209 |
|
|
$ |
9,457 |
|
|
$ |
(452 |
) |
|
$ |
(20,125 |
) |
|
$ |
(7,911 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year $ Change |
|
|
Three months ended |
|
|
Year ended |
|
Operating Income (Loss) |
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
June 30 |
|
Wholesale |
|
(754 |
) |
|
|
(131,100 |
) |
|
|
(4,829 |
) |
|
|
3,177 |
|
|
|
(133,506 |
) |
Direct to Consumer |
|
(62 |
) |
|
|
(9,099 |
) |
|
|
(3,919 |
) |
|
|
(21,201 |
) |
|
|
(34,281 |
) |
Business to Business |
|
4,304 |
|
|
|
(8,422 |
) |
|
|
(7,610 |
) |
|
|
6,261 |
|
|
|
(5,467 |
) |
Other/ Non-Allocable |
|
(10,082 |
) |
|
|
(7,918 |
) |
|
|
8,628 |
|
|
|
(18,280 |
) |
|
|
(27,652 |
) |
Total |
$ |
(6,594 |
) |
|
$ |
(156,539 |
) |
|
$ |
(7,730 |
) |
|
$ |
(30,043 |
) |
|
$ |
(200,906 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year % Change |
|
|
Three months ended |
|
|
Year ended |
|
Operating Income (Loss) |
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
June 30 |
|
Wholesale |
|
-24.8 |
% |
|
|
-3118.5 |
% |
|
|
-148.3 |
% |
|
|
-42.5 |
% |
|
|
-4404.7 |
% |
Direct to Consumer |
|
-3.1 |
% |
|
|
-86.5 |
% |
|
|
-386.5 |
% |
|
|
-873.5 |
% |
|
|
-214.3 |
% |
Business to Business |
|
69.1 |
% |
|
|
-116.1 |
% |
|
|
-76.0 |
% |
|
|
-108.9 |
% |
|
|
-30.8 |
% |
Other/ Non-Allocable |
|
124.6 |
% |
|
|
63.2 |
% |
|
|
-58.5 |
% |
|
|
195.9 |
% |
|
|
61.9 |
% |
Total |
|
-205.5 |
% |
|
|
-1655.3 |
% |
|
|
1710.2 |
% |
|
|
149.3 |
% |
|
|
2539.6 |
% |
Vintage Wine Estates, Inc.
Fiscal 2023 and Fiscal 2022 Segment Data
Case Volume1
(case volume in thousands)
The following table summarizes 9-liter equivalent cases sold by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2023 |
|
Three Months Ended |
|
|
Year Ended |
|
|
|
September 30, 2022 |
|
|
December 31, 2022 |
|
|
March 31, 2023 |
|
|
June 30, 2023 |
|
|
June 30, 2023 |
|
Wholesale |
|
|
539 |
|
|
|
453 |
|
|
|
433 |
|
|
|
472 |
|
|
|
1,897 |
|
Business to Business |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
Direct to Consumer |
|
|
99 |
|
|
|
125 |
|
|
|
67 |
|
|
|
70 |
|
|
|
361 |
|
Total case volume |
|
|
638 |
|
|
|
578 |
|
|
|
500 |
|
|
|
542 |
|
|
|
2,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year 2022 |
|
Three Months Ended |
|
|
Year Ended |
|
|
|
September 30, 2021 |
|
|
December 31, 2021 |
|
|
March 31, 2022 |
|
|
June 30, 2022 |
|
|
June 30, 2022 |
|
Wholesale |
|
|
209 |
|
|
|
379 |
|
|
|
484 |
|
|
|
489 |
|
|
|
1,561 |
|
Business to Business |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
Direct to Consumer |
|
|
60 |
|
|
|
160 |
|
|
|
87 |
|
|
|
101 |
|
|
|
408 |
|
Total case volume |
|
|
269 |
|
|
|
539 |
|
|
|
571 |
|
|
|
590 |
|
|
|
1,969 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year Unit Change |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
June 30 |
|
Wholesale |
|
|
330 |
|
|
|
74 |
|
|
|
(51 |
) |
|
|
(17 |
) |
|
|
336 |
|
Business to Business |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
Direct to Consumer |
|
|
39 |
|
|
|
(35 |
) |
|
|
(20 |
) |
|
|
(31 |
) |
|
|
(47 |
) |
Total case volume |
|
|
369 |
|
|
|
39 |
|
|
|
-71 |
|
|
|
-48 |
|
|
|
289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-Over-Year % Change |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
June 30 |
|
Wholesale |
|
|
157.9 |
% |
|
|
19.5 |
% |
|
|
-10.5 |
% |
|
|
-3.5 |
% |
|
|
21.5 |
% |
Business to Business |
|
* |
|
|
* |
|
|
* |
|
|
* |
|
|
* |
|
Direct to Consumer |
|
|
65.0 |
% |
|
|
-21.9 |
% |
|
|
-23.0 |
% |
|
|
-30.7 |
% |
|
|
-11.5 |
% |
Total case volume |
|
|
137.2 |
% |
|
|
7.2 |
% |
|
|
(12.4 |
%) |
|
|
(8.1 |
%) |
|
|
14.7 |
% |
*B2B segment sales are primarily not related to case volumes, therefore the Company has elected to not report case volumes for this segment as it would not be indicative of the underlying performance of the business.
Vintage Wine Estates, Inc.
Reconciliation of Net Loss to Adjusted EBITDA
and Net Loss to Adjusted EBITDA Margin
(Unaudited, in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
(in thousands) |
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
Net loss |
$ |
(47,876 |
) |
|
$ |
(17,115 |
) |
|
$ |
(190,229 |
) |
|
$ |
(702 |
) |
Interest expense |
|
5,085 |
|
|
|
3,085 |
|
|
|
18,407 |
|
|
|
13,910 |
|
Income tax (benefit) provision |
|
(6,480 |
) |
|
|
(5,673 |
) |
|
|
(31,360 |
) |
|
|
723 |
|
Depreciation expense |
|
4,127 |
|
|
|
5,864 |
|
|
|
15,926 |
|
|
|
15,248 |
|
Amortization expense |
|
1,828 |
|
|
|
2,010 |
|
|
|
7,257 |
|
|
|
5,948 |
|
Gain on insurance and litigation proceeds |
|
(876 |
) |
|
|
(3,000 |
) |
|
|
(2,290 |
) |
|
|
(3,000 |
) |
Stock-based compensation expense |
|
1,071 |
|
|
|
3,722 |
|
|
|
6,737 |
|
|
|
5,116 |
|
Goodwill and Intangibles Impairment |
|
24,226 |
|
|
|
1,281 |
|
|
|
162,154 |
|
|
|
1,281 |
|
Net gain on interest rate swap agreements |
|
(1,451 |
) |
|
|
(3,103 |
) |
|
|
(6,343 |
) |
|
|
(22,578 |
) |
(Gain)/loss on disposition of assets |
|
9,846 |
|
|
|
(22 |
) |
|
|
8,300 |
|
|
|
366 |
|
Adjusted EBITDA |
$ |
(10,500 |
) |
|
$ |
(12,951 |
) |
|
$ |
(11,441 |
) |
|
$ |
16,312 |
|
Net revenue |
$ |
62,096 |
|
|
$ |
74,256 |
|
|
$ |
283,228 |
|
|
$ |
292,835 |
|
Net loss margin |
|
-77.1 |
% |
|
|
-23.0 |
% |
|
|
-67.2 |
% |
|
|
-0.2 |
% |
Adjusted EBITDA margin |
|
-16.9 |
% |
|
|
-17.4 |
% |
|
|
-4.0 |
% |
|
|
5.6 |
% |
Reconciliation of Net Loss to Adjusted Net Loss
and Net Loss per Share to Adjusted Net Loss per Share
(Unaudited, in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
Net loss |
$ |
(47,876 |
) |
|
$ |
(17,115 |
) |
|
$ |
(190,229 |
) |
|
$ |
(702 |
) |
Amortization expense |
|
1,828 |
|
|
|
2,010 |
|
|
|
7,257 |
|
|
|
5,948 |
|
Gain on insurance and litigation proceeds |
|
(876 |
) |
|
|
(3,000 |
) |
|
|
(2,290 |
) |
|
|
(3,000 |
) |
Loss on goodwill and intangible assets impairment |
|
24,226 |
|
|
|
1,281 |
|
|
|
162,154 |
|
|
|
1,281 |
|
Net gain on interest rate swap agreements |
|
(1,451 |
) |
|
|
(3,103 |
) |
|
|
(6,343 |
) |
|
|
(22,578 |
) |
(Gain)/loss on sale of assets |
|
9,846 |
|
|
|
(22 |
) |
|
|
8,300 |
|
|
|
366 |
|
Non-GAAP adjusted net loss |
$ |
(14,303 |
) |
|
$ |
(19,949 |
) |
|
$ |
(21,151 |
) |
|
$ |
(18,685 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share |
|
(0.81 |
) |
|
|
(0.28 |
) |
|
|
(3.22 |
) |
|
|
(0.01 |
) |
Non-GAAP adjusted net loss per share |
|
(0.24 |
) |
|
|
(0.33 |
) |
|
|
(0.36 |
) |
|
|
(0.31 |
) |
Exhibit 99.2
News Release
937 Tahoe Boulevard, Suite 210 | Incline Village, NV 89451
For Immediate Release
Vintage Wine Estates Announces Amended Credit Agreement
•Terms and covenants support execution of Five-Point Plan and transition year fiscal 2024
•Expected to provide sufficient liquidity to support fiscal 2024 plans as Company advances to positive cash generation from operations
INCLINE VILLAGE, NV, October 12, 2023 - 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-consumer platform, today announced it has amended its credit agreement (the “Amended Credit Agreement”) to, among other things, waive existing events of default, redefine financial covenants and allow for additional asset sales.
Kristina L. Johnston, Chief Financial Officer of VWE, commented, “We are pleased our lenders have worked with us to execute a credit agreement that we believe provides us financial and operational flexibility to continue to execute on our Five-Point Plan. We are becoming a more efficient and productive wine company with stronger cash generation from operations. We are simplifying the business, improving inventory management and quality while focusing sales and marketing on our key brands. We also look forward to advancing our strategy under new leadership with Seth Kaufman assuming the role of CEO on October 30, 2023.” As of closing, the Company had approximately $305 million in outstanding borrowings under the Amended Credit Agreement and approximate total liquidity of approximately $73 million including approximately $18 million of cash.
In exchange for the waiver of defaults and financial covenant modifications, the Amended Credit Agreement, among other things, reduces the aggregate revolving commitment and the aggregate delayed draw term loan commitment to $200 million and $38.1 million respectively, requires term loan prepayments of $10 million by March 31, 2024, an additional $10 million by June 30, 2024 and an additional $25 million by December 31, 2024. In addition, the Company will be required to make prepayments with any cash on hand in excess of $20 million and suspends the exercise of any incremental facilities through December 31, 2024. The rates under the Amended Credit Agreement are initially SOFR plus 3%. The Company has filed a Form 8-K with additional details regarding the Amended Credit Agreement and its revised terms.
BMO Bank N.A. acts as administrative agent under the Amended Credit Agreement.
About Vintage Wine Estates, Inc.
Vintage Wine Estates is a family of wineries and wines whose singular focus is producing the best 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 2.2 million nine-liter equivalent cases annually. With approximately
40 brands, key focus brands include ACE Cider, Bar Dog, B.R. Cohn, Cameron Hughes, Cherry Pie, Firesteed, and Kunde, many of which have achieved critical acclaim. 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 private label and custom wine making services. While VWE is diverse across price points and varietals with 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 ir.vintagewineestates.com.
-MORE-
Vintage Wine Estates Announces Amended Credit Agreement
October 13, 2023
Page 2 of 3
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 “continue,” “intend,” “plan,” “becoming,” “simplifying,” “improving,” “focusing,” “advancing,” “requires,” “provides,” or other similar expressions that indicate future events or trends. These forward-looking statements include, but are not limited to, statements regarding the anticipated benefits of the Amended Credit Agreement, expected results from the implementation of the Company’s Five-Point Plan; and the expected timing and results of Seth Kaufman’s start as President and CEO. 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: risk that the Amended Credit Agreement does not provide the anticipated financial and operational flexibility, if at all; risks that the Company is unable to meet the additional restrictions and obligations imposed by the Amended Credit Agreement; the Company’s ability to recognize benefits from any organization restructuring and other cost savings actions, including expected results from the implementation of the Company’s Five-Point Plan and positive cash generation; the risk that Seth Kaufman does not start as President and CEO in the expected the time frame, or at all; the Company’s ability to regain compliance with the Nasdaq Listing Standards and maintain the listing of its securities on Nasdaq; risks related to ongoing legal proceedings; the Company’s limited experience operating as a public company and its ability to remediate its material weakness in internal control over financial reporting and to maintain effective internal control over financial reporting; 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 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; 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.
Vintage Wine Estates Announces Amended Credit Agreement
October 13, 2023
Page 2 of 3
Contacts:
|
|
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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