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 provided an
update on its simplification and cost reduction activities,
progress on productivity improvements, preliminary fiscal 2023
results and fiscal 2024 expectations.
Jon Moramarco, Interim CEO, commented, “In the latter half of
fiscal 2023, we shifted our strategy to benefit from our solid
foundation built over 20 years, capitalize on our valuable asset
base, focus on our key powerful brands, and leverage our strong and
experienced team. We initiated our Five-Point Plan that we believe
will enable us to drive stronger earnings power, reinforce a
sustainable foundation for future growth and continue our position
as a leading vintner with a strong portfolio of affordable luxury
brands. We have made excellent progress with this plan by
simplifying the business and taking out costs. We are driving
better productivity in our bottling and canning facilities to
improve gross margin. Through our identified actions, we expect to
reduce annualized SG&A by more than 15%. The savings are from a
combination of personnel savings, improvement of freight lanes,
elimination of certain professional fees and more focused
advertising spend.”
He added, “Fiscal 2024 will be a year of transition and while we
expect revenue to decline, we plan for margins to measurably
improve. We believe our strategy will enable the Company to better
scale and grow beyond fiscal 2024. Importantly, Seth Kaufman has
agreed to join us as President & CEO to drive that potential.”
Separately today, the Company announced that Mr. Kaufman will be
joining VWE not later than October 30, 2023, from LVMH.
Five-Point Plan to Drive Improvements
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.
In the last six months, VWE has eliminated over 50% of SKUs to
2,000 and has begun to streamline internal shipping lanes and
warehouse operations to reduce costs and improve productivity and
safety. In addition, the Company has expanded bottling output by
over 40% year-over-year. Of note, VWE has raised prices on several
brands, improved pricing in tasting rooms and increased shipping
costs.
As part of its restructuring plan, the Company has reduced its
personnel headcount by approximately 4% in addition to the
reductions made in March 2023, for expected total annualized
savings of approximately $6 million. Restructuring costs are
expected to be approximately $6 million to $7 million, with the
majority of the expense to occur in the first quarter of fiscal
2024.
In conjunction with the restructuring, President Terry Wheatley
tendered her resignation, effective July 19, 2023. Ms. Wheatley
commented, “VWE has a very bright future and I believe the actions
being taken now will help to deliver greater value. I am confident
our people, brands, distributors and customers are in very good
hands. I will enjoy watching the progress unfold.”
Other efforts by the Company to simplify the business were the
sale of The Sommelier Company and sale of the Tamarack building.
Additional actions driving margin improvement included the
discontinuation of a less profitable customer program, realignment
of brand management and improved warehouse footprint for greater
efficiencies.
Cash management is focused on supply chain efficiencies and
improved inventory management. Kristina Johnston, Chief Financial
Officer, noted, “Ongoing conversations with our lenders continue to
advance, and we expect a revised agreement with our lenders prior
to reporting our fiscal year end results in September. The amended
agreement should provide us the opportunity to execute on our
Five-Point Plan, improve margins and cash generation and
successfully progress through this transition year.”
Preliminary Unaudited Fiscal 2023 Results and Fiscal
2024 Preliminary Expectations
Preliminary unaudited financial results for fiscal 2023 are
estimated to be as follows:
Preliminary unaudited revenue: |
|
Approximately $290 million |
Gross margin: |
|
30% to 32% |
SG&A: |
|
$118 million to $122
million |
Non-cash amortization expense |
|
$7 million to $7.5
million |
VWE preliminary expectations for fiscal 2024 based on execution
of the restructuring and Five-Point Plan are as follows:
Revenue: |
|
Approximately $250 million to $270 million |
Gross margin: |
|
37% to 39%, or an estimated
700 basis point improvement on lower volume |
SG&A: |
|
$95 million to $105 million,
an estimated 16.5% improvement at mid-point of range |
Non-cash amortization expense: |
|
Approximately $6 million to $7
million |
Estimated restructuring charges: |
|
$6 million to 7 million |
Lower expected revenue in fiscal 2024 primarily reflects
approximately $33 million related to the depletion of aged bulk
whiskey inventory, $6 million related to the discontinued bottled
spirits program and an estimated $9 million SKU rationalization.
These declines are being somewhat offset by improved pricing and
higher volume in select brands. For fiscal 2024,
SG&A excludes executive stock-based compensation awards
expected with new leadership.
Teleconference and WebcastThe Company will host
a teleconference and webcast today at 4:45 pm ET/1:45 pm PT. The
call can be accessed by dialing +1.201.689.8562. Alternatively, the
live webcast is available at ir.vintagewineestates.com. An audio
replay of the call will be available from approximately 8:45 p.m.
ET / 5:45 p.m. PT on the day of the call through Thursday, July 27,
2023. To listen to the audio replay, dial +1.412.317.6671 and enter
the conference ID number 13740114. The webcast replay will be
available at ir.vintagewineestates.com, where a transcript will
also be posted once available.
About Vintage Wine EstatesVintage 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 two million nine-liter equivalent cases annually.
To consistently drive growth, the Company curates, creates,
stewards, and markets its many brands and services to customers and
end consumers via a balanced omni-channel strategy encompassing
direct-to-consumer, wholesale, and exclusive brands arrangements
with national retailers. While VWE is diverse across price points
and varietals with over 60 brands ranging from $10 to $150 USD at
retail, its primary focus is on the fastest growing luxury segment
of the U.S. wine industry with the majority of brands selling in
the range of $10 to $20 per bottle. The Company regularly posts
updates and additional information at vintagewineestates.com.
Forward-Looking StatementsSome 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
“believe,” “estimate,” “expect,” “may,” “ongoing,” “plan,”
“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 preliminary unaudited
fiscal 2023 results, 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, the appointment of Seth Kaufman as President and CEO,
the conversations with the Company’s lenders, and the expectations
and timing of an amendment to the agreement with the Company’s
lenders. These statements are based on various assumptions, whether
or not identified in this news release, and on the current
expectations of VWE’s management. These forward-looking statements
are not intended to serve as, and should not be relied on by any
investor as, a guarantee of actual performance or an assurance or
definitive statement of fact or probability. Actual events and
circumstances are difficult or impossible to predict and may differ
materially from those contained in or implied by such
forward-looking statements. These forward-looking statements are
subject to a number of risks and uncertainties, many of which are
beyond the control of VWE. Factors that could cause actual results
to differ materially from the results expressed or implied by such
forward-looking statements include, among others: the Company’s
limited experience operating as a public company and its ability to
remediate its material 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.
Contacts:InvestorsDeborah K.
Pawlowski Kei Advisors LLCdpawlowski@keiadvisors.comPhone:
716.843.3908 |
MediaMary Ann
Vangrinmvangrin@vintagewineestates.com |
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