Press Release: Vintage Wine Estates Executes on Strategy for Fiscal 2021 with Revenue Growth of 16% to $221 million

Vintage Wine Estates Executes on Strategy for Fiscal 2021 with Revenue Growth of 16% to $221 million

-- Delivered on growth plans: -- Completed two accretive, synergistic acquisitions since going public -- Generated strong growth in its direct-to-customer and business-to-business market channels demonstrating value of multi-channel marketing platform -- Expanding bottling capacity nearly 100% to over 13.5 million cases per year -- Exceeded fiscal year revenue target with $4.1 million in net income while exceeding proforma adjusted EBITDA1 target -- Shipped 1.9 million cases in the fastest growing premium and luxury segments -- Reiterated fiscal year 2022 guidance of over 35% pro forma adjusted EBITDA2 growth -- Public listing provided financial strength to execute growth plans with $234 million of liquidity at fiscal year end -- Robust acquisition pipeline expected to accelerate rate of adding more brands, deepening omni channel presence and creating operating leverage

SANTA ROSA, Calif., Sept. 28, 2021 (GLOBE NEWSWIRE) -- Vintage Wine Estates, Inc. (NASDAQ: VWE) (TSX: VWE.U) (TSX: VWE.WT.U) ("VWE" or the "Company"), one of the fastest-growing wine producers in the U.S. with an industry leading direct-to-customer platform, today reported its financial results for its fourth quarter and fiscal year ended June 30, 2021 ("fiscal 2021"). Results include the additions of Kunde Family Winery ("Kunde") acquired on April 19, 2021, and The Sommelier Company ("TSC") acquired on June 22, 2021.

Pat Roney, Founder and Chief Executive Officer, commented, "These have been exciting times for Vintage Wine Estates. We completed the transaction to become a public company and our common stock began trading on the Nasdaq and TSX on June 8, 2021. With this transaction, we added capital to enable us to accelerate consolidation of the fragmented premium brand wine market in the U.S. We believe we clearly demonstrated our ability to execute on our strategy to grow both organically and through acquisitions with our first fiscal year results as a public company. VWE's key growth drivers are the combination of our omni-channel strategy and acquisition capabilities, which have enabled us to deliver strong, above market growth in revenue and EBITDA. We believe our strategy drives growth, improves profitability and ultimately generates strong cash flow that enables reinvestment for continued expansion."

He added, "Since becoming a public company has temporarily strained our resources, we are building out our team, outsourcing where needed and implementing processes to improve our capabilities. I believe we are addressing these challenges full on and are entering fiscal 2022 in a strong position to continue to execute on our growth and achieve our vision to be one of the fastest growing vintners in the U.S. offering a broad collection of wines, serving our customers' lifestyles and interests, all while maintaining a humble and entrepreneurial spirit."

(_______1) Proforma adjusted EBITDA is a non-GAAP measure. Please see related disclosures regarding the use of non-GAAP measures in this news release.

(2) Expected proforma adjusted EBTIDA is a forward-looking non-GAAP measure. Please see related disclosures regarding the infeasibility of reconciling forward-looking non-GAAP measures.

Fiscal 2021 Financial Results Review

Revenue and Volume (See additional segment data in the attached tables)

Fiscal 2021 net revenue of $220.7 million was up $30.8 million, or 16.2%, over the prior fiscal year driven by volume growth and improved mix across segments. Acquisitions contributed $2.3 million in net revenue for the year.

VWE 9L Equivalent Case Sales by Segment --------------------- Year ended June 30, ---------------------
(in thousands) 2021 2020 Unit Change % Change -------------- ----- ----------- ---------- Wholesale 969 1,037 -68 -6.6% B2B 558 411 147 35.8% DTC 348 274 74 27.0% Total case volume 1,875 1,722 153 8.9%
---------------- -------------- ----- ----------- ------

Case volume was up 9% for the fiscal year, driven by volume increases in the Business-to-Business ("B2B") and Direct-to-Customer ("DTC") segments. Although volume was 6.6% lower in Wholesale, revenue was down just 3.3% as a result of improved mix and the Kunde acquisition. B2B volume grew 35.8% for the year while revenue increased 43.3%, reflecting the Company's expanded relationships in private label and custom wine production. DTC volume was up 27.0% while revenue increased 19.7% due to the change in mix within the channel which was more oriented toward special programming through a large e-commerce company.

Gross Profit and Margin

Gross profit was up $3.7 million to $75.4 million, an increase of 5.2%. Gross margin of 34.1% was impacted by atypical yearend inventory adjustments of approximately $9.0 million (11.9% impact on margin), primarily related to the impact of wildfires on the 2020 harvest and product mix, as well as a $4.8 million gain from litigation proceeds. The shift in mix to greater B2B volume, which is the lowest gross margin business, combined with a shift of channels within the DTC segment had an approximate 5.5% impact on margin.

Operating Expenses

Operating expenses increased $2.3 million, or 3.6%, to $66.2 million. Gains realized from the dispositions of assets, litigation proceeds and remeasurement of contingent consideration liabilities partially offset the $7.8 million, or 12.1%, increase in selling, general and administrative expenses ("SG&A"). Higher SG&A reflected incremental costs related to the going-public and business combination transaction, increased personnel costs, higher insurance costs, and elevated freight costs.

Operating and Net Income

Income from operations increased 18.6% to $9.2 million. Operating margin for fiscal 2021 was 4.2%, up 8 basis points from fiscal 2020. Mix, inventory adjustments related to the impact of wildfires in the 2020 harvest and transaction expenses were the primary impacts on operating income and margin, partially offset by gains on asset dispositions, litigation proceeds and a sale leaseback.

Interest expense for fiscal 2021 was $11.6 million, down $3.8 million, or 24.9%, as a result of lower realized rates and a lower average balance. In fiscal 2021, VWE recognized $6.6 million for the forgiveness of the loan granted under the Paycheck Protection Program and $6.1 million in unrealized gain on interest rate swap agreements.

Net income available to VWE common shareholders for fiscal 2021 was $4.1 million, significantly improved over the loss of $14.7 million in the prior year. On a per diluted share basis, net income available to VWE common shareholders was $0.14 for fiscal 2021.

Adjusted EBITDA

Adjusted EBITDA for fiscal 2021 was $39.2 million, or 17.7% of net revenue, delivering growth of 42.0% over the prior fiscal year adjusted EBITDA of $27.5 million.

On a pro forma basis, which includes the acquisitions as if owned for the full fiscal year, adjusted EBITDA was $46.4 million and pro forma adjusted EBITDA margin was 19.3% exceeding its previous guidance of pro forma adjusted EBITDA of $46.1 million.

NOTE: Adjusted EBITDA, pro forma adjusted EBITDA and adjusted EBITDA margin are all non-GAAP metrics. Please see the relevant disclosures and reconciliations of GAAP to non-GAAP measures in the tables that accompany this release.

Fourth Quarter 2021 Financial Results Review

Revenue for the quarter was up 36.8% to $57.0 million driven by strength in all segments. Acquired revenue was $2.3 million in the quarter and was primarily in Wholesale and DTC. Gross profit of $11.1 million, or 19.5% of sales, reflected the impact of approximately $9.0 million in atypical yearend inventory adjustments primarily in the fourth quarter, as well as the shift in sales mix. B2B net revenue grew 51.5% to $19.7 million in the quarter and represented 34.6% of revenue, higher than the historical average, as a result of strong growth in private label and custom wine programs, which are lower margin business. DTC net revenue grew 17.8% in the quarter with high volume growth in special programming through a large e-commerce company.

Operating loss in the quarter of $10.9 million primarily resulted from the $9.0 million of inventory adjustments, $1.5 million in costs related to the impacts of a delayed brand launch during COVID restrictions, $1.3 million of going-public and business combination transaction expenses and $1.1 million associated with the impairment of intangible assets.

Net loss allocable to VWE common shareholders for the fourth quarter of fiscal 2021 was $6.1 million compared with net income of $0.7 million in the prior-year period. On a per diluted share basis, net loss allocable to VWE common shareholders was $0.18 for the fourth quarter.

Adjusted EBITDA for the fourth quarter was $8.8 million, or 15.4% of net revenue, delivering growth of 12.8% over the prior-year period. Adjusted EBITDA growth was driven by strong sales growth offset somewhat by a shift in sales mix.

Strong Balance Sheet with Financial Flexibility

Successful Business Combination Provides Financial Strength to Fund Growth Plans

On June 7, 2021, Vintage Wine Estates and Bespoke Capital Acquisition Corp., combined to form Vintage Wine Estates, Inc.

The transaction enabled the paydown of $131 million in debt and infused $70 million of cash into the Company.

Liquidity

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September 28, 2021 16:36 ET (20:36 GMT)