Company experiences strong turnaround in
domestic winery operations and repositions agency
business
NIAGARA-ON-THE-LAKE, ON,
Nov. 21, 2018 /CNW/ - Diamond Estates
Wines & Spirits Inc. ("Diamond Estates" or "the Company")
(DWS-TSX Venture) today announced its financial results for the
three-month period ended September 30,
2018 ("Q2 2019").
Q2 2019 Highlights:
- Revenue was $8.2 million, a
decline of 8.3% from $8.9 million in
the three-month period ended September 30,
2017 ("Q2 2018"), driven by lower export sales in the winery
division and the loss of a supplier in the agency division;
- Gross Margin was $3.7 million, a
decline of 1.5% from $3.8 million in
Q2 2018, driven primarily by accounting for the acquisition of
Backyard Vineyards Corp. ("BYV"), partially offset by higher gross
margin in the agency division;
- EBITDA was $0.3 million, compared
to $0.8 million in Q2 2018;
- Net loss was $0.4 million,
compared to slightly positive net income in Q2 2018;
- Sales in the Ontario grocery
channel remained strong, with Diamond Estates' brands achieving the
top market share position in grocery during the quarter and
generating year-over-year sales growth in the LCBO / grocery
channel of 17.2%;
- On September 12, 2018, the
Company announced that its agency division has been rebranded as
Trajectory Beverage Partners, reflecting the division's projected
growth and new sales and marketing strategy;
- Completed the Company's first full quarter with the
recently-acquired BYV, which has established Diamond Estates as a
national VQA wine producer;
- The Company completed the build out of new office space in
Oakville, Ontario and moved its
agency business to that location; and
- The Company continued to accumulate accolades for its
high-quality wines, with its Lakeview Cellars 2016 Vidal Icewine
and 2015 Syrah winning Gold and Bronze, respectively, at the
National Wine Awards, while also winning several awards for its
EastDell and Lakeview Cellars brands at the Intervin International
Wine Awards.
"The second quarter of fiscal 2019 was highlighted by renewed
momentum in our core Ontario
winery operations," said Murray
Souter, President and CEO. "This was driven by continued
strength in the emerging grocery channel where we have achieved a
record 15.6% market share, as well as additional LCBO store
listings as we successfully re-introduced products that were
temporarily removed as a result of the short-crop strategy
implemented during fiscal 2018. The impact was offset by a decline
in export sales, as a key distributor continued to work through
excess icewine inventory that was attributable to
slower-than-planned new store growth in China. However, we expect this to be a
temporary interruption to a very positive long-term growth curve in
that market."
"Results in the agency division continued to be impacted by the
loss of a supplier during fiscal 2018 who we previously represented
as their national distributor. We have reorganized the division
under strong new leadership and rebranded as Trajectory Beverage
Partners. Our focus is on developing special relationships with a
select number of companies that recognize us as partners, not just
agents. We are committed to a more strategic business with a
well-balanced portfolio that minimizes duplication within sectors
and internal competition. We have consolidated our operations,
continue to add good people across the country and are committed to
a strategic approach to brand building."
"The first half of fiscal 2019 represented a transitional period
for Diamond Estates," added Mr. Souter. "We have generated a
leading position in the important Ontario grocery channel, experienced a rebound
in the company's LCBO listings, acquired Backyard Vineyards in the
Okanagan Valley of British
Columbia, seen a reduction in inventory for our key Chinese
distributor and repositioned our agency business. As we look out to
the next 18 months, we are very well positioned to drive
sustainable growth across our business."
Conference Call
Murray Souter, CEO, and
Alan Stratton, CFO, will host a
conference call for the investment community today at 10:00 a.m. (ET). The call-in numbers for
participants are (416) 764-8688 or (888) 390-0546. In addition, the
call will be webcast live at:
https://event.on24.com/wcc/r/1873762/B64D3816DEEE573A9E6FF90B81716BE1.
A replay of the call will be available until Wednesday, November 28, 2018. To access the
replay, dial (416) 764-8677 or (888) 390-0541 (Passcode: 314171 #).
A transcript of the call will be archived on the Company's
website.
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high
quality wines and a sales agent for over 120 beverage alcohol
brands across Canada. The Company
operates three wineries, two in Ontario and one in British Columbia, that produce predominantly
VQA wines under such well known brand names as 20 Bees, EastDell,
Lakeview Cellars, Dan Aykroyd,
Fresh, McMichael Collection, Benchmark, Seasons and Backyard
Vineyards. Through its wholly owned subsidiary, Trajectory Beverage
Partners, the Company is the sales agent for many leading
international brands in all regions of the country as well as being
a distributor in the western provinces. These recognizable brands
include Josh wines from California, Fat Bastard and Andre Lurton wines from France, Kaiken wines from Argentina, Anciano wines from Spain, Blue Nun wines from Germany, Francois
Lurton wines from France
and Argentina, Waterloo Brewing
and Amsterdam Brewery, both from Canada, Landshark Lager from the USA, Marston's beers from England, Social Lite vodka sodas from
Canada, Malfy Gin from
Italy, Edinburgh Gin from
Scotland, Ian MacLeod and Glengoyne scotches from
Scotland, Barcelo Rum from the
Dominican Republic and Tequila
Rose Liqueur from McCormick Distilling in the USA.
Forward Looking Statements
This press release contains forward-looking statements. Often,
but not always, forward-looking statements can be identified by the
use of words such as "plans", "expects" or "does not expect", "is
expected", "estimates", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases
or state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Diamond Estates Wines and Spirits
Inc. to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Actual results and developments are
likely to differ, and may differ materially, from those expressed
or implied by the forward-looking statements contained in this
press release. Such forward-looking statements are based on a
number of assumptions which may prove to be incorrect, including,
but not limited to: the economy generally; consumer interest in the
services and products of the Company; financing; competition; and
anticipated and unanticipated costs. While the Company acknowledges
that subsequent events and developments may cause its views to
change, the Company specifically disclaims any obligation to update
these forward-looking statements. These forward-looking statements
should not be relied upon as representing the views of the Company
as of any date subsequent to the date of this press release.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
Non IFRS Financial Measure
Management uses net income (loss) and comprehensive income
(loss) as presented in the unaudited interim condensed consolidated
statements of net income (loss) and comprehensive income (loss) as
well as "EBITDA" as a measure to assess performance of the Company.
EBITDA is another financial measure and is reconciled to net income
(loss) and comprehensive income (loss) under "Results of
Operations" in the Company's MD&A.
EBITDA is a supplemental financial measure to further assist
readers in assessing the Company's ability to generate income from
operations before taking into account the Company's financing
decisions, depreciation of property, plant and equipment and
amortization of intangible assets. EBITDA comprises gross margin
less operating costs before financial expenses, depreciation and
amortization, non-cash expenses such as share based compensation,
one time and other unusual items, and income tax. Gross margin is
defined as gross profit excluding depreciation on property, plant
and equipment used in production. Operating expenses excludes
interest, depreciation on property, plant and equipment used in
selling and administration, and amortization of intangible
assets.
EBITDA does not represent the actual cash provided by the
operating activities nor is it a recognized measure of financial
performance under IFRS. Readers are cautioned that this measure
should not be considered as a replacement for those as per the
unaudited interim condensed consolidated financial statements
prepared under IFRS. The Company's definitions of this non IFRS
financial measure may differ from those used by other
companies.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Diamond Estates Wines & Spirits Inc.
