- Reassessment of technical accounting matters leads to
restatement of fiscal 2023 interim quarterly periods; requires more
time to complete year-end filing
- Expects to file amended 10-Qs and fiscal 2023 10-K, including
revisions to fiscal 2022, as soon as practical
- Seeking covenant relief amendment to credit agreement prior to
reporting fiscal 2023 results
- Confirms Seth Kaufman to join Company on October 30, 2023 as
President and CEO
- Refines fiscal 2023 revenue expectations from $290 million to
approximately $280 million with gross margin of approximately 30%;
reaffirms preliminary expectations for fiscal 2024
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 that
it will restate its previously issued consolidated financial
statements for the first, second and third quarters of fiscal 2023,
which ended September 30, 2022, December 31, 2022 and March 31,
2023, respectively. The adjustments resulted from a reassessment of
technical accounting matters in the fiscal 2023 first, second and
third quarters. The restatements will delay filing of the Company’s
fiscal 2023 10-K and the finalizing of amendments to the Company’s
credit agreement. The Company is seeking to complete the credit
agreement amendments within the next two weeks. The restated
interim financials and fiscal 2023 10-K will be filed as soon as
practical.
Jon Moramarco, Interim CEO, commented, “While frustrating, we
believe these restatements and revisions, some of which date back
to acquisition accounting in 2019, will provide greater clarity of
our financial performance and improved comparability both looking
back and as we move forward.”
He added, “We continue to work on our Five-Point Plan to advance
through the transition period of fiscal 2024. We believe our focus
on margin expansion through simplification and better execution,
measurable cost reduction, disciplined cash management,
monetization of assets to accelerate debt reduction and growing
revenue in focused key brands will lead to improved financial
performance and enable us to leverage our strong foundation to
drive growth. We are excited that industry veteran Seth Kaufman
will be joining us soon as President and CEO and look forward to
his contributions to creating our go-forward strategy that will
define our future path beyond this transition year.”
Fiscal 2023 Quarterly Restatements
The Company intends to file amendments to its fiscal 2023 first,
second and third quarters’ Form 10-Qs as soon as practical. As a
result, investors should no longer rely upon the Company’s
previously issued financial statements for these periods.
Similarly, related press releases, earnings releases and investor
communications, including presentation materials, describing the
Company’s financial results for those periods should no longer be
relied upon.
The following summarizes the expected principal impacts to the
Company’s prior quarterly financial statements.
Quarter ended September 30, 2022: The recognition of a
$10.7 million deferred gain through an adjustment to retained
earnings. The deferred gain originated with a sale-leaseback
transaction in 2019 and the recognition adjustment was required by
the implementation of ASC 842 – Leases in July 2022.
Quarter ended December 31, 2022: The classification of
purchase price to specific property and equipment acquired in 2019
for the Laetitia sale in December of 2022 increased the loss on
disposal by $3.5 million.
Quarter ended March 31, 2023: The reversal of $4.7
million in revenue and the related $3.5 million in gross profit for
an uncollectable sale of bulk whiskey for which inventory was not
transferred.
Updated Preliminary Unaudited Fiscal 2023 Results and
Reaffirmed Fiscal 2024 Preliminary Expectations
The Company’s preliminary unaudited financial results for fiscal
2023 are estimated to be as follows:
Previous Expectations
Current Expectations
Preliminary unaudited
revenue:
Approximately $290 million
Approximately $280 million
Gross margin:
30% to 32%
Approximately 30%
SG&A:
$118 million to $122 million
Approximately $119 million
Non-cash amortization
expense
$7 million to $7.5 million
Approximately $7.3 million
VWE’s preliminary expectations for fiscal 2024 based on
execution of the restructuring and Five-Point Plan are currently
unchanged 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
For fiscal 2024, SG&A excludes executive stock-based
compensation awards expected with new leadership.
About Vintage Wine Estates
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 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 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.
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 “believe,” “estimate,” “expect,” “to join,”
“continue,” “intend,” “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 intention to restate its previously
issued consolidated financial statements for the first, second and
third quarters of fiscal 2023, which ended September 30, 2022,
December 31, 2022 and March 31, 2023, respectively; the expected
filing timing of the restatements and Form 10-K for the fiscal year
ended June 30, 2023; 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 expected timing of Seth Kaufman’s start 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
ability to timely file the restatements and Form 10-K for the
fiscal year ended June 30, 2023; the Company’s ability to reach its
preliminary expected results for fiscal years ended June 30, 2023
and June 30, 2024; 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; the risk that Seth Kaufman does not start as
President and CEO in the expected the time frame, or at all; risk
that the Company’s lenders do not agree to an amendment in the
expected 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; 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230927648711/en/
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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