Diamond Estates Wines & Spirits Reports Fiscal 2022 Financial Results

NIAGARA-ON-THE-LAKE, Ontario–(BUSINESS WIRE)–Diamond Estates Wines & Spirits Inc. (“Diamond Estates” or “the Company”) (DWS-TSX Venture) today announced its financial results for the three and twelve months ended March 31, 2021 (“Q4 2022 and “financial year 2022” respectively).

Summary of the 2022 financial year

“As the restrictions associated with the pandemic diminish, we are beginning to see a significant resurgence in our domestic business,” said Murray Souter, President and CEO. “Our wine business is returning to more normal volumes, particularly our on-site retail stores and cellars as covid restrictions ease. Additionally, we are seeing our export business return to previous levels as global covid restrictions are eased. We are also seeing strong sales and margin contribution from our recent acquisitions, in line with our expectations as we further integrate their operations into the company. The company remains focused on improving its cost structure in order to realize new synergies in the future.

  • Fiscal 2022 revenue of $30.0 million represents an increase of $4.4 million from fiscal 2021 revenue of $25.6 million. The wineries division saw an increase of $4.2 million due to the acquisition of Equity Wine Group and stronger growth and distribution in local and export channels. Agency business rose $0.2 million as growth was hampered by a combination of flooding in Western Canada and ongoing global supply chain issues.

  • Gross profit for fiscal 2022 was $11.0 million, an increase of $0.5 million from $10.5 million for fiscal 2022, while gross profit as a percentage of revenue was 36.8% for fiscal 2022, compared to 41.2% for fiscal 2021. However, taking into account adjustments to cost of goods sold for the fair value of EWG inventory sold, gross margin for the Fiscal 2022 was $11.7 million and 39.0% of revenue, down 2.2% year-over-year. The winery posted slightly higher gross margins than the prior year due to the inclusion of the results of the EWG acquisition. The agency division experienced margin compression due to rising product costs, ongoing supply chain issues leading to stock-outs and continued sales pressure on sales discounts in marketplaces. ‘buy Sell.

  • EBITDA was ($1.7) million in fiscal 2022, a decrease of ($2.5) million from $0.8 million in fiscal 2022. fiscal 2021, primarily due to a decline in gross margin less an increase in selling, general and administrative expenses of $3.1 million. The decrease in gross margin is mainly due to the inventory fair value adjustment following the acquisition of EWG. General and administrative expenses increased due to increased employee compensation associated with reopening as covid restrictions eased, advertising and promotion costs and operating costs related to the acquisition from EWG.

  • Adjusted EBITDA was ($1.1) million for FY2022 taking into account the incremental fair value of EWG inventory of $0.6 million, $0.1 of costs transactions and $(0.1) of public funding; and

  • Net loss was $2.5 million, compared to a net loss of $2.6 million in fiscal 2021.

Summary of the 4th quarter of 2022:

  • Q4 2022 revenue was $7.1 million, an increase of $1.7 million, compared to the results recorded for the three-month period ended March 31, 2021 (“Q4 2021”). The increase in revenue is attributable to the wine division and the acquisition of EWG. Gross margin increased $0.3 million to $2.0 million, or 29.4% of revenue, compared to $1.7 million, or 32.3% of revenue in Q4 2021. Adjusted EBITDA was ($1.1) million, compared to ($0.8) million in Q4 2021, and net loss was $3.1 million, compared to $1.4 million in the fourth quarter of 2021. The January to March quarter is a seasonally slow period for the Company, and therefore fiscal fourth quarter financial results are generally weaker than other quarters.

“The continued impact of global supply chain disruptions, inflationary pressures on our costs and their impact on our business remain a primary concern for the organization, today and into the near future,” Murray said. Underground. “We have implemented a series of price increases across our product lines to recoup increased costs and will continue to monitor input costs and adjust prices as necessary.”

About Diamond Estates Wines and Spirits Inc.

Diamond Estates Wines and Spirits Inc. is a producer of premium wines and ciders and is the sales agent for over 120 brands of alcoholic beverages across Canada. The Company operates four wineries, three in Ontario and one in British Columbia, which primarily produce VQA wines under well-known brands such as 20 Bees, Creekside, EastDell, Lakeview Cellars, Queenston Mile, Mindful, Dan Aykroyd, Shiny Apple Cider, Vins frais, Proud Pour, Red Tractor, Seasons, Serenity and Backyard Vineyards.

Through its business division, Trajectory Beverage Partners, the Company is the sales agent for many major international brands in all regions of the country as well as 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, Blue Nun wines from Germany, François Lurton wines from France and Argentina, Felix Solis wines from Spain, Waterloo Brewing from Canada, Landshark Lager from the USA, Edinburgh Gin from Scotland, Tamdhu, Glengoyne and Smokehead single malt Scotch whiskies, CK Mondavi & Family wines including Charles Krug from Napa, Bols Vodka from Amsterdam, Koyle Family Wines from Chile, Pearse Lyons whiskeys and gins from Ireland, and Fontana di Papa wines from Italy.

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 “anticipates”, “expects” or “does not expect”, “is expected”, “estimates”, ” intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of these words and expressions or declare that certain actions, events or results “might”, “could”, “would “, “could” or “would” be taken, occur or be affected. Forward-looking statements involve known and unknown risks, uncertainties and other factors that 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 forward-looking statements. – look at the 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. These forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the economy in general; consumer interest in the Company’s services and products; funding; competition; and planned and unplanned 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 taken to represent 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 the forward-looking statements, there may be other factors that cause the actions, events or results are not those intended, 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 and comprehensive income as presented in the unaudited condensed interim consolidated statements of net income and comprehensive income and “EBITDA” as a measure to assess the performance of the Company. EBITDA is another financial measure and is reconciled to net income and comprehensive income under the heading “Results of Operations” in the Company’s MD&A.

EBITDA is an additional financial measure to further assist readers in evaluating the Company’s ability to generate operating revenue prior to considering Company financing decisions, depreciation of property, plant and equipment and depreciation intangible assets. EBITDA includes gross margin less operating costs before finance costs, depreciation and amortization, non-cash expenses such as stock-based compensation, one-time and other unusual items, and income tax. Gross profit is defined as gross profit excluding depreciation of property, plant and equipment used in production. Operating expenses exclude interest, amortization of property, plant and equipment used for sale and administration, and amortization of intangible assets.

EBITDA does not represent actual cash flow generated from operating activities, nor is it a recognized measure of financial performance under IFRS. Readers are cautioned that this measure should not be considered a substitute for those in the unaudited condensed interim consolidated financial statements prepared in accordance with 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.

Elisha A. Tilghman