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 of position for the three and nine months ended December 31, 2022 ("Q3 2023 and "YTD 2023" respectively).
Q3 2023 Summary:
- Revenue for Q3 2023 of $9.1 million represents an increase of $0.7 million from Q3 2022 revenue of $8.4 million. The winery division experienced an increase of $1.1M from a resurgence in retail, on-premise and exports compared to Q3 2022. The agency division experience a moderate decline of $0.3 million to $4.3 million in Q3 2023 from lost suppliers over the last fiscal year;
- Gross margin for Q3 2023 was $3.8 million, an increase of $0.6 million from $3.2 million in Q3 2022, while gross margin as a percentage of revenue was 41.5% for Q3 2023 compared to 38.1% in Q3 2022. When factoring in the adjustments to cost of goods sold for the fair value of EWG inventories sold, gross margin for Q3 2023 was $3.9 million or 43.2% of revenue. The increase in gross margin was a result of revenue increases seen in our highest gross margin channels in the winery division;
- EBITDA was $(0.2) million in Q3 2023, an increase of $0.3 million from $(0.5) million in Q3 2022. The improvements is attributable from increasing revenues and gross margins quarter over quarter experienced in the Winery division. When adjusting EBITDA to account for the incremental fair value of EWG inventories sold in the quarter of $0.2 million, adjusted EBITDA was $(0.1) million for Q3 2023 compared to $(0.1) million in Q3 2022; and
- Operating loss was $(1.5) million, compared to a loss of $1.4 million in Q3 2022. The decrease in income is mainly attributable to an increase in interest expenses over the period.
- Subsequent to December 31, 2022, the Company received $1.4 million under the federal government's Winery Sector Support Program and will receive another $0.1 million in the fourth quarter.
“I am pleased to see continued growth with +7.0% revenue versus last year and very strong 24.0% growth from the winery division which fuelled a 4.2% improvement in Gross Margin. As a comparison, the total industry has been quite soft with the wine category losing 4.0% on an annual basis,” said Andrew Howard, President and CEO.
Andrew continues saying “With that said, we still have a lot of progress to make with the three key pillars anchoring our choices: Growth, Gross Margin improvement and cost containment.
“This quarter saw improvements year over year in the winery division with every winery growing and particular strength posted from Export, On Premise and On-Site winery sales leading to improved gross margins. Unfortunately, this was partially offset by a difficult quarter in our Agency business with slightly soft revenue and margins.
“Our newest wine, Mindful, continues to over-deliver on expectations and has become one of the best performing new VQA products launched this past year. With lower alcohol, less than one gram of sugar per serving, great taste, attractive branding and strong Trade support – this wine is delivering on consumer trends and has a lot of growth potential.
“Three years of Covid restrictions, followed by significant inflation and early signals of a recession, has provided a lot of head-wind for the business. I believe our better than industry growth combined with our focus on cost demonstrates a clear roadmap to deliver the turnaround targets we have set for the business,” says Howard.
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high-quality wines and ciders as well as a sales agent for over 120 beverage alcohol brands across Canada. The Company operates five production facilities, four in Ontario and one in British Columbia, that produce predominantly VQA wines under such well-known brand names as 20 Bees, Creekside, EastDell, Lakeview Cellars, Mindful, Queenston Mile, Shiny Apple Cider, Fresh, Proud Pour, Red Tractor, Seasons, Serenity, Persona and Backyard Vineyards.
Through its commercial division, 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, Meffre, Pierre Chavin and Andre Lurton wines from France, Brimincourt Champagne from France, Merlet and Larsen Cognacs from France, Kaiken wines from Argentina, Blue Nun and Erben wines from Germany, Calabria Family Estate Wines from Australia, Saint Clair Family Estate Wines from New Zealand, Redemption Bourbon and Rye whiskies from the U.S., Gray Whale Gin from California, Storywood and Cofradia Tequilas from Mexico, Magnum Cream Liqueur from Scotland, Talamonti and Cielo wines from Italy, Catedral and Cabeca de Toiro wines from Portugal, Waterloo Beer & Radlers from Canada, Landshark Lager from the USA, Edinburgh Gin, Tamdhu, Glengoyne and Smokehead single-malt Scotch whiskies from Scotland, Islay Mist, Grand MacNish and Waterproof whiskies from Scotland, C. Mondavi & Family wines including C.K Mondavi & Charles Krug from Napa, Wize Spirits and Hounds Vodka from Canada, Bols Vodka from Amsterdam, Koyle Family Wines from Chile and Pearse Lyons whiskies and gins from Ireland.
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 "gross margin", "EBITDA" and "Adjusted EBITDA" as a measure to assess performance of the Company. The Company defines "gross margin" as gross profit excluding depreciation. EBITDA and "Adjusted EBITDA" are other financial measures and are reconciled to net income (loss) and comprehensive income (loss) below under "Results of Operations”.
EBITDA and Adjusted EBITDA are supplemental financial measures to further assist readers in assessing the Company’s ability to generate income from operations before considering 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. Adjusted EBITDA comprises EBITDA before non- recurring expenses including cost of sales adjustments related to inventory acquired in business combinations, EWG transaction costs expensed, government funding under CEWS and CERS programs, and other non-recurring adjustments included in the calculation of EBITDA. Gross margin is defined as gross profit excluding depreciation on property, plant and equipment used in production. Operating expenses exclude 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.