Vintage Wine Estates Inc. (Nasdaq: VWE), one of the largest wine companies in the United States, announced on Monday that fiscal second-quarter profits fell 7.8% from a year ago, but that adjusted earnings jumped 137% during that period.
Quarterly net sales for the group of Santa Rosa-headquartered California and Pacific Northwest wine, spirit and cider brands such as Kunde, BR Cohn and Ace were to $83.6 million, up almost a third from nearly $63 million the previous year.
CEO Pat Roney said in the announcement that the impact of inflation will likely cause the price of bottles to rise.
“We operate in a tight labor market and face challenges with the timing of dry product deliveries,” Roney said. “We work with our suppliers to prioritize our needs and carefully manage our customer requirements. It takes an agile approach and a resilient team to succeed in this environment. Inflation is impacting the industry and, although we let’s not be a leader in price changes, we see the trend and we intend to systematically implement price increases from March to address the inflationary impact on input costs.“
Acquisitions of Sevastopol-based maker Ace Cider and Napa-based winery Vinesse, both completed in the quarter, accounted for a third of the revenue boost, the company said. The most recent acquisition was that of Meier’s Beverage Group in January.
Vintage noted that it had a significant war chest for other such transactions. At the end of the quarter, it had approximately $274.2 million in cash, including $75.1 million in unrestricted cash and the rough split between revolving credit and accordion financing.
The volume of cases shipped increased over the year by 63.2%, to reach the equivalent of 878,000 9-litre cases. This growth came from wholesale, up 93% to 506,000 cases, boosted by the acquisition of Ace Cider; business to business such as exclusive labels, up 50% to 212,000 checkouts; and direct-to-consumer sales in tasting rooms and clubs, up 18% to 160,000 cases.
“Tasting room traffic has surpassed pre-pandemic levels, wine club membership continues to grow, customer retention remains strong, and e-commerce subscriber numbers continue to grow “Roney said.
Sales momentum that Vintage called “very strong” led it to raise its forecast for fiscal 2022 revenue to $275-285 million and adjusted profit to $63-66 million. dollars.”
Vintage reported net income of $8.55 million, or 14 cents per diluted share, for the quarter ended Dec. 31, compared with $9.28 million a year ago, or 27 cents per share.
Adjusted earnings were $10 million, or 17 cents per diluted share, versus $4.6 million, or 19 cents per share.
Vintage Wine Estates is the 15th largest American wine company, producing over 2 million cases a year.