UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______ to______
Commission file number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of November 7, 2023,
Part I—Financial Information
Item 1. Financial Statements
VINTAGE WINE ESTATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
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September 30, 2023 |
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June 30, 2023 |
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Assets |
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(Unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Other receivables |
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Inventories |
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Assets held for sale, net |
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Current interest rate swap asset |
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Prepaid expenses |
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Total current assets |
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Property, plant, and equipment, net |
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Operating lease right-of-use assets |
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Finance lease right-of-use-assets |
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Intangible assets, net |
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Interest rate swap asset |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities, redeemable noncontrolling interest, and stockholders' equity |
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Current liabilities: |
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Line of credit |
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$ |
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$ |
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Accounts payable |
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Accrued liabilities and other payables |
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Accrued employee compensation |
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Current operating lease liabilities |
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Current finance lease liabilities |
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Current maturities of long-term debt |
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Total current liabilities |
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Other long-term liabilities |
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Long-term debt, less current maturities |
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Long-term operating lease liabilities |
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Long-term finance lease liabilities |
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Deferred tax liability |
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Total liabilities |
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Redeemable noncontrolling interest |
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Stockholders' equity: |
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Preferred stock, |
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Common stock, |
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Additional paid-in capital |
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Treasury stock, at cost: |
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( |
) |
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( |
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Accumulated deficit |
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( |
) |
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( |
) |
Total Vintage Wine Estates, Inc. stockholders' equity |
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Noncontrolling interests |
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( |
) |
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( |
) |
Total stockholders' equity |
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Total liabilities, redeemable noncontrolling interest, and stockholders' equity |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
1
VINTAGE WINE ESTATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
(in thousands, except per share amounts)
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Three Months Ended September 30, |
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2023 |
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2022 |
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Net revenue |
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Wine, spirits and cider |
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$ |
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$ |
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Nonwine |
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Total revenue |
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Cost of revenue |
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Wine, spirits and cider |
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Nonwine |
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Total cost of revenue |
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Gross profit |
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Selling, general, and administrative expenses |
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Amortization expense |
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Loss on remeasurement of contingent liability |
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Restructuring expenses |
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Gain on insurance and litigation proceeds |
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( |
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Gain on sale of assets |
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( |
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Loss from operations |
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( |
) |
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( |
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Other income (expense) |
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Interest expense |
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( |
) |
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( |
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Net (loss) gain on interest rate swap agreements |
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( |
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Other, net |
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Total other (expense) income, net |
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( |
) |
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(Loss) income before provision for income taxes |
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( |
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Income tax provision |
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Net (loss) income |
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( |
) |
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Net loss attributable to the noncontrolling interests |
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( |
) |
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( |
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Net (loss) income attributable to common stockholders |
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$ |
( |
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$ |
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Net earnings per share allocable to common stockholders |
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Basic |
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$ |
( |
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$ |
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Diluted |
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$ |
( |
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$ |
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Weighted average shares used in the calculation of earnings per share allocable to common stockholders |
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Basic |
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Diluted |
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See notes to unaudited condensed consolidated financial statements.
2
VINTAGE WINE ESTATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share amounts)
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Redeemable Non-Controlling |
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Common Stock |
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Treasury Stock |
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Additional |
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Accumulated |
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Non-Controlling |
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Total Stockholders' Equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Balance, June 30, 2023 |
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$ |
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$ |
- |
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$ |
( |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Stock-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Restricted stock units vested |
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- |
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- |
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- |
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- |
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- |
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- |
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Taxes paid related to net share settlement of equity awards |
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- |
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( |
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- |
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- |
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- |
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( |
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- |
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- |
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( |
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Net loss |
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( |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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( |
) |
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( |
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Balance, September 30, 2023 |
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$ |
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$ |
- |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Redeemable Non-Controlling |
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Common Stock |
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Treasury Stock |
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Additional |
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(Accumulated Deficit) Retained |
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Non-Controlling |
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Total Stockholders' Equity |
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Shares |
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Amount |
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Shares |
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Amount |
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Balance, June 30, 2022 |
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$ |
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$ |
- |
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$ |
( |
) |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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Adoption of ASC 842 |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Stock-based compensation expense |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Repurchase of public warrants |
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- |
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- |
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- |
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- |
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- |
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( |
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- |
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- |
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( |
) |
Shareholder distribution |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Net income (loss) |
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( |
) |
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- |
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- |
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- |
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- |
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- |
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( |
) |
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Balance, September 30, 2022 |
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$ |
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$ |
- |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
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$ |
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See notes to unaudited condensed consolidated financial statements.
3
VINTAGE WINE ESTATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
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Three months ended September 30, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net (loss) income |
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$ |
( |
) |
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$ |
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Adjustments to reconcile net (loss) income to net cash from operating activities: |
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Depreciation expense |
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Non-cash operating lease expense |
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Amortization expense |
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Amortization of deferred loan fees and line of credit fees |
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Stock-based compensation expense |
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Provision for credit losses |
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( |
) |
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( |
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Provision for inventory reserves |
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Remeasurement of contingent consideration liabilities |
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Net loss (gain) on interest rate swap agreements |
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( |
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Provision for deferred income tax |
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Gain on sale of assets |
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( |
) |
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Change in operating assets and liabilities: |
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Accounts receivable |
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( |
) |
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( |
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Other receivables |
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( |
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( |
) |
Inventories |
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( |
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Prepaid expenses and other current assets |
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Other assets |
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( |
) |
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Accounts payable |
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( |
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Accrued liabilities and other payables |
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Net change in lease assets and liabilities |
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( |
) |
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( |
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Net cash (used in) provided by operating activities |
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( |
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Cash flows from investing activities |
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Proceeds from sale of assets |
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Purchases of property, plant and equipment |
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( |
) |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Principal payments on line of credit |
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( |
) |
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( |
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Proceeds from line of credit |
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Change in outstanding checks in excess of cash |
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Principal payments on long-term debt |
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( |
) |
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( |
) |
Principal payments on finance leases |
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( |
) |
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( |
) |
Payments of minimum tax withholdings on stock-based payment awards |
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( |
) |
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- |
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Distributions to noncontrolling interest |
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- |
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( |
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Repurchase of public warrants |
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- |
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( |
) |
Payments on acquisition earnout |
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( |
) |
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( |
) |
Net cash provided by (used in) financing activities |
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( |
) |
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Net change in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash, beginning of year |
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Cash and cash equivalents, end of year |
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$ |
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$ |
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Supplemental cash flow information |
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Noncash investing and financing activities: |
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Increase in operating lease assets and liabilities upon adoption of ASC 842 |
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$ |
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$ |
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Increase in finance lease assets and liabilities upon adoption of ASC 842 |
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$ |
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$ |
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Operating lease assets obtained in exchange for operating lease liabilities |
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$ |
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$ |
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Finance lease assets obtained in exchange for finance lease obligations |
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$ |
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$ |
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Issuance of shares in lieu of payment to consultant |
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$ |
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$ |
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See notes to unaudited condensed consolidated financial statements.
4
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements include the accounts of all majority-owned or controlled subsidiaries, and all significant intercompany transactions and amounts have been eliminated. The results of businesses acquired or disposed of are included in the condensed consolidated financial statements from the date of the acquisition or up to the date of disposal, respectively.
References to the "Company," "we," "our," "us," and similar pronouns in this Quarterly Report on Form 10-Q for the three months ended September 30, 2023 (this "Form 10-Q") refer to Vintage Wine Estates, Inc., a Nevada corporation, and its majority owned subsidiaries or controlled subsidiaries unless the context requires otherwise.
Our fiscal year ends on June 30. References to fiscal 2024 in these condensed consolidated financial statements are to the fiscal year ending June 30, 2024.
Our unaudited condensed consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission ("SEC") instructions to Quarterly Reports on Form 10-Q and include the information and disclosures required by accounting principles generally accepted in the United States ("GAAP") for interim financial reporting.
In the opinion of management, all adjustments necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included in this Form 10-Q. Except as disclosed elsewhere in this Form 10-Q, all such adjustments are of a normal and recurring nature. In addition, financial results presented for this fiscal 2024 interim period are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2024 or any other future interim or annual period. These condensed consolidated financial statements are unaudited and accordingly, should be read in conjunction with the audited consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the SEC on October 13, 2023. The June 30, 2023 condensed consolidated balance sheet was derived from the audited consolidated financial statements as of that date.
Restatement of Previously Issued Condensed Consolidated Financial Statements
The Company restated its unaudited quarterly financial data, on October 13, 2023, for the periods ended September 30, 2022, December 31, 2022 and March 31, 2023. All amounts in this quarterly report on Form 10-Q affected by the restatement, including but not limited to the three months ended September 30, 2022, reflect such restated amounts.
Significant Accounting Policies
A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10-K for the fiscal year ended June 30, 2023. There have been no material changes in the Company’s significant accounting policies during the three months ended September 30, 2023.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates are based on management’s knowledge about current events and expectations about actions we may undertake in the future. Significant estimates include, but are not limited to the net realizable value of inventory, estimated fair values of intangible assets in acquisitions, intangible assets for impairment, amortization methods and periods, contingent consideration, stock-based compensation, and accounting for income taxes, as applicable. Actual results could differ materially from those estimates.
Reclassifications
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations. Specifically, we reclassified $
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Allowance for Credit Losses
The provision for credit losses for the periods ended September 30, 2023 and June 30, 2023, was immaterial. We do not accrue interest on past-due amounts. Bad debt expense was immaterial for all reporting periods presented.
Disaggregation of Revenue
The following table summarizes revenue by geographic region:
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September 30, |
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(in thousands) |
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2023 |
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2022 |
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United States |
|
$ |
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|
$ |
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||
International |
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Total net revenue |
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$ |
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$ |
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The following table provides a disaggregation of revenue based on the pattern of revenue recognition:
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September 30, |
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(in thousands) |
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2023 |
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2022 |
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Point in time |
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$ |
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$ |
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Over time |
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Total net revenue |
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$ |
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|
$ |
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||
Inventories
Inventory consists of the following:
(in thousands) |
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September 30, 2023 |
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|
June 30, 2023 |
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Bulk wine, spirits and cider |
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$ |
|
|
$ |
|
||
Bottled wine, spirits and cider |
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|
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|
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Bottling and packaging supplies |
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|
|
|
|
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Nonwine inventory |
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|
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|
|
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Total inventories |
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$ |
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|
$ |
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||
Inventories of bulk and bottled wines, spirits, and ciders and inventories of non-wine products and bottling and packaging supplies are valued at the lower of cost using the FIFO method or net realizable value. Costs associated with winemaking, and other costs associated with the manufacturing of products for resale, are recorded as inventory. Net realizable value is the value of an asset that can be realized upon the sale of the asset, less a reasonable estimate of the costs associated with either the eventual sale or the disposal of the asset in question. Inventories are classified as current assets in accordance with recognized industry practice, although most wines and spirits are aged for periods longer than one year. The inventory reserve for the three months ended September 30, 2023 and 2022 was immaterial.
Indefinite-Lived Intangible Assets
During the three months ended September 30, 2023 and 2022, the Company did
Casualty Gains
In relation to various weather and wildfire events, the Company received insurance and litigation proceeds of
Segment Information
We operate in
Earnings Per Share
Basic net income (loss) per share is calculated by dividing the net income (loss) allocable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of the calculation of diluted net income (loss) per share, stock options, warrants to purchase common stock and restricted stock units are considered potentially dilutive securities but are excluded from the calculation of
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diluted net income (loss) per share when their effect is antidilutive. As a result, in certain periods, diluted net income (loss) per share is the same as the basic net income (loss) per share.