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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 001-40016

 

img8508296_0.jpg 

 

VINTAGE WINE ESTATES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

 

 

87-1005902

(State or other jurisdiction of incorporation or organization)

 

 

 

(I.R.S. Employer Identification No.)

 

937 Tahoe Boulevard, Suite 210

Incline Village, Nevada 89451

(Address of principal executive offices)

 

Registrant’s telephone number, including area code: (877) 289-9463

 

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common stock, no par value per share

 

VWE

 

The NASDAQ Stock Market LLC

Warrants to purchase common stock

 

VWEWW

 

The NASDAQ Stock Market LLC

 

 

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

 

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 May 2, 2022, 60,945,682 shares of the registrant’s common stock were outstanding.

 


 

Part 1. Financial Information

 

Item 1. Financial Statements

1

Condensed Consolidated Balance Sheets (Unaudited)

1

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

2

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

3

Condensed Consolidated Statements of Cash Flows (Unaudited)

3

Notes to the Condensed Consolidated Financial Statements (Unaudited)

4

Note 1: Basis of Presentation and Significant Accounting Policies

4

Note 2: Merger and Reverse Recapitalization

10

Note 3: Acquisitions

11

Note 4: Inventory

14

Note 5: Property, Plant and Equipment

14

Note 6: Goodwill and Intangibles

16

Note 7: Accrued Liabilities

17

Note 8: Long-Term and Other Short-Term Obligations

18

Note 9: Fair Value Measurements

19

Note 10: Redeemable Stock and Redeemable Noncontrolling Interest

20

Note 11: Stockholders' Equity

20

Note 12: Income Taxes

22

Note 13: Commitments and Contingencies

22

Note 14: Segments

23

Note 15: Earnings Per Share

25

Note 16: Related Party Transactions

26

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3. Quantitative and Qualitative Disclosures About Market Risk

34

Item 4. Controls and Procedures

34

Part 2. Other Information

35

Item 1. Legal Proceedings

35

Item 1A. Risk Factors

35

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3. Defaults Upon Senior Securities

37

Item 4. Mine Safety Disclosures

37

Item 5. Other Information

37

Item 6. Exhibits

37

Signatures

38

 

 

 


Table of Contents

Part I—Financial Information

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share amounts)

 

 

March 31, 2022

 

 

June 30, 2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

69,109

 

 

$

118,879

 

Restricted cash

 

 

6,600

 

 

 

4,800

 

Accounts receivable, net

 

 

39,649

 

 

 

21,193

 

Other receivables

 

 

13,668

 

 

 

7,490

 

Inventories

 

 

221,264

 

 

 

221,145

 

Prepaid expenses and other current assets

 

 

10,968

 

 

 

8,538

 

Total current assets

 

 

361,258

 

 

 

382,045

 

Property, plant, and equipment, net

 

 

234,141

 

 

 

213,673

 

Goodwill

 

 

158,185

 

 

 

109,895

 

Intangible assets, net

 

 

64,809

 

 

 

36,079

 

Other assets

 

 

7,635

 

 

 

1,806

 

Total assets

 

$

826,028

 

 

$

743,498

 

Liabilities, redeemable noncontrolling interest, and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Line of credit

 

$

146,732

 

 

$

87,351

 

Accounts payable

 

 

14,777

 

 

 

17,301

 

Accrued liabilities and other payables

 

 

30,460

 

 

 

25,078

 

Current maturities of long-term debt

 

 

21,200

 

 

 

22,964

 

Total current liabilities

 

 

213,169

 

 

 

152,694

 

Other long-term liabilities

 

 

8,740

 

 

 

2,767

 

Long-term debt, less current maturities

 

 

172,324

 

 

 

183,541

 

Interest rate swap liabilities

 

 

5,225

 

 

 

13,807

 

Deferred tax liability

 

 

29,965

 

 

 

16,752

 

Deferred gain

 

 

10,999

 

 

 

12,000

 

Total liabilities

 

 

440,422

 

 

 

381,561

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

1,684

 

 

 

1,682

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, no par value, 2,000,000 shares authorized, and none issued and outstanding at March 31, 2022 and June 30, 2021.

 

 

-

 

 

 

-

 

Common stock, no par value, 200,000,000 shares authorized, 61,691,054 issued and 61,377,515 outstanding at March 31, 2022 and 60,461,611 issued and outstanding at June 30, 2021.

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

373,196

 

 

 

360,732

 

Treasury stock, at cost: 313,539 and zero shares held at March 31, 2022 and June 30, 2021, respectively

 

 

(2,833

)

 

 

-

 

Retained earnings

 

 

14,176

 

 

 

-

 

Total Vintage Wine Estates, Inc. stockholders' equity

 

 

384,539

 

 

 

360,732

 

Noncontrolling interests

 

 

(617

)

 

 

(477

)

Total stockholders' equity

 

 

383,922

 

 

 

360,255

 

Total liabilities, redeemable noncontrolling interest, and stockholders' equity

 

$

826,028

 

 

$

743,498

 

See notes to condensed consolidated financial statements.

 

1


Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except share and per share amounts)

 

 

Three Months Ended March 31,

 

 

Nine Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net revenues

 

 

 

 

 

 

 

 

 

 

 

 

Wine, spirits and cider

 

$

50,859

 

 

$

37,238

 

 

$

157,292

 

 

$

132,086

 

Nonwine

 

 

28,074

 

 

 

9,659

 

 

 

60,939

 

 

 

31,623

 

 

 

 

78,933

 

 

 

46,897

 

 

 

218,231

 

 

 

163,709

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Wine, spirits and cider

 

 

38,764

 

 

 

23,561

 

 

 

98,428

 

 

 

82,180

 

Nonwine

 

 

12,152

 

 

 

5,095

 

 

 

29,886

 

 

 

17,288

 

 

 

 

50,916

 

 

 

28,656

 

 

 

128,314

 

 

 

99,468

 

Gross profit

 

 

28,017

 

 

 

18,241

 

 

 

89,917

 

 

 

64,241

 

Selling, general, and administrative expenses

 

 

27,035

 

 

 

18,378

 

 

 

70,662

 

 

 

50,932

 

Loss (gain) on sale of property, plant, and equipment

 

 

98

 

 

 

(322

)

 

 

(493

)

 

 

(1,999

)

Gain on litigation proceeds

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(4,750

)

Income from operations

 

 

884

 

 

 

184

 

 

 

19,748

 

 

 

20,058

 

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,729

)

 

 

(3,842

)

 

 

(10,825

)

 

 

(9,173

)

Net unrealized gain on interest rate swap agreements

 

 

4,553

 

 

 

5,589

 

 

 

8,582

 

 

 

8,212

 

Other, net

 

 

1,957

 

 

 

327

 

 

 

1,945

 

 

 

684

 

Total other income (expense), net

 

 

2,781

 

 

 

2,075

 

 

 

(298

)

 

 

(277

)

Income before provision for income taxes

 

 

3,665

 

 

 

2,259

 

 

 

19,450

 

 

 

19,780

 

Income tax provision

 

 

958

 

 

 

1,633

 

 

 

5,412

 

 

 

4,517

 

Net income

 

 

2,707

 

 

 

626

 

 

 

14,038

 

 

 

15,263

 

Net income (loss) attributable to the noncontrolling interests

 

 

(73

)

 

 

53

 

 

 

(138

)

 

 

343

 

Net income attributable to Vintage Wine Estates, Inc.

 

 

2,780

 

 

 

573

 

 

 

14,176

 

 

 

14,920

 

Accretion on redeemable Series B stock

 

 

-

 

 

 

1,446

 

 

 

-

 

 

 

4,760

 

Net income (loss) allocable to common stockholders

 

$

2,780

 

 

$

(873

)

 

$

14,176

 

 

$

10,160

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) per share allocable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.05

 

 

$

(0.04

)

 

$

0.23

 

 

$

0.38

 

Diluted

 

$

0.05

 

 

$

(0.04

)

 

$

0.23

 

 

$

0.35

 

Weighted average shares used in the calculation of earnings per share allocable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

61,410,403

 

 

 

21,920,583

 

 

 

60,773,258

 

 

 

21,920,583

 

Diluted

 

 

61,410,403

 

 

 

21,920,583

 

 

 

60,773,258

 

 

 

24,564,309

 

See notes to condensed consolidated financial statements.

 

2


Table of Contents

 

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share amounts)

 

 

Redeemable Non-Controlling
Interest Amount

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Additional
Paid-In Capital

 

 

Retained
Earnings

 

 

Non-Controlling
Interests

 

 

Total Stockholders' Equity

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2021

 

$

1,682

 

 

 

 

60,461,611

 

 

$

-

 

 

 

 

 

 

 

 

$

360,732

 

 

$

-

 

 

$

(477

)

 

$

360,255

 

Net income (loss)

 

 

3

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

 

 

2,804

 

 

 

(28

)

 

 

2,776

 

Balance, September 30, 2021

 

$

1,685

 

 

 

 

60,461,611

 

 

$

-

 

 

 

 

 

 

 

 

$

360,732

 

 

$

2,804

 

 

$

(505

)

 

$

363,031

 

Net income (loss)

 

 

5

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

-

 

 

 

8,592

 

 

 

(45

)

 

 

8,547

 

Balance, December 31, 2021

 

$

1,690

 

 

 

 

60,461,611

 

 

$

-

 

 

 

 

 

 

 

 

$

360,732

 

 

$

11,396

 

 

$

(550

)

 

$

371,578

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

1,943

 

 

 

-

 

 

 

-

 

 

 

1,943

 

Issuance of common stock in business combination

 

 

 

 

 

 

1,229,443

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,521

 

 

 

-

 

 

 

-

 

 

 

10,521

 

Repurchase of common stock

 

 

 

 

 

 

-

 

 

 

-

 

 

 

313,539

 

 

 

(2,833

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,833

)

Net income (loss)

 

 

(6

)

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,780

 

 

 

(68

)

 

 

2,713

 

Balance, March 31, 2022

 

$

1,684

 

 

 

 

61,691,054

 

 

$

-

 

 

 

313,539

 

 

$

(2,833

)

 

$

373,196

 

 

$

14,176

 

 

$

(617

)

 

$

383,922

 

 

 

 

Redeemable Non-Controlling
Interest Amount

 

 

 

Common Stock

 

 

Treasury Stock

 

Additional
Paid-In Capital

 

 

Retained
Earnings

 

 

Non-Controlling
Interests

 

 

Total Stockholders' Equity

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2020

 

$

1,382

 

 

 

 

26,460,375

 

 

$

-

 

 

 

 

 

 

$

92,940

 

 

$

15,191

 

 

$

(395

)

 

$

107,736

 

Accretion on redeemable stock

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

5,880

 

 

 

(5,880

)

 

 

-

 

 

 

-

 

Stock-based compensation expense

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

330

 

 

 

-

 

 

 

-

 

 

 

330

 

Net income

 

 

278

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

5,058

 

 

 

26

 

 

 

5,084

 

Balance, September 30, 2020

 

$

1,660

 

 

 

 

26,460,375

 

 

$

-

 

 

 

 

 

 

$

99,150

 

 

$

14,369

 

 

$

(369

)

 

$

113,150

 

Accretion on redeemable stock

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

5,376

 

 

 

(5,376

)

 

 

-

 

 

 

-

 

Stock-based compensation expense

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

128

 

 

 

-

 

 

 

-

 

 

 

128

 

Net income (loss)

 

 

2

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

-

 

 

 

9,289

 

 

 

(40

)

 

 

9,249

 

Balance, December 31, 2020

 

$