|
news release
FOR IMMEDIATE RELEASE
November 6, 2013
NASDAQ: THST |
 |
Truett-Hurst Inc. Reports First Quarter
Fiscal Year 2014 Financial Results
Healdsburg, California (November 6,
2013) – Truett-Hurst Inc. (NASDAQ: THST), an innovative and fast growing super-premium and ultra-premium wine sales,
marketing and production company based in the acclaimed Dry Creek and Russian River Valleys of Sonoma County, California, today
reported financial results for its first quarter of fiscal 2014 ended September 30, 2013.
“Truett-Hurst Inc.’s net sales
growth reflects improving market demand combined with the strength of our brand portfolio, innovative packaging product launches
and our enhanced relationships with our distribution channels. As we build our foundation of products and relationships in new
US and International markets we see continued strong growth.” said Phillip L. Hurst, Truett-Hurst’s CEO.
Sales: Consolidated net sales increased
5% from $5.2 million for FY13Q1 to $5.4 million for FY14Q1. New brand introductions continue to be a major opportunity for growth as well as leveraging our direct to consumer and
internet segments. We believe our recent distributor change to Southern Wine and Spirits will provide us the opportunity for greater
market penetration and accounts sold.
Wholesale net sales decreased 5% in
FY14Q1 and was due to a major launch and ongoing seasonal programs which occurred in FY13Q1. We continue to focus on introducing brands at higher price points. In FY14Q1, we introduced
California Square, Paso Ranches and Trader Joe’s Petit Rose programs as compared to the evocative wine wrap
program launched in FY13Q1.
Direct to consumer net sales
increased 24% in FY14Q1 and was attributable to increased wine club memberships and increased tasting room traffic. Internet
sales from Wine Spies improved as we had three months of operations and net sales compared to only two months in FY13Q1 (we
acquired Wine Spies August 2012). Our focus on driving web traffic to the site has increased our customer base and greater
loyalty as seen in the frequency of customer purchases.
Gross
Margins: The Company achieved a gross profit margin of 33% of net sales, which represents an increase of 1% from FY13Q1.
The wholesale segment gross margin increased 1% compared to FY13Q1 based upon sales mix and new brand introductions. Direct
to consumer margins decreased 4% compared to FY13Q1 and was attributable to an increase in the use of
promotions and increased sales of brands with lower margins. The
Company continues to focus on delivering a mix of products and brands through distributors nationwide and through direct and
online sales while striving to decrease production costs and improve gross margins.
Truett-Hurst
• PO BOX 1532 • HEALDSBURG • CA • 95448 • F: 707. 431.4423 • email: ir@truetthurstinc.com
Reports First Quarter Fiscal Year 2014
Financial Results
Operating Income (Loss): Operating
loss was $0.1 million for FY14Q1 compared to FY13Q1 of operating income of $0.5
million. Operating loss primarily consisted of increased sales and marketing expenses and general and administrative expenses associated
with an emerging growth company.
Sales and marketing expense
totaled $1.1 million for FY14Q1 from $0.8 million for FY13Q1. $0.1 million of the increase was non-cash stock-based
compensation. Sales and marketing expense as a percent of net sales totaled 20% for FY14Q1 compared to 15% for FY13Q1 and 20%
for FY13. General and administrative expense totaled $0.8 million for FY14Q1 from $0.4 million for FY13Q1. General and
administrative expense as a percent of net sales totaled 16% for FY14Q1 compared to
7% for FY13Q1 and 12% for FY13.
James D. Bielenberg, CFO of Truett-Hurst,
Inc., states “We are excited about our top line sales growth as we continue to focus on the super and ultra-premium categories.
Our new brand introductions at higher price points with stronger margins produced results exceeding the prior year’s quarter
with a reduced case volume.”
Guidance
Based on our current expectations and estimates
regarding our future results, and subject to the factors described in the Forward-Looking Statements section of this release, which
represent risks to this forecast, the following annual guidance for our fiscal 2014 assumes no changes:
| · | net sales between $24 million and $28
million |
| · | gross margin between 31% and 34% |
| · | operating expenses between $6.8 million
and $7.5 million |
For the remaining fiscal 2014, we expect
an increase in revenue over the prior year, based on rising market demand, new customer wins and follow-on sales from current customers,
many of which are at the early stages in their deployment of our products.
The Company expects to increase its sales
and marketing resources to support sales growth in all of its key markets and implement significant financial and production software
to better manage our business. Historically, the Company has experienced irregular quarter over quarter fluctuations in revenue
based largely on the timing of product launches and customer deployments.
Reports First Quarter Fiscal Year 2014
Financial Results
Note Regarding Condensed Consolidated
Financial Statements
The unaudited condensed consolidated financial
statements for the three-month period ended September 30, 2013 and the June 30, 2013 balance sheet, include the results of Truett-Hurst,
Inc. and its subsidiaries: H.D.D. LLC and its consolidated subsidiary, The Wine Spies, LLC. The unaudited condensed consolidated
financial statements for the three-month period ended September 30, 2012 reflect the results of the LLC and Wine Spies. Truett-Hurst,
Inc.’s fiscal 2013 period is from June 26, 2013 to June 30, 2013 due to the completion of the Company’s initial public
offering on June 25, 2013.
Conference Call Details
Truett-Hurst Inc. will conduct a conference call at 10:00 a.m.
Pacific Time or 1:00 p.m. Eastern Time, on November 7, 2013 to discuss its first quarter fiscal 2014 results for the period ended
September 30, 2013. To listen to the conference call, dial in approximately ten minutes before the scheduled call to 1.877.870.4263
or International Toll: 1.412.317.0790 and request Truett-Hurst First Quarter of Fiscal 2014 Results Call. The webcast link is:
http://www.videonewswire.com/event.asp?id=96805.
A
replay of the call will be available for 48 hours beginning about two hours after the call. To listen to the replay, dial US Toll
Free: 1.877.344.7529 or International Toll: 1.412.317.0088 and enter conference number: 10036496. The call will be available
one hour after the end of the conference call through November 21, 2013 at 9:00 am ET.
About Truett-Hurst Inc.
Truett-Hurst Inc. (NASDAQ: THST) is an
innovative and fast-growing super-premium and ultra-premium wine sales, marketing and production company based in the acclaimed
Dry Creek and Russian River Valleys of Sonoma County, California. Our corporate website is www.truetthurstinc.com. Our principal
executive offices are located at 4035 Westside Road, Healdsburg, California 95448, and our telephone number is 707.433.4423. We
are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, enacted on April 5, 2012 (“JOBS
Act”), a small reporting company as defined by Section 15(d) of the Exchange Act, and a controlled company as defined by
the corporate governance rules of NASDAQ.
Reports First Quarter Fiscal Year 2014 Financial Results
Forward-Looking Statements
This press release and our
earnings conference call for the first quarter ended September 30, 2013 contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended,
that are made as of the date of this press release based upon our current expectations. All statements, other than statements
of historical fact, regarding our strategy, future operations, financial position, estimated revenue, projected costs,
prospects, plans, opportunities, and objectives constitute “forward-looking statements.” The words
“may,” “will,” “expect,” “intend,” “plan,”
“anticipate,” “believe,” “estimate,” “potential” or “continue”
and similar types of expressions identify such statements, although not all forward-looking statements contain these
identifying words. Such forward-looking statements include expectations regarding revenue, income, expenses, and other
guidance for fiscal 2014 ended June 30, 2014 and any future periods. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future
results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could
cause such differences include, but are not limited to, a reduction in the supply of grapes and bulk wine available to us;
significant competition; any change in our relationships with retailers could harm our business; we may not achieve or
maintain profitability in the future; the loss of key employees; a reduction in our access to, or an increase in the cost of,
the third-party services we use to produce our wine could harm our business; credit facility restrictions on our current and
future operations; failure to protect, or infringement of, trademarks and proprietary rights; these factors should not be
construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this
report. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new
information, future developments or otherwise.
This press release should be read in conjunction
with our most recent annual report on Form 10-K filed on September 27, 2013, and our other reports currently on file with the Securities
and Exchange Commission, which contain more detailed discussion of risks and uncertainties that may affect future results. We do
not undertake to update any forward-looking statements unless otherwise required by law.
| For more information, contact: |
For more information, contact: |
| Truett-Hurst Inc. |
Truett-Hurst Inc.’s Investor Relations |
James D. Bielenberg,
Chief Financial Officer |
Wil Lindgren,
Director of Reporting and Finance |
Phone: 707.431.4423
Fax: 707.431.4402 |
Phone: 707.431.4436
Email: ir@truetthurstinc.com |
| Email: james@truetthurst.com |
|
TRUETT-HURST INC. AND SUBSIDIARIES
(Prior to June 26, 2013, H.D.D. LLC and
Subsidiary)
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except share data)
(unaudited)
| | |
Three Month Periods Ended
September 30, | |
| | |
2013 | | |
2012 | |
| | |
| |
| Sales | |
$ | 5,536 | | |
$ | 5,304 | |
| Less excise tax | |
| (150 | ) | |
| (153 | ) |
| Net sales | |
| 5,386 | | |
| 5,151 | |
| | |
| | | |
| | |
| Cost of sales | |
| 3,597 | | |
| 3,521 | |
| | |
| | | |
| | |
| Gross profit | |
| 1,789 | | |
| 1,630 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing | |
| 1,051 | | |
| 767 | |
| General and administrative | |
| 839 | | |
| 360 | |
| Bulk wine sales, net (gain) | |
| - | | |
| (2 | ) |
| Total operating expenses | |
| 1,890 | | |
| 1,125 | |
| Income (loss) from operations | |
| (101 | ) | |
| 505 | |
| Other income (expense): | |
| | | |
| | |
| Interest expense | |
| (42 | ) | |
| (121 | ) |
| Changes in fair value of warrant and interest rate swap | |
| (3 | ) | |
| (7 | ) |
| Loss on foreign currency | |
| (14 | ) | |
| - | |
| Total other expense | |
| (59 | ) | |
| (128 | ) |
| Income (loss) before income taxes | |
| (160 | ) | |
| 377 | |
| Income tax expense (benefit) | |
| (21 | ) | |
| 1 | |
| Net income (loss) before non-controlling interests | |
| (139 | ) | |
| 376 | |
| Less: Net income (loss) attributable to non-controlling interest: The Wine Spies, LLC | |
| (24 | ) | |
| (21 | ) |
| Net income (loss) attributable to Truett-Hurst, Inc. and H.D.D. LLC | |
| (115 | ) | |
$ | 397 | |
| Less: Net income (loss) attributable to non-controlling interest: H.D.D. LLC | |
| (82 | ) | |
| | |
| Net loss attributable to Truett-Hurst, Inc. | |
$ | (33 | ) | |
| | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Net loss per share: | |
| | | |
| | |
| Basic and Diluted | |
$ | (0.01 | ) | |
| | |
| | |
| | | |
| | |
| Shares used in computing net loss per share: | |
| | | |
| | |
| Basic and Diluted | |
| 2,700,000 | | |
| | |
Reports First Quarter Fiscal Year 2014 Financial Results
TRUETT-HURST INC. AND SUBSIDIARIES
(Prior to June 26, 2013, H.D.D. LLC and
Subsidiary)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| | |
September 30, 2013 | | |
June 30, 2013 | |
| ASSETS | |
(unaudited) | | |
| |
| Current assets: | |
| | | |
| | |
| Cash | |
$ | 8,361 | | |
$ | 11,367 | |
| Accounts receivable | |
| 1,861 | | |
| 2,816 | |
| Inventories | |
| 17,117 | | |
| 13,222 | |
| Other current assets | |
| 436 | | |
| 245 | |
| Total current assets | |
| 27,775 | | |
| 27,650 | |
| Property and equipment, net | |
| 5,544 | | |
| 5,383 | |
| Goodwill | |
| 134 | | |
| 134 | |
| Intangible assets, net | |
| 689 | | |
| 706 | |
| Other assets, net | |
| 311 | | |
| 259 | |
| Total assets | |
$ | 34,453 | | |
$ | 34,132 | |
| | |
| | | |
| | |
| LIABILITIES and STOCKHOLDERS' EQUITY | |
| | | |
| | |
| | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Line of credit | |
$ | 6,018 | | |
$ | 6,887 | |
| Accounts payable | |
| 2,967 | | |
| 2,123 | |
| Accrued expenses | |
| 1,478 | | |
| 1,710 | |
| Due to related parties | |
| 777 | | |
| 71 | |
| Current portion of deferred taxes | |
| 75 | | |
| 96 | |
| Current maturities of related party notes | |
| 71 | | |
| 70 | |
| Current maturities of long-term debt | |
| 251 | | |
| 250 | |
| Total current liabilities | |
| 11,637 | | |
| 11,207 | |
| | |
| | | |
| | |
| Deferred rent liability | |
| 50 | | |
| 53 | |
| Deferred taxes, net of current portion | |
| 127 | | |
| 127 | |
| Related party notes, net of current maturities | |
| 49 | | |
| 67 | |
| Long-term debt, net of current maturities | |
| 3,391 | | |
| 3,454 | |
| Total liabilities | |
| 15,254 | | |
| 14,908 | |
| | |
| | | |
| | |
| Commitments and contingencies (Note 8) | |
| | | |
| | |
| | |
| | | |
| | |
| Stockholders' equity | |
| | | |
| | |
| Preferred stock, par value of $0.001 per share,5,000,000 shares authorized and zero issued and outstanding | |
| - | | |
| - | |
| Class A common stock, par value of $0.001 per share, 7,000,000 authorized and 2,700,000 issued and outstanding | |
| 3 | | |
| 3 | |
| Class B common stock, par value of $0.001 per share,1,000 authorized and 10 issued and outstanding | |
| - | | |
| - | |
| Additional paid-in capital | |
| 11,091 | | |
| 10,977 | |
| Accumulated deficit | |
| (3,500 | ) | |
| (3,467 | ) |
| Total Truett-Hurst, Inc. equity | |
| 7,594 | | |
| 7,513 | |
| Non-controlling interests | |
| 11,605 | | |
| 11,711 | |
| Total equity | |
| 19,199 | | |
| 19,224 | |
| Total liabilities and stockholders' equity | |
$ | 34,453 | | |
$ | 34,132 | |
Reports First Quarter Fiscal Year 2014 Financial Results
TRUETT-HURST INC. AND SUBSIDIARIES
(Prior to June 26, 2013, H.D.D. LLC and
Subsidiary)
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(unaudited)
| | |
Three Month Periods Ended
September 30, | |
| | |
2013 | | |
2012 | |
| Cash flows from operating activities: | |
| | |
| |
| Net income (loss) | |
$ | (139 | ) | |
$ | 376 | |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 121 | | |
| 67 | |
| Deferred rent | |
| (3 | ) | |
| (1 | ) |
| Deferred taxes | |
| (21 | ) | |
| - | |
| Contributed rent | |
| - | | |
| 36 | |
| Loss on fair value of warrant and interest rate swap | |
| 3 | | |
| 7 | |
| Stock-based compensation | |
| 114 | | |
| - | |
| | |
| | | |
| | |
| Changes in operating assets and liabilities, net | |
| | | |
| | |
| Accounts receivable | |
| 955 | | |
| (856 | ) |
| Inventories | |
| (3,895 | ) | |
| (1,309 | ) |
| Bulk wine deposit | |
| - | | |
| 220 | |
| Other assets, current | |
| (195 | ) | |
| (26 | ) |
| Accounts payable and accrued expenses | |
| 612 | | |
| 1,442 | |
| Net cash used in operating activities | |
| (2,448 | ) | |
| (44 | ) |
| | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | |
| Acquisition of property and equipment | |
| (247 | ) | |
| (340 | ) |
| Acquisition of intangible and other assets | |
| (71 | ) | |
| (40 | ) |
| Acquisition of The Wine Spies, LLC | |
| - | | |
| (275 | ) |
| Proceeds from sale of assets | |
| 2 | | |
| - | |
| Net cash used in investing activities | |
| (316 | ) | |
| (655 | ) |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Net proceeds from (repayments on) line of credit | |
| (869 | ) | |
| 1,877 | |
| Advances from related parties | |
| 706 | | |
| 156 | |
| Payments on related party notes | |
| (17 | ) | |
| - | |
| Proceeds from long-term debt | |
| - | | |
| 3,382 | |
| Payments on long-term debt | |
| (62 | ) | |
| (3,850 | ) |
| Payments on amount due factor | |
| - | | |
| (869 | ) |
| Net cash provided by (used in) financing activities | |
| (242 | ) | |
| 696 | |
| Net decrease in cash | |
| (3,006 | ) | |
| (3 | ) |
| Cash at beginning of period | |
| 11,367 | | |
| 167 | |
| Cash at end of period | |
$ | 8,361 | | |
$ | 164 | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Supplemental disclosure of cash flow information: | |
| | | |
| | |
| Interest paid during year | |
$ | 53 | | |
$ | 106 | |
| Income taxes paid during year, net of refunds | |
$ | 1 | | |
$ | 1 | |
| | |
| | | |
| | |
| Supplemental disclosure of non-cash transactions | |
| | | |
| | |
| Contributed rent for membership interest | |
$ | - | | |
$ | 36 | |
