0000950170-22-023880.txt : 20221109 0000950170-22-023880.hdr.sgml : 20221109 20221109161752 ACCESSION NUMBER: 0000950170-22-023880 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 100 CONFORMED PERIOD OF REPORT: 20220930 FILED AS OF DATE: 20221109 DATE AS OF CHANGE: 20221109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Vintage Wine Estates, Inc. CENTRAL INDEX KEY: 0001834045 STANDARD INDUSTRIAL CLASSIFICATION: BEVERAGES [2080] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-40016 FILM NUMBER: 221372884 BUSINESS ADDRESS: STREET 1: 937 TAHOE BOULEVARD STREET 2: SUITE 210 CITY: INCLINE VILLAGE STATE: NV ZIP: 89451 BUSINESS PHONE: 707-346-3640 MAIL ADDRESS: STREET 1: 937 TAHOE BOULEVARD STREET 2: SUITE 210 CITY: INCLINE VILLAGE STATE: NV ZIP: 89451 FORMER COMPANY: FORMER CONFORMED NAME: Bespoke Capital Acquisition Corp DATE OF NAME CHANGE: 20201125 10-Q 1 vwe-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

 

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

 

For the quarterly period ended September 30, 2022

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 001-40016

 

img8514061_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) (Zip code)

 

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 November 1, 2022, 61,691,054 shares of the registrant’s common stock were outstanding.

 


 

Part I. 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)

4

Notes to the Condensed Consolidated Financial Statements (Unaudited)

5

Note 1: Basis of Presentation and Significant Accounting Policies

5

Note 2: Acquisitions

9

Note 3: Inventory

12

Note 4: Assets Held for Sale

12

Note 5: Property, Plant and Equipment

12

Note 6: Goodwill and Intangibles

13

Note 7: Accrued Liabilities

14

Note 8: Fair Value Measurements

14

Note 9: Leases

15

Note 10: Long-Term and Other Short-Term Obligations

17

Note 11: Stockholders' Equity

17

Note 12: Income Taxes

19

Note 13: Commitments and Contingencies

20

Note 14: Related Party Transactions

20

Note 15: Segments

21

Note 16: Earnings Per Share

22

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

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

29

Item 4. Controls and Procedures

29

Part II. Other Information

30

Item 1. Legal Proceedings

30

Item 1A. Risk Factors

30

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

30

Item 3. Defaults Upon Senior Securities

31

Item 4. Mine Safety Disclosures

31

Item 5. Other Information

31

Item 6. Exhibits

31

Signatures

32

 

 

 


Table of Contents

Part I—Financial Information

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

 

September 30, 2022

 

 

June 30, 2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$

44,622

 

 

$

45,492

 

Restricted cash

 

 

-

 

 

 

4,800

 

Accounts receivable, net

 

 

38,424

 

 

 

38,192

 

Other receivables

 

 

3,071

 

 

 

3,866

 

Inventories

 

 

201,940

 

 

 

192,102

 

Assets held for sale

 

 

6,553

 

 

 

-

 

Current interest rate swap asset

 

 

5,826

 

 

 

2,877

 

Prepaid expenses and other current assets

 

 

9,478

 

 

 

13,394

 

Total current assets

 

 

309,914

 

 

 

300,723

 

Property, plant, and equipment, net

 

 

228,204

 

 

 

236,100

 

Operating lease right-of-use assets

 

 

35,509

 

 

 

-

 

Finance lease right-of-use-assets

 

 

689

 

 

 

-

 

Goodwill

 

 

154,951

 

 

 

154,951

 

Intangible assets, net

 

 

62,672

 

 

 

64,377

 

Interest rate swap asset

 

 

12,555

 

 

 

6,280

 

Other assets

 

 

5,187

 

 

 

3,464

 

Total assets

 

$

809,681

 

 

$

765,895

 

Liabilities, redeemable noncontrolling interest, and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Line of credit

 

$

140,066

 

 

$

144,215

 

Accounts payable

 

 

20,076

 

 

 

13,947

 

Accrued liabilities and other payables

 

 

27,867

 

 

 

24,204

 

Current operating lease liabilities

 

 

5,197

 

 

 

-

 

Current finance lease liabilities

 

 

263

 

 

 

-

 

Current maturities of long-term debt

 

 

14,738

 

 

 

14,909

 

Total current liabilities

 

 

208,207

 

 

 

197,275

 

Other long-term liabilities

 

 

6,140

 

 

 

6,491

 

Long-term debt, less current maturities

 

 

165,577

 

 

 

169,095

 

Long-term operating lease liabilities

 

 

31,637

 

 

 

-

 

Long-term finance lease liabilities

 

 

429

 

 

 

-

 

Deferred tax liability

 

 

29,952

 

 

 

29,979

 

Deferred gain

 

 

10,332

 

 

 

10,666

 

Total liabilities

 

 

452,274

 

 

 

413,506

 

Commitments and contingencies (Note 13)

 

 

 

 

 

 

Redeemable noncontrolling interest

 

 

1,282

 

 

 

1,663

 

Stockholders' equity:

 

 

 

 

 

 

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

 

 

-

 

 

 

-

 

Common stock, no par value, 200,000,000 shares authorized, 61,691,054 issued and 58,819,160 outstanding at September 30, 2022 and 60,461,611 issued and outstanding at June 30, 2022.

 

 

-

 

 

 

-

 

Additional paid-in capital

 

 

382,347

 

 

 

377,897

 

Treasury stock, at cost: 2,871,894 shares held at September 30, 2022 and June 30, 2022, respectively.

 

 

(26,034

)

 

 

(26,034

)

Retained earnings (accumulated deficit)

 

 

406

 

 

 

(571

)

Total Vintage Wine Estates, Inc. stockholders' equity

 

 

356,719

 

 

 

351,292

 

Noncontrolling interests

 

 

(594

)

 

 

(566

)

Total stockholders' equity

 

 

356,125

 

 

 

350,726

 

Total liabilities, redeemable noncontrolling interest, and stockholders' equity

 

$

809,681

 

 

$

765,895

 

See notes to unaudited condensed consolidated financial statements.

1


Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

 

 

2022

 

 

2021

 

Net revenues

 

 

 

 

 

 

Wine, spirits and cider

 

$

52,052

 

 

$

36,287

 

Nonwine

 

 

25,810

 

 

 

19,400

 

 

 

 

77,862

 

 

 

55,687

 

Cost of revenues

 

 

 

 

 

 

Wine, spirits and cider

 

 

34,522

 

 

 

20,588

 

Nonwine

 

 

13,192

 

 

 

11,662

 

 

 

 

47,714

 

 

 

32,250

 

Gross profit

 

 

30,148

 

 

 

23,437

 

Selling, general, and administrative expenses

 

 

34,244

 

 

 

16,983

 

Amortization expense

 

 

1,811

 

 

 

651

 

Gain on litigation proceeds

 

 

(530

)

 

 

-

 

Gain on sale of property, plant, and equipment

 

 

(452

)

 

 

(340

)

Income (loss) from operations

 

 

(4,925

)

 

 

6,143

 

Other income (expense)

 

 

 

 

 

 

Interest expense

 

 

(3,381

)

 

 

(3,603

)

Net unrealized gain on interest rate swap agreements

 

 

9,327

 

 

 

1,393

 

Other, net

 

 

271

 

 

 

39

 

Total other income (expense), net

 

 

6,217

 

 

 

(2,171

)

Income before provision for income taxes

 

 

1,292

 

 

 

3,972

 

Income tax provision

 

 

658

 

 

 

1,193

 

Net income

 

 

634

 

 

 

2,779

 

Net loss attributable to the noncontrolling interests

 

 

(343

)

 

 

(25

)

Net income attributable to Vintage Wine Estates, Inc.

 

 

977

 

 

 

2,804

 

Accretion on redeemable Series B stock

 

 

-

 

 

 

-

 

Net income allocable to common stockholders

 

$

977

 

 

$

2,804

 

 

 

 

 

 

 

 

Net earnings per share allocable to common stockholders

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

0.05

 

Diluted

 

$

0.02

 

 

$

0.05

 

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

 

 

 

 

 

 

Basic

 

 

58,819,160

 

 

 

60,461,611

 

Diluted

 

 

58,819,160

 

 

 

60,461,611

 

See notes to unaudited condensed consolidated financial statements.

 

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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 (Accumulated Deficit)

 

 

Non-Controlling
Interests

 

 

Total Stockholders' Equity

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2022

 

$

1,663

 

 

 

61,691,054

 

 

$

-

 

 

 

2,871,894

 

 

$

(26,034

)

 

$

377,897

 

 

$

(571

)

 

$

(566

)

 

$

350,726

 

Stock-based compensation expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,622

 

 

 

-

 

 

 

-

 

 

 

4,622

 

Repurchase of public warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(172

)

 

 

-

 

 

 

-

 

 

 

(172

)

Shareholder distribution

 

 

(66

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net income (loss)

 

 

(315

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

977

 

 

 

(28

)

 

 

949

 

Balance, September 30, 2022

 

$

1,282

 

 

 

61,691,054

 

 

$

-

 

 

 

2,871,894

 

 

$

(26,034

)

 

$

382,347

 

 

$

406

 

 

$

(594

)

 

$

356,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

See notes to unaudited condensed consolidated financial statements.

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Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

 

Three Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

634

 

 

$

2,779

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

 

 

 

Depreciation

 

 

3,215

 

 

 

3,503

 

Non-cash operating lease expense

 

 

37

 

 

 

-

 

Amortization expense

 

 

1,978

 

 

 

750

 

Stock-based compensation expense

 

 

4,622

 

 

 

-

 

Provision for doubtful accounts

 

 

(280

)

 

 

(15

)

Net unrealized gain on interest rate swap agreements

 

 

(9,327

)

 

 

(1,393

)

(Benefit) provision for deferred income tax

 

 

(27

)

 

 

-

 

(Gain) on disposition of assets

 

 

(118

)

 

 

(6

)

Deferred gain on sale leaseback

 

 

(334

)

 

 

(334

)

Deferred rent

 

 

(2,079

)

 

 

128

 

Change in operating assets and liabilities (net of effect of business combinations):

 

 

 

 

 

 

Accounts receivable

 

 

48

 

 

 

863

 

Other receivables

 

 

795

 

 

 

(2,850

)

Inventories

 

 

(8,138

)

 

 

(4,671

)

Prepaid expenses and other current assets

 

 

3,916

 

 

 

884

 

Other assets

 

 

(1,766

)

 

 

116

 

Accounts payable

 

 

2,087

 

 

 

(3,071

)

Accrued liabilities and other payables

 

 

5,532

 

 

 

1,356

 

Net change in lease assets and liabilities

 

 

1,288

 

 

 

-

 

Net cash provided by (used in) operating activities

 

 

2,083

 

 

 

(1,961

)

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from disposition of assets

 

 

-

 

 

 

6

 

Purchases of property, plant, and equipment

 

 

(3,454

)

 

 

(7,792

)

Label design expenditures

 

 

(95

)

 

 

(59

)

Net cash used in investing activities

 

 

(3,549

)

 

 

(7,845

)

Cash flows from financing activities

 

 

 

 

 

 

Principal payments on line of credit

 

 

(34,466

)

 

 

(6,304

)

Proceeds from line of credit

 

 

30,317

 

 

 

17,675

 

Outstanding checks in excess of cash

 

 

4,042

 

 

 

387

 

Principal payments on long-term debt

 

 

(3,753

)

 

 

(2,482

)

Principal payments on finance leases

 

 

(67

)

 

 

-

 

Distributions to noncontrolling interest

 

 

(66

)

 

 

-

 

Repurchase of public warrants

 

 

(172

)

 

 

-

 

Payments on acquisition payable

 

 

(39

)

 

 

(74

)

Net cash (used in) provided by financing activities

 

 

(4,204

)

 

 

9,202

 

Net change in cash and restricted cash

 

 

(5,670

)

 

 

(604

)

Cash and restricted cash, beginning of period

 

 

50,292

 

 

 

123,679

 

Cash and restricted cash, end of period

 

$

44,622

 

 

$

123,075

 

Supplemental cash flow information

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

3,187

 

 

$

2,603

 

Income taxes

 

$

-

 

 

$

-

 

Noncash investing and financing activities:

 

 

 

 

 

 

Increase in operating lease assets and liabilities upon adoption of ASC 842

 

$

36,776

 

 

$

-

 

Increase in finance lease assets and liabilities upon adoption of ASC 842

 

$

759

 

 

$

-

 

See notes to unaudited condensed consolidated financial statements.

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Table of Contents

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 quarter ended September 30, 2022 (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 2023 and 2022 in these condensed consolidated financial statements are to the fiscal years ending or ended June 30, 2023 and June 30, 2022, respectively.