VWE - Earnings call transcript Q3 2022 | Vintage Wine Estates, Inc.

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Operator

Good afternoon. And thank you for attending today's Vintage Wine Estates Third Quarter Fiscal Year 2022 Results Conference Call. My name is Daniel and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions] I would now like to pass the conference over to our host, Deborah Pawlowski and the Investor Relations of Wine Estates. proceed. Please

Deborah Pawlowski

hello, in appreciate Vintage And and time We interest your Wine everyone. Danielle. your certainly today Thanks, Estates.

joining Wheatley, Joining Pat me President. Terry Roney, are Also our our Founder on and CEO, the us today. call and

the well are the and and are After Pat call for discuss year. of third our going new year remainder fiscal as overview Terry quarter an strategy Kris of will our as provide XXXX we We for open welcoming questions. our for CFO. of our Johnston, outlook to financial that, growth results the

we As actual formal make and uncertainties, you are results are during are aware, cause we as risks provided as as today's website. and documents These be what well the These well today. as can as slide forward-looking uncertainties and will Exchange the release are this other is events factors documents, -- statements during well are that slides our as as on to and conversation, session, that future found release, Commission. which are could These which may to outlined the factors with subject with on statements the Securities press risks as here stated well other materially Q&A some differ discussion, filed from accompanying X. other apply, in

measures, believe will we which be call, today's financial evaluating discuss will we our in non-GAAP During performance. some also useful

in prepared this of information in presentation isolation GAAP. for as with the consider additional not should accordance a or You substitute results

over to begin. quarter to X the it I will deck, will Terry. turn you turn to now Slide if So, Terry on

Terry Wheatley

Deb, you, and Thank welcome Great. everyone.

acquisitions increases growth by $XX.X excellent over million net with third strong year. in volume Organic XX% all XX% revenue in Our of segments. impressive across growth while quarter. was last was growth results a the net contributed This were revenue driven in quarter

strategy our Omni-channel differentiator is for clearly is a jam. our direct-to-consumer our business key market While us,

Those also storm, that demographic. across of garnered Dog broad very has by appeal market a our continued has Bar that outperform to appeal. brand but course, include, Firesteed headline broad market brands Our with a strong status the taken

very well how is And Operating many $XX five brand strong, customer the is well-recognized Our income Photograph and performing with in name times a for Pegase level Clos expanded adjusted homes. a is to brand $XXX,XXX our to record increased EBITDA nearly million. them. XX% pleased

covered Pat of being acquisitions due As revenue, period of synergies adjusted compared will was $XX.X combination and to a net EBITDA fully more $XX.X not with in about timing. talk actions. the by the pricing not yet expected integrated percentage higher-costs prior-year and

Meier’s execute of the provides X, you with front, as a our fairly advantage Group On this among the will strategy three Omni-channel January to acquisition marketing acquisition we year. On of Beverage remain competitive business evenly our our we continue balanced strategy slide on see in channels.

delivery benefiting program, label private strong our had addition BXB With channel very the Meier's. from of the of a quarter

less year's was brands. volume at still ordering business off-premise Nevertheless, was which COVID restrictions or kept folks impacted X.X% top up our sales X.X% tough that by For home quarter, last depletion our with comparisons wholesale tier and was for growth more against were and online.

points. our Vintage success to hallmark by the DPC of through Our Omni-channel consumer validate Wine multiple touch a and the is Estates channel of reaching continues strategy

Wine. and marketing, the the sales to initiative our although is next development, an to I build expanding our product value with for through One our categories wine. our new an latest should on opportunity be mention operational of consumer We diversification. of as strength, to this believe alternative leisure greater focused wine. with alternative plan growth beverage and beverages as We always new travel of expertise synergies is And many our examples enterprise, partnership presents products. leverage line which well, share across our core further reach will adjacency

to in exclusively us a low creates flavors category developing alcohol, and experience Tracy the Drinks to has infused breadth packaging, new brands of line the Tracy infusions, beverages. the Mason and alternative that product sales beverage CBD lead and joined Next operation. brings industry. in non-alcohol, devoted this encompasses beverage alternative marketing a space alcohol

Cider leveraging development products with as will it's We production Drinks to channels portfolio in capabilities, and ACE of Cider as CBD market. the the launch year, new plan Next latter anchor infused ACE's ACE our product business hemp alcohol-removed half well to and this

infused national and into focused, retail a cannabinoid our product plan to to We sparkling Pat. about recent also let and low hemp distribution. beverage women outlook. turn acquired the results, + to the botanical, Gem to which calorie, adaptogen for that, over CBD With allow Pat it acquisitions, property brand, me and we Jane, more our talk reformulate intellectual rights to infused

Pat Roney

Thank you, Terry. good And afternoon, everyone.

Slide you to see Turning segment discussion. additional X, will

gains. very channels. XX%, growth from $X.X note, average up of in also DTC drove across room our direct-to-consumer segment, expansion. traffic. order organic Recovery million. stable COVID tasting XX% Volume increased On-site and primarily strong strong with was quarter million on-site purchases $XX.X restrictions a gains. Wine up DTC reflecting which revenue As result for to customer was That revenue. our traffic all was continues Tasting a club room drive growth XX% had the our club Terry of had a membership XX.X%, of in mentioned, acquired to of impact we organic membership value growth and positive Of during engagements, combined

brands $X brands, which total depletion quarter helped million. the Acquired grew on Moving was off-premise challenging for of market, depletion was Priority saw of X.X%. up depletion revenue to amounted growth Wholesale, to comparison to across volume our which XX% against the volume X.X%. XX% about million, $XX.X revenue

revenue the ability million for our to acquisition The at quarter of were demand increasing Next, Meier's our results quite also customers driven our programs. by with XXX% label and the XX.X business, contributed deliver to strong BXB of was beginning million. $X.X our private

help should results. continue strong Our drive multi-brand to portfolio

being growth was programs margins segment in improved a BXB operating year-on-year, from income from get customer strong supply of result margin higher as able reflecting increase a to in the measurably. to XX%, XXX% first BXB of following issues the quarter. segment also a mix. The benefited chain With delays volume delivered XX%

touch the EBITDA basis recent With yet acquisition was to period to you on a be company year's adjusted third dry costs, and year higher EBITDA which in XX six, actions. Slide Adjusted turn and costs, by million integration costs, incurred the down XX.X% for goods impacted XXX margin were last points Adjusted If quarter, same not by was pricing I'll our EBITDA year-on-year. of quarter. net first offset public ago. up income XX% from the EBITDA

as all inflation executing not As and given continuously challenges you the aware, at as been production constraints, we well, environment. were well juggling labor have abated. plans and We're believe meet quite chain have the to delivery I supply all schedules. well

of of income in quarter execute to which available As $X our XX beginning CapEx VWE to $X.XX of VWE was to common synergies of demonstrates was take the available financial income to loss $X share normalized more the loss the up $XXX,XXX our level share. per the at prior-year $X.XX XX to growth Combined, diluted reflection plans. the available to acquisitions, was non-GAAP shareholders assets third a diluted are the excludes synergies, in accurate $XX.X Vinesse, redundant Net the performance. We per third ACE, it contribute opportunities. to strength, acquisitions On related from for income additional believe of to quarter months can quarter a in $X.X and the million net provides period. common Meier's $X.XX our $X.X for integrate million, that million. with prior-year was adjusted X shareholders the capture which intangible amortization and fully flexibility presents per On us basis, to of basis, income, or all compared order net to million $X.X Slide off period. cost million, acquisitions, net an in bringing the cash a costs, diluted roll year-to-date X on expected up adjusted months. next over share

approximately our to We $XX million from are year $XX the to increasing million. forecast to be million up CapEx $XX $XX for

maintenance and investments to $X productivity our we're improve and efficiencies. regarding enhance to modest $X opportunistic a operating million, is our While relatively CapEx

our With have identified we certain demand. the lines and that growing well meet acquisitions expanding as projects to returns we will provide strong expect

million are expansion increasing acquisitions. out-performance $XXX $XX that organic under in the quarter guidance unrestricted of noted liquidity I million included X, reflect At feature, and XXX.X for to you our As we before, company $XX.X we update see for CapEx, this at quarter. growth opportunities. and the accordion line lending available as credit, in available million identify a will the acquisitions. for approximately approximately had million revolving cash, On Slide available end, This in agreement investments the will we our our under the

fiscal In constraints, expect to know, you estimated we and do have to million we about risks our factored supply represents prospective million. forma this be range, related the our in pro revenue chain we not include EBITDA midpoint year of - guidance, expectations XX% of from expect as growth $XXX offsets as any in the labor the of 'XX. the in well over our we $XXX acquisitions range As guidance, will At pricing.

$XX EBITDA million for now the with $XX to million deal to range. continue the year expect to we As we in these be adjusted challenges,

We through from realize as public synergies year expect move begin our acquisitions company lower to our costs fiscal we to to and 'XX.

The strong Slide demographics tailwinds growth we behavior. X, Looking we investment consumer margins. thesis offer supported EBITDA higher deliver offers compelling believe we industry by as and tier and top to

includes remain solid strategy, our which shareholders. deliver to focused our on will to growth We performance acquisitions,

direct and leadership depth As team. the it's of I our been reflection believe have mentioned, we a Terry on and breadth outperforming

are in on to times. about very our summarize we these future Slide Finally, XX, tumultuous excited even

the operational while expect questions. in outpace innovate to continue growth. that, line also drive in With to we Danielle, the open to call for We continue industry and can to efficiencies

Operator

registered. as Certainly. [Operator We Instructions] are here pause briefly will questions

Vivien Cowen. Please proceed. first question comes The Azer of from

Stanley Harrison Vivas

for Harrison the Great. for Thanks much Vivien. so taking Vivas This questions. is on

so wanted is for headlines year? the frost your ask comment parts seen as as so we've Oregon, any just around late-season this harvest First well expectations some the Valley, to of in one both Willamette around I California;

Pat Roney

be of and probably little a can bit at to was first. Well, the years. for crop sure years. the XX% there couple XX% we is going been to normal last It's to issues like levels of Oregon speak up There

in necessarily tell in frost been significant come not there We're point. that's to still nothing has a California, California to early where So And is going spotty certain areas, out. too but surprise. this at

Stanley Harrison Vivas

Understood.

you're at XX.X%. previous EBITDA than bits guidance, to looking it lighter for is looks the Turning your implied margin like about XXX that

of the about, cost -- that to increases. You had changed of expectations? over caused pricing course you talked quarter margin those EBITDA Pat, a lot the your What most reduce offsetting

Pat Roney

we range still increases continued revenue suppliers. And just that expectation seen EBITDA. of providing our as and lot of have as a well Well, significant price from we're a is

So, we that a may in bit perform today. of we're the EBITDA, comfortable little but we with provided the numbers terms better

Stanley Harrison Vivas

That's helpful another back-of-the-queue. Okay. with

Operator

question The of from Thank comes Hannan next you. Please Genuity. Luke Canaccord proceed.

Luke Hannan

afternoon, able those a more sense there's will value magnitude material be price start price price get price QX to a Pat, everyone. with think idea? enough you that the an customer. primarily show I follower, results. headroom are your guys that Good with and going whether us is guys I to increasing you maintaining when of increases mentioned want to give that that but the know increases. through proposition I for while and see the to prices Thanks. you increase continue of you that flow we're up wanted in Can I to

Pat Roney

question, It's a good Luke.

It pricing ground seen. the think goods. there to from may look forward of price first an be increases increases an X% and I now we've the And on continued it as with will suppliers increase and basis, and overall our car revenue. up annualized dry annualized our on we expectations translate

again haven't taking rolled out, up We sometime next late prices fiscal year.

Luke Hannan

markets if was then to pipeline. -- able the guys know one stepped private why what's leverage part able the of Okay. I any using Understood. public the stock being your acquisition multiple? you be because able for a executing that arbitrage on of or down to your vehicle. by trading consummate to know a that lower pipeline is of you'd switching reasons gears be you'd acquisition your on to take guys advantage potential curious in pipeline a public to into public to slow there with that And you out I'm inhibitors

Pat Roney

No.

very opportunities very that pipeline have And in And cash bullish optimistic of go to have and We about do a ahead acquisitions about to and the announce solid near very hopefully contemplating term. position we enough ahead in certainly that the all a it. we're us. acquisitions we're of actually we'll be currently and

Luke Hannan

for just probably be initial one I'll terms for Should the what than Okay. fiscal guys different we are materially up question to the pass this guidance. curious early, Last to then that past? It's 'XX, asking just be you me. that's your on have the been maybe, of in line here. able growth anything too And expectations but expecting put rates I'm in

Pat Roney

acquisitions continue right. Luke, and as Yeah, early well finalizing It's our we planning continue and stand the to stand for of and and additional behind about next as plan to behind growth. think some I our as budget to to but middle the organic we a guidance process you're probably year talk little make history of our in growth acquisitions,

looks future the -- bright. it's think I So,

Luke Hannan

callers. Appreciate Understood.

you. Next, thank

Operator

Thank you.

Hedgeye. Next Please question Daniel of Biolsi proceed. comes from

Daniel Biolsi

I brand growth new much robust of shelf elaborate had if accounts doors wondering a out seasonal win was or that's can could if the store maybe And or break Pat. year-round Hi if a those you program? or you you very on how are wins.

Pat Roney

the Some that delayed new doors. related accelerates Dog things having that's and come good some us. were properties growth for and And for new its then timing-related, acquisitions that up. some we new related that's some distribution to consumers to In was the accelerated for in did. particular, sure year it's of timing last mark some getting more on the bookings Bar and so, that. points, its a store accelerate of growth people the of it philosophy, direct-to-consumer a side out then back new continues Having to to lot of the we're we're hospitality And brands, is from

For wins. all those are good solid

Daniel Biolsi

price a distributors from to you on manage little buying increases? can customers you the more of how you are And other elaborate and going ahead

Pat Roney

next to -- buy-in -- isn't their side go of buy-in there the is opportunity manage that the used and -- any really but the they forward consumer it day, their don't the of announce the the they we consumers announce the We of relatively aren't commitments they already on floor of an making some pricing their of wholesaler's average before XX so really ahead they way have in doing major cover of enough retailers. with inventory exception floor price that sure have to increases. cash, much to They inventory we the the their on time, days

do we expect So, see buy-in. to we nor lot haven't of really a seen,

Daniel Biolsi

Thanks for that.

Operator

[Operator from Instructions] Next of Feldman question is Joe Telsey proceed. Advisory. Please

Joseph Feldman

guys. Feldman afternoon, from good It's Joe Hey, Telsey.

CapEx. You mentioned the

a some that bit. hoping You And higher? you're what took budget the those achieve projects new about up Can from you new that of to projects. driving the talk are

Pat Roney

new putting got to that's savings as Meier's books efforts, for have some, which will the which this Leticia a Those of the of Canian will hard some ACE the kinds under opportunities tremendous and And some of like multi-million-dollar into facility, Yeah. really more brands out and improve and we're allow on only bring significant capital prices not continue Kornell major overall but Paula delays, then us that some to those and of are we cider of sparkling some sparkling which for operating of us. canning to facility for and Leticia -- are projects. instance, there. behind into that line We've significantly sparkling year is volume projects last get efficiencies savings will grow the versus we higher for have the investment. Coast the spilled our translate to allow it East It's there are will us things will provide a year, the -- the new line facility freight

Joseph Feldman

the but with at it you you the helpful. or what start pressure, of cost a it was each than expected much inflation? Thanks. the Got of I and -- little the break where big the can a relative was what guess, to was it. And it it of That's then of like also the regard two thought to Like, more lack increased chain felt lag, more buckets side supply of ago? those you quarter, Was how different the quarter those? of down the synergies acquisition not you delay and

Pat Roney

Well, I with Most it primary more increases this the of is actually impact, our the know supply the chain things capsules. driver, Ukraine mean, of people some it's is don't those the just to supplier. probably wine that shorter world. Wine the from supply price in -- -- notice suppliers are is there happened, largest

that. and acquisitions. and with are producing while, expected. provide of So, We're a little actually cost pro all it with continued But basis we've side now without optimistic it's always acquisitions the we seen and our going the acquisitions, and We've roll increases actual vendors through wines fully was forma and that results mutations glass price [Indiscernible], seen we've when just outs started the - takes but a And goods. shortages our from it stock we as the about on continue. it's now those with our of just on

see those see just will to coming some also and pick we facilities the the own So, that. to last and in and of we'll begin of months we've pack benefits so benefit month of our transitioned

are to plus for the doing at also move some made going made CapEx facility some Meier's that projects. other can also -- we cider well that plus capacity acquisitions to we've of hard it to minor X.X and get so the cases increase So, we million tank ready we're

Joseph Feldman

current and guys, Thanks, good helpful. that's Now this with luck quarter.

Pat Roney

you. Thank

Operator

queue, no are the There you. closing so questions in it I pass back team to management over will further the currently remarks. Thank for

Pat Roney

and time profitability, overall and drive at call continue Vintage positive as next remain the taking Thank continue to to Estates to today very continue improve to you. look on Wine optimistic providing and like excited revenue we everybody we forward to to get quarter. results for I'd we and thank the

Operator

call. year for That Vintage your Wine participation. quarter XXXX conference fiscal you concludes the results Thank Estates third

disconnect may You now your line.

Vintage Wine Estates (VWESQ) 17 May 222022 Q3 Earnings call transcript