HEALDSBURG, Calif., Nov. 7, 2016 /PRNewswire/ -- Truett-Hurst, Inc. (NASDAQ: THST), which operates 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, reported results for the first quarter of fiscal year 2017 which ended on September 30, 2016.
First Quarter FY17 vs. FY16
For the first quarter of fiscal year 2017, total net sales from continuing operations totaled $5.9 million, a decrease of 7.6% compared to the same period in the prior year. Consolidated gross margin from continuing operations was 31.1%, a decrease of 2.7% over the prior year.
Wholesale
- Net Sales of $4.5 million ( a decrease of 11.7%) or $.6 million)
- Gross Margin of 21.6% (an decrease of 4.0 margin points)
- Gross Profit of $1.0 million (a decrease of $0.3 million)
Direct to Consumer (DTC)
- Net Sales of $1.4 million ( an increase of 9.1% or $0.1 million)
- Gross Margin of 62.3% (a decrease of 4.4 margin points)
- Gross Profit of $0.8 million, flat to prior year
Operating Expenses:
Operating expenses for the three months ended September 30, 2016 were $2.1 million compared to $2.3 million in the same period in the prior year.
"We exceeded our case sales objectives, however, the mix varied from expectation therefore our wholesale net sales and gross margins were lower, DTC gross margins are down due to several online promotions and should come back up over the year. I'm pleased that are our expenses were lower as we work to get our mix back on track," commented Phillip L. Hurst, Truett-Hurst, Inc.'s President and CEO.
Earnings Call
Truett-Hurst, Inc.'s management will host a conference call today, November 7, 2016, at 1:30 p.m. PT (4:30 p.m. ET) to discuss the Company's financial results. To listen to the conference call, dial in approximately ten minutes before the scheduled call to 1.888.347.6082 or international at 1.412.902.4286 and request Truett-Hurst, Inc.'s Fiscal Year 2016 Results Call, or visit our webcast link: https://www.webcaster4.com/Webcast/Page/1132/17739.
A supporting presentation, in advance of the conference call, will be available at:
To listen to a replay of the call, dial US Toll Free: 1.877.344.7529 or International Toll: 1.412.317.0088 and enter the replay access code 10094603. The call will be available one hour after the end of the conference call through November 14, 2016 at 9:00 am ET.
About Truett-Hurst, Inc.
Truett-Hurst, Inc. (NASDAQ: THST, www.truetthurstinc.com) is a holding company and its sole asset is the controlling equity interest in H.D.D. LLC., an innovative and fast-growing super-premium, ultra-premium and luxury wine sales, marketing and production company based in the acclaimed Dry Creek and Russian River Valleys of Sonoma County, California. Truett-Hurst, Inc. is headquartered in Healdsburg, California.
Forward-Looking Statements
This press release and our earnings conference call for the first quarter ended September 30, 2016 contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, 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, and expenses for the periods after June 30, 2016. 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 which 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; 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. For additional information, see our Annual Report on Form 10-K filed on September 28, 2016, or our other reports currently on file with the Securities and Exchange Commission, which contain a more detailed discussion of risks and uncertainties that may affect future results. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
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TRUETT-HURST, INC. AND SUBSIDIARY |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands, except share data/per share data) |
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September 30, 2016 |
June 30, 2016 |
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(unaudited) |
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Assets |
||||
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Current assets: |
||||
|
Cash and cash equivalents |
$ |
4,324 |
$ |
4,043 |
|
Accounts receivable |
3,890 |
2,678 |
||
|
Inventories, net |
21,666 |
19,918 |
||
|
Bulk wine deposits |
- |
271 |
||
|
Other current assets |
215 |
125 |
||
|
Total current assets |
30,095 |
27,035 |
||
|
Property and equipment, net |
5,560 |
5,583 |
||
|
Intangible assets, net |
498 |
496 |
||
|
Other assets, net |
367 |
391 |
||
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Total assets |
$ |
36,520 |
$ |
33,505 |
|
Liabilities and Equity |
||||
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Current liabilities: |
||||
|
Lines of credit |
$ |
10,034 |
$ |
10,311 |
|
Accounts payable |
4,055 |
1,351 |
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Accrued expenses |
976 |
820 |
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Depletion allowance |
612 |
610 |
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Due to related parties |
64 |
- |
||
|
Accrual for sales returns |
34 |
528 |
||
|
Current maturities of long term debt |
512 |
475 |
||
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Total current liabilities |
16,287 |
14,095 |
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Long term debt, net of current maturities |
3,363 |
3,189 |
||
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Total liabilities |
19,650 |
17,284 |
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Commitments and contingencies |
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Equity: |
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Stockholders' equity |
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Preferred stock, par value of $0.001 per share, 5,000,000 shares authorized, none issued and outstanding at September 30, 2016 and June 30, 2016 |
- |
- |
||
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Class A common stock, par value of $0.001 per share, 15,000,000 authorized, 4,306,609 issued and outstanding at September 30, 2016 and June 30, 2016 |
4 |
4 |
||
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Class B common stock, par value of $0.001 per share, 1,000 authorized, 7 issued and outstanding at September 30, 2016 and June 30, 2016 |
- |
- |
||
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Additional paid-in capital |
15,889 |
15,794 |
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Accumulated deficit |
(5,283) |
(5,600) |
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Total Truett-Hurst, Inc. equity |
10,610 |
10,198 |
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Noncontrolling interest |
6,260 |
6,023 |
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Total equity |
16,870 |
16,221 |
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Total liabilities and equity |
$ |
36,520 |
$ |
33,505 |
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TRUETT-HURST, INC. AND SUBSIDIARY |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except share data/per share data) |
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(unaudited) |
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Three Months Ended |
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September 30, |
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2016 |
2015 |
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Sales |
$ |
6,102 |
$ |
6,533 |
|
Less excise tax |
(216) |
(163) |
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Net sales |
5,886 |
6,370 |
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Cost of sales |
4,056 |
4,220 |
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Gross profit |
1,830 |
2,150 |
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Operating expenses: |
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Sales and marketing |
1,224 |
1,438 |
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General and administrative |
812 |
891 |
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Loss (gain) on disposal of assets |
17 |
(1) |
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Total operating expenses |
2,053 |
2,328 |
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Loss from operations |
(223) |
(178) |
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Other income (expense): |
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Interest expense, net |
(80) |
(83) |
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Gain on termination of lease |
844 |
- |
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Other |
14 |
(93) |
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Total other income (expense), net |
778 |
(176) |
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Net income (loss) before income taxes |
555 |
(354) |
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Income tax expense |
1 |
- |
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Net income (loss) from continuing operations |
554 |
(354) |
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Income from discontinued operations, net of tax |
- |
16 |
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Net income (loss) attributable to Truett-Hurst, Inc. and H.D.D. LLC |
554 |
(338) |
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Net (income) loss attributable to noncontrolling interest: H.D.D. LLC |
(237) |
126 |
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Net income (loss) attributable to Truett-Hurst, Inc. |
$ |
317 |
$ |
(212) |
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Net income (loss) per share: |
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Basic weighted avg shares |
$ |
0.07 |
$ |
(0.05) |
|
Diluted weighted average shares |
$ |
0.04 |
$ |
- |
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Weighted average shares used in computing net income (loss) per share: |
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Basic weighted average shares |
4,306,609 |
4,027,183 |
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Diluted weighted average shares |
7,675,917 |
- |
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TRUETT-HURST, INC. AND SUBSIDIARY |
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In thousands) |
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(unaudited) |
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Three Months Ended |
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September 30, |
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2016 |
2015 |
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Cash flows from operating activities: |
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Net income (loss) |
$ |
554 |
$ |
(338) |
|
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Income from discontinued operations, net of tax |
- |
(16) |
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Net income (loss) from continuing operations |
554 |
(354) |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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|
Depreciation and amortization |
200 |
154 |
|||
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Reserve for assets to be abandoned |
127 |
- |
|||
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Stock-based compensation |
95 |
86 |
|||
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(Gain) loss on fair value of interest rate swap |
(23) |
72 |
|||
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Loss (gain) on disposal of assets |
17 |
(1) |
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Changes in operating assets and liabilities, net |
|||||
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Accounts receivable |
(1,212) |
(797) |
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Inventories |
(1,748) |
(2,148) |
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|
Bulk wine deposit |
271 |
320 |
|||
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Other current assets |
(90) |
176 |
|||
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Accounts payable |
2,704 |
1,972 |
|||
|
Accrued expenses |
179 |
401 |
|||
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Depletion allowance |
2 |
(100) |
|||
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Accrual for sales returns |
(494) |
(6) |
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Due to related parties |
64 |
200 |
|||
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Cash provided by discontinued operations |
- |
61 |
|||
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Net cash provided by operating activities |
646 |
37 |
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Cash flows from investing activities: |
|||||
|
Acquisition of property and equipment |
(288) |
(260) |
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Acquisition of intangible and other assets |
(15) |
(42) |
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Proceeds from sale of assets |
4 |
2 |
|||
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Net cash used in investing activities |
(299) |
(300) |
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Cash flows from financing activities: |
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|
Net (payments on) proceeds from line of credit |
(277) |
961 |
|||
|
Proceeds from long-term debt |
387 |
481 |
|||
|
Payments on long-term debt |
(176) |
(85) |
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Net cash (used in) provided by financing activities |
(66) |
1,357 |
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Net change in cash and cash equivalents |
281 |
1,094 |
|||
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Cash and cash equivalents at beginning of period |
4,043 |
1,578 |
|||
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Cash and cash equivalents at end of period |
$ |
4,324 |
$ |
2,672 |
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Supplemental disclosure of cash flow information: |
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Cash paid for interest |
$ |
80 |
$ |
81 |
|
|
Cash paid for income taxes |
$ |
1 |
$ |
- |
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For more information, contact:
Truett-Hurst, Inc.
Evan Meyer,
Chief Financial Officer
Phone: 707.431.4423
Fax: 707.395.0289
Email: Evan@truetthurst.com
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SOURCE Truett-Hurst, Inc.