Truett-Hurst, Inc. Reports Third Quarter and Nine Months Ended March 31, 2017 Results - May 11, 2017
Truett-Hurst, Inc. Reports Third Quarter and Nine Months Ended March 31, 2017 Results

HEALDSBURG, Calif., May 11, 2017 /PRNewswire/ -- Truett-Hurst, Inc. (NASDAQ: THST), which operates an innovative super-premium and ultra-premium wine sales, marketing, and production company based in the acclaimed Dry Creek Valley of Sonoma County, California, reported results for the third quarter of fiscal year 2017 which ended on March 31, 2017.

Nine months FY17 vs. FY16
For the nine months ended March 31, 2017, total net sales from continuing operations decreased 14.2% compared to the same period in the prior year and totaled $17.0 million.  Consolidated gross margin from continuing operations was 34.7%, an increase of 1.8 margin points over the prior year.

Wholesale

  • Net Sales of $12.4 million (-19.9% or $3.1 million)
  • Gross Margin of 23.8% (a decrease of 0.1 margin points)
  • Gross Profit of $2.9 million (-$0.8 million)

Direct to Consumer (DTC)

  • Net Sales of $4.6 million (+5.9% or $0.3 million)
  • Gross Margin of 64.1% (a decrease of 0.8 margin points)
  • Gross Profit of $2.9 million (+$0.1 million)

Operating Expenses
Operating expenses for the nine months ended March 31, 2017 were $6.0 million compared to $6.2 million in the same period in the prior year, though the expenses expressed as a percentage of net sales increased due to the net sales shortfall. Sales and marketing expenses decreased $0.1 million, 22.7% of net sales vs 19.8% from the prior year period. General and administrative expenses decreased $0.1 million, 12.7% of net sales vs 11.3% from the prior year period.

Third Quarter FY17 vs. FY16
For the three months ended March 31, 2017, total net sales from continuing operations increased 8.9% compared to the same periods in the prior year and totaled $5.3 million.  Consolidated gross margin from continuing operations was 37.9%, an increase of 2.8 margin points over the prior year. 

Wholesale

  • Net Sales of $3.9 million (12.4% or $0.4 million)
  • Gross Margin of 27.8% (an increase of 4.6 margin points)
  • Gross Profit of $1.1 million (+$0.3 million)

Direct to Consumer (DTC)

  • Net Sales of $1.4 million (+0% or $0.0 million)
  • Gross Margin of 65.8% (an increase of 1.5 margin points)
  • Gross Profit of $0.9 million (+$0.0 million)

Operating Expenses
Operating expenses for the three months ended March 31, 2017 increased by $0.1 million compared to the same period in the prior year. 

Earnings Call
Truett-Hurst, Inc.'s management will host a conference call on May 11, 2017, 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 2017 Third Quarter Results Call, or visit our webcast link: https://www.webcaster4.com/Webcast/Page/1132/21104.  

A supporting presentation, in advance of the conference call, will be available at:

http://www.truetthurstinc.com

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 10107310.  The call will be available one hour after the end of the conference call through May 18, 2017 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 super-premium, ultra-premium and luxury wine sales, marketing and production company based in the acclaimed Dry Creek Valley 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 quarter ended March 31, 2017 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, expenses, for the period ended March 31, 2017.  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.

TRUETT-HURST, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)








March  31, 2017


June 30, 2016



(unaudited)



Assets





Current assets:





    Cash and cash equivalents

$

542

$

4,043

Accounts receivable


1,985


2,678

Inventories, net


19,336


19,918

Bulk wine deposits


568


271

Other current assets


180


125

Total current assets


22,611


27,035






Property and equipment, net


5,356


5,583

Intangible assets, net


503


496

Other assets, net


300


391

Total assets

$

28,770

$

33,505






Liabilities and Equity





Current liabilities:





Lines of credit

$

4,311

$

10,311

Accounts payable


3,024


1,351

Accrued expenses


392


1,348

Depletion allowance


566


610

Current maturities of long term debt


507


475

Total current liabilities


8,800


14,095






Long term debt, net of current maturities


3,115


3,189

Total liabilities


11,915


17,284






Commitments and Contingencies





Equity:





Stockholders' equity





  Preferred stock, par value of $0.001 per share, 5,000,000 shares authorized,





  none issued and outstanding at March  31, 2017 and June 30, 2016


-


-

  Class A common stock, par value of $0.001 per share, 15,000,000 authorized,





  4,426,789 and 4,306,609 issued and outstanding at March  31, 2017 and June 30, 2016


4


4

  Class B common stock, par value of $0.001 per share, 1,000 authorized, 7





  issued and outstanding at March  31, 2017 and June 30, 2016


-


-

Additional paid-in capital


15,890


15,794

Accumulated deficit


(5,296)


(5,600)

Total Truett-Hurst, Inc. equity


10,598


10,198

Noncontrolling interest


6,257


6,023

Total equity


16,855


16,221

Total liabilities and equity

$

28,770

 

$

33,505

                               

TRUETT-HURST, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(unaudited)







Three Months Ended



Nine Months Ended




March  31,



March 31,




2017


2016



2017


2016


Sales

$

5,427

$

5,090


$

17,487

$

20,367


Less excise tax


(87)


(184)



(525)


(587)


Net sales


5,340


4,906



16,962


19,780













Cost of sales


3,318


3,186



11,074


13,272













Gross profit


2,022


1,720



5,888


6,508













Operating expenses:











Sales and marketing


1,236


1,103



3,843


3,925


General and administrative


641


635



2,156


2,244


Loss on disposal of assets


4


11



47


10


Total operating expenses


1,881


1,749



6,046


6,179













Income  (loss)  from operations


141


(29)



(158)


329













Other income (expense), net:











Interest expense, net


(71)


(73)



(248)


(242)


Other


(14)


(80)



945


(148)


Total other  income (expense)


(85)


(153)



697


(390)


Net income (loss) before income taxes


56


(182)



539


(61)


Income tax expense


(1)


(1)



(2)


(1)


Net income  (loss) from continuing operations


55


(183)



537


(62)


Income from discontinued operations, net of tax


-


-



-


45


Net income (loss)


55


(183)



537


(17)


Net (income) loss attributable to noncontrolling interest: H.D.D. LLC


(22)


90



(234)


(55)


Net income  (loss) attributable to Truett-Hurst, Inc.

$

33

$

(93)


$

303

$

(72)













Net income (loss) per share:











Basic per share

$

0.01

$

(0.02)


$

0.07

$

(0.02)


Diluted per share

$

0.00

$

(0.02)


$

0.04

$

(0.02)














Weighted average shares used in computing net income (loss) per share:






















Basic weighted average shares


4,365,122


4,253,026



4,323,487


4,114,545



Diluted weighted average shares


7,459,702


4,253,026



7,572,351


4,114,545




















 

TRUETT-HURST, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)





Nine Months Ended


March 31,



2017


2016

Cash flows from operating activities:





Net income (loss)

$

537

$

(17)

Income  from discontinued operations, net of tax


-


(45)

Net income (loss) from continuing operations


537


(62)

Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization


623


496

Stock-based compensation


96


274

Deferred rent


-


(5)

(Gain) loss on fair value of interest rate swap


(140)


112

Loss  on disposal of assets


188


10






Changes in operating assets and liabilities, net





Accounts receivable


693


1,061

Inventories


582


2,289

Bulk wine deposits


(297)


(595)

Other current assets


(37)


29

Accounts payable


1,673


(875)

Accrued expenses


(834)


(332)

Depletion allowance


(44)


216

Due to related parties


-


(38)

Cash provided by discontinued operations


-


78

Net cash provided by operating activities


3,040


2,659






Cash flows from investing activities:





Acquisition of property and equipment


(473)


(395)

Acquisition of intangible and other assets


(31)


(125)

Proceeds from sale of assets


5


4

Net cash used in investing activities


(499)


(516)






Cash flows from financing activities:





Net (payments on) proceeds from line of credit


(6,000)


1,022

Proceeds from long term debt


388


500

Payments on long term debt


(430)


(373)

Net cash (used in) provided by financing activities


(6,042)


1,149






Net change in cash and cash equivalents


(3,501)


3,292

Cash and cash equivalents at beginning of period


4,043


1,578

Cash and cash equivalents at end of period

$

542

$

4,870






Supplemental disclosure of cash flow information:





Cash paid for interest

$

245

$

242

Cash paid for income taxes

$

2

$

-






 

For more information, contact:                               
Truett-Hurst, Inc.
Evan B. Meyer,                                                                        
Chief Financial Officer              
Phone: 707.431.4423                                                                
Fax: 707.395.0289                                                                    
Email: evan@truetthurstinc.com

 

SOURCE Truett-Hurst, Inc.


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