Truett-Hurst, Inc. Reports Results for the Fiscal Year Ended June 30, 2017 - Oct 13, 2017
Truett-Hurst, Inc. Reports Results for the Fiscal Year Ended June 30, 2017

HEALDSBURG, Calif., Oct. 13, 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 its fiscal year 2017 which ended on June 30, 2017.

Truett-Hurst, Inc.,  www.truetthurstinc.com

FY17 vs. FY16

For fiscal year 2017, total net sales from continuing operations totaled $21.5 million, a decrease of 16.5% compared to the prior year. The reduction was primarily the result of a FY16 retail exclusive project with a national retailer that was nonrecurring in FY17. In addition, sales related to two other retail exclusive partners decreased in FY17 vs. FY16. Consolidated gross margin from continuing operations was 33.5%, an increase of 1.4% over the prior year due to a change in the ratio of wholesale to direct to consumer sales.

Wholesale Segment

  • Net Sales of $15.6 million (-22.2% or -$4.4 million compared to the prior year)
  • Gross Margin of 21.9% (a decrease of 0.9 margin points compared to the prior year)
  • Gross Profit of $3.4 million (-25.1% or -$1.1 million compared to the prior year)

Direct to Consumer (DTC) Segment

  • Net Sales of $6.0 million (+3.3% or $0.2 million compared to the prior year)
  • Gross Margin of 63.9% (a decrease of 0.7 margin points compared to the prior year)
  • Gross Profit of $3.8 million (+2.2% or +$0.1 million compared to the prior year)

Operating Expenses

Operating expenses for the fiscal year ended June 30, 2017 were $8.0 million compared to $8.4 million in the prior year, a decrease of 4.0%.

"Fiscal year 2017 was a year of significant change for our company," commented Phillip L. Hurst, Truett-Hurst, Inc.'s President and CEO. "We moved our wine production to a new custom crush facility and purchased state of the art winemaking equipment to achieve greater quality control over our ultra-premium products. We broke ground on the VML tasting room at our Dry Creek Valley estate to enhance the reach of our DTC segment. Moreover, we put in place new sales, marketing, and finance leadership allowing us to strengthen our relationships with distributor partners and key customers."

Earnings Call

The Company will not be conducting an earnings call related to its results for the fiscal year ended June 30, 2017.

About Truett-Hurst, Inc.

Truett-Hurst, Inc. (NASDAQ: THST) 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 for the fiscal year ended June 30, 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, and expenses for the periods after June 30, 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; risks relating to our inventory; risks relating to our structure; 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 expected to be filed on October 13, 2017, 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

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)




June 30, 2017



June 30, 2016


Assets









Current assets:









Cash and cash equivalents


$

783



$

4,043


Accounts receivable



1,932




2,678


Inventories, net



20,609




19,918


Bulk wine deposits






271


Other current assets



505




125


Total current assets



23,829




27,035


Property and equipment, net



5,426




5,583


Intangible assets, net



506




496


Other assets, net



277




391


Total assets


$

30,038



$

33,505


Liabilities and Equity









Current liabilities:









Lines of credit


$

7,290



$

10,311


Accounts payable



1,994




1,351


Accrued expenses



546




820


Depletion allowance and accrual for sales returns



495




1,138


Current portion of capital lease obligation



11





Current maturities of long term debt



491




475


Total current liabilities



10,827




14,095


Long term debt, net of current maturities



3,002




3,189


Capital lease obligation, net of current portion



63





Total liabilities



13,892




17,284











Equity:









Shareholders' equity:









Preferred stock, par value of $0.001 per share, 5,000,000 shares authorized, none issued and outstanding at June 30, 2017 and June 30, 2017







Class A common stock, par value of $0.001 per share, 15,000,000 authorized, 4,426,789 issued and outstanding at June 30, 2017 and 4,306,609 issued and outstanding at June 30, 2016



4




4


Class B common stock, par value of $0.001 per share, 1,000 authorized, 7 issued and outstanding at June 30, 2017 and June 30, 2016







Additional paid-in capital



16,082




15,794


Accumulated deficit



(5,651)




(5,600)


Total Truett-Hurst, Inc. shareholders' equity



10,435




10,198


Noncontrolling interest



5,711




6,023


Total equity



16,146




16,221


Total liabilities and equity


$

30,038



$

33,505


 

TRUETT-HURST, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)




Fiscal Year Ended June 30,




2017



2016


Sales


$

22,153



$

26,517


Less excise tax



(617)




(734)


Net sales



21,536




25,783


Cost of sales



14,314




17,496


Gross profit



7,222




8,287


Operating expenses:









Sales and marketing



4,986




5,286


General and administrative



2,985




3,062


Loss on disposal of assets



62




17


Total operating expenses



8,033




8,365


Net loss from operations



(811)




(78)


Other income (expense):









Interest expense, net



(331)




(317)


Gain on lease termination, net



844





Gain (loss) on fair value of interest rate swap



131




(143)


Other expense



(35)




(8)


Total other income (expense)



609




(468)


Net loss before income taxes



(202)




(546)


Income tax expense



(2)




(2)


Net loss from continuing operations



(204)




(548)


Income from discontinued operations, net of tax






45


Net loss attributable to Truett-Hurst, Inc. and H.D.D. LLC



(204)




(503)


Net loss attributable to noncontrolling interest: H.D.D. LLC



(153)




(259)


Net loss attributable to Truett-Hurst, Inc.


$

(51)



$

(244)


Net loss per share:









Basic per share


$

(0.01)



$

(0.06)


Weighted average shares used in computing net loss per share:









Basic and diluted weighted average shares



4,377,994




4,155,151


 

TRUETT-HURST, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)




Fiscal Year Ended




June 30,




2017



2016


Cash flows from operating activities:









Net loss


$

(204)



$

(503)


Income from discontinued operations, net of tax






(45)


Net loss from continuing operations



(204)




(548)


Adjustments to reconcile net loss to net cash provided by operating

activities:









Depreciation and amortization



851




707


Stock-based compensation



129




375


(Gain) loss on fair value of interest rate swap



(131)




143


Gain on lease termination, net



(844)





Proceeds received on lease termination



955





Loss on disposal of assets



92




17


Changes in operating assets and liabilities, net









Accounts receivable



746




105


Inventories



(691)




2,162


Bulk wine deposits



271




74


Other current assets



(372)




166


Accounts payable



643




(1,538)


Accrued expenses



(151)




28


Depletion allowance and accrual for sales returns



(643)




90


Due to related parties






(134)


Net cash provided by net operating assets and liabilities of discontinued

operations






78


Net cash provided by operating activities



651




1,725


Cash flows from investing activities:









Acquisition of property and equipment



(674)




(428)


Acquisition of intangible and other assets



(50)




(137)


Proceeds from sale of assets



5




4


Net cash used in investing activities



(719)




(561)


Cash flows from financing activities:









Net (payments on) proceeds from lines of credit



(3,021)




1,277


Proceeds from long term debt



387




500


Payments on long term debt



(558)




(476)


Net cash (used in) provided by financing activities



(3,192)




1,301


Net change in cash and cash equivalents



(3,260)




2,465


Cash and cash equivalents at beginning of year



4,043




1,578


Cash and cash equivalents at end of year


$

783



$

4,043


Supplemental disclosure of cash flow information:









Cash paid for interest


$

327



$

324


Cash paid for income taxes


$

2



$

1


Non-cash investing and financing activities:









Equipment financed with capital lease obligation


$

74





 

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

 

SOURCE Truett-Hurst, Inc.


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