Quarter highlighted by Company's wine entering Ontario grocery channel and significant balance sheet improvement
NIAGARA-ON-THE-LAKE, ON, Feb. 17, 2017 /CNW/ - Diamond Estates Wines & Spirits Inc. ("Diamond Estates" or "the Company") (DWS-TSX Venture) today announced continued growth in revenue and net earnings for the three and nine-month periods ended December 31, 2016 ("Q3 2017" and "YTD 2017" respectively).
Q3 2017 Highlights:
- Revenue increased 12.2% to $8.8 million from $7.9 million in Q3 2016, driven by continued strength in export sales and solid growth in other channels;
- Gross margin increased slightly to 39.0% from 38.4%, reflecting a reduction in promotional activity in the LCBO channel;
- Q3 2017 Standardized EBITDA (see "Non IFRS Financial Measure") was consistent with last year at $0.6 million, reflecting the timing of export sales, which were more concentrated in the first half of this year than last year; Standardized EBITDA is up strongly on a YTD basis at $3.3 million compared with $2.4 million last year;
- Cash flow from operating activities, before changes in non-cash working capital items, increased 63.9% to $2.4 million in YTD 2017 from $1.5 million in YTD 2016;
- Net income in Q3 2017 was slightly positive versus a nominal loss in Q3 2016; YTD 2017 net income was $1.5 million compared with $0.4 million in YTD 2016;
- On December 20, 2016, the Company completed a private placement offering of 40 million common shares at a price of $0.22 per share for total gross proceeds of $8.8 million;
- Since March 31, 2016, the Company's working capital has increased to $10.9 million from $3.2 million (excluding debt then-classified temporarily as current) and its debt to equity ratio improved substantially to 0.59:1 from 1.76:1; and
- Following the Province of Ontario's issuance of the first tranche of licenses to permit wine sales in the grocery channel, Diamond Estates' VQA products are now available in 57 such locations.
"The third quarter of 2017 was a milestone period for our company," said Murray Souter, President and CEO of Diamond Estates. "First, the introduction of wine into grocery stores represents an important event for our industry, and we have secured listings for our brands with all chains and large independent grocery stores carrying wine. This direct entry into an expanding channel is important for the continued growth of our brand franchise and represents a significant business opportunity. Second, we completed an important equity financing that resulted in balance sheet metrics appropriate to our industry, and positions us to complete an expansion of our production facilities that is expected to result in an increase of approximately 50% in our processing, aging and bottling capacity. This expansion will enable us to meet the growing demand for our products in both domestic and export markets."
"Looking forward, the outlook is favourable," added Mr. Souter. "The winery division continues to meet or exceed expectations, with exports providing robust growth and domestic brands performing solidly. In the agency division, we are undertaking a number of initiatives to enhance gross margins including better product sourcing costs, pricing adjustments and promotional activities. These initiatives are expected to positively impact the Company's financial results in the coming months."
Murray Souter, CEO, and Alan Stratton, CFO, will host a conference call for the investment community today at 10:00 a.m. (ET). The call-in numbers for participants are (416) 764-8688 or (888) 390-0546. In addition, the call will be webcast live at: http://event.on24.com/wcc/r/1362501-1/497C39B01BFB920A02AAEA08F3B91E5F.
A replay of the call will be available until Friday, February 24, 2017. To access the replay, dial (416) 764-8677 or (888) 390-0541 (Passcode: 683971). A transcript of the call will be archived on the Company's website.
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer of high quality wines and a sales agent for over 120 beverage alcohol brands across Canada. The company operates two wineries in the Niagara region of Ontario producing VQA and blended wines under such well-known brand names as 20 Bees, EastDell Estates, Lakeview Cellars, Dois Amigos, Dan Aykroyd, Benchmark and Seasons. Through its partnership, Kirkwood Diamond Canada, the Company is the sales agent for top selling international brands in all regions of the country as well as being a distributor in the western provinces. These recognizable brands include Fat Bastard wines from France, Kaiken wines from Argentina, Charles Wells beers from England, Hpnotiq Liqueur from France, Anciano wines from Spain, Francois Lurton wines from France and Argentina, Blue Nun wines from Germany, coolers and spirits from Independent Distillers in New Zealand, Brick Brewing from Canada, Evan Williams Bourbon from USA, Flor de Cana rum from Nicaragua, Iceberg Vodka from Canada and many others. For further information on the company, please visit the company's SEDAR profile at www.sedar.com.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward Looking Statement
This press release contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Diamond Estates Wines and Spirits Inc. to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the economy generally; consumer interest in the services and products of the Company; financing; competition; and anticipated and unanticipated costs. While the Company acknowledges that subsequent events and developments may cause its views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the views of the Company as of any date subsequent to the date of this press release. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Non IFRS Financial Measure
Management uses net income (loss) and comprehensive income (loss) as presented in the unaudited interim condensed consolidated statements of net income (loss) and comprehensive income (loss) as well as "Standardized EBITDA" as a measure to assess performance of the Company. Standardized EBITDA is another financial measure and is reconciled to net income (loss) and comprehensive income (loss) below under "Results of Operations".
Standardized EBITDA is a supplemental financial measure to further assist readers in assessing the Company's ability to generate income from operations before taking into account the Company's financing decisions, depreciation of property, plant and equipment and amortization of intangible assets. Standardized EBITDA comprises gross margin less operating costs before financial expenses, depreciation and amortization, non-cash expenses such as share based compensation, one time and other unusual items, and income tax. Gross margin is defined as gross profit excluding depreciation on property, plant and equipment used in production. Operating expenses excludes interest, depreciation on property, plant and equipment used in selling and administration, and amortization of intangible assets.
Standardized EBITDA does not represent the actual cash provided by the operating activities nor is it a recognized measure of financial performance under IFRS. Readers are cautioned that this measure should not be considered as a replacement for those as per the unaudited interim condensed consolidated financial statements prepared under IFRS. The Company's definitions of this non IFRS financial measure may differ from those used by other companies.
SOURCE Diamond Estates Wines & Spirits Inc.
For further information: J. Murray Souter, President & CEO, Diamond Estates Wines & Spirits Inc., [email protected], 905.641.1042 Ext 234; Alan Stratton, CPA, CA, Chief Financial Officer, Diamond Estates Wines & Spirits Inc., [email protected], 905.641.1042 Ext 225