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The foundations for future organic growth
Niagara-on-the-Lake, Ontario – (Newsfile Corp. – November 25, 2021) – – Diamond Estates Wines & Spirits Inc. (TSXV: DWS) (“Diamond Estates” or “the Company”) announced today its position results for the three and six months ended September 30, 2021 (“Q2 2022 and“ YTD 2022 ”respectively).
Summary Q2 2021:
- Revenue for the second quarter of 2022 was $ 7.1 million, a decrease of $ 0.1 million from revenue of $ 7.2 million in the second quarter of 2021, due to observed weakness during July and August in the agency sector due to a combination of delayed orders from provincial retailers in commission markets and procurement. chain delays in Western Canada. The weakness of the agency activity was offset by the increase in sales within the winery division. The removal of some of the restrictions related to the COVID pandemic has resulted in the reopening of many on-site and private retail accounts nationwide, in addition to the resumption of export orders from overseas distributors.
- Gross profit for the second quarter of 2022 was $ 2.7 million, down $ 0.4 million from $ 3.1 million in the second quarter of 2021, and the gross profit as a percentage of revenue was 38.1% for the second quarter of 2022, compared to 43.0% in the second quarter of 2021. The change in the mix of sales versus commissions buy / sell markets and constraints procurement in the agency business led to a decrease in the gross margin of the agency business from 44.0% YTD 2022 to 38.0% YTD 2022.;
- EBITDA was $ (0.2) million in the second quarter of 2022, a decrease of $ 1.0 million from $ 0.8 million in the second quarter of 2021, largely due to lower gross margin and an increase in employee compensation of $ 0.4 million. The increase in employee compensation is directly attributable to the reduction in government assistance funds received this year compared to last year; and
- The net loss amounted to $ 1.0 million, compared to a net loss of $ 0.4 million in the second quarter of 2021.
The company saw an increase in sales in the Winery business, but also some weakness in the agency business in the second quarter of fiscal 2022. The strength of the Winery business continued through the second quarter , although sales continue to be affected by government restrictions. Although other restrictions were lifted in the second quarter of 2022, the Company expects sales to continue to be affected by COVID-19 measures, particularly with domestic and international travel and business disruptions. ‘supply.
- On October 6, 2021, the Company completed two acquisitions, a capital increase and converted its convertible debentures into equity. The acquisitions are expected to be highly profitable for Diamond’s current business, generate additional revenue, create brand expansion, leverage more of the company’s infrastructure and generate cost reduction synergies.
- For the rolling twelve-month period ended September 30, 2021, the Company did not meet its fixed covenant ratio. The breach of the commitment was corrected on October 6, 2021 with the proceeds of the capital increase, as authorized by the Company’s credit institution.
Recent events are a testament to the confidence and strength in the company and also lay the foundation for future organic growth.
“As the pandemic and government restrictions continue to impact our business and our customers in unusual and unprecedented ways, we see encouraging signs that these factors are starting to fade away as the pandemic abates.” said Murray Souter, President and CEO of Diamond Estates. “Our wine business has started to return to more normal volumes, especially in our on-site business, as restaurant restrictions ease. Additionally, we are starting to see an increase in our export business as we move forward. other countries are relaxing their restrictions. We believe that over the longer term, we will see a return to sales growth and pre-pandemic margins as more normal conditions return. “
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 brands of alcoholic beverages across Canada. The company operates two wineries, one in Ontario and one in British Columbia, which primarily produce VQA wines under well-known brands like 20 Bees, Creekside, EastDell, Lakeview Cellars, Queenston Mile, Fresh, Seasons, Serenity and Backyard Vineyards . .
Through its commercial division, Trajectory Beverage Partners (“TBP”), the Company is the commercial agent for several major international brands in all regions of the country as well as a distributor in the Western provinces. These recognizable brands include Josh wines from California, Fat Bastard and Andre Lurton wines from France, Kaiken wines from Argentina, Blue Nun wines from Germany, François Lurton wines from France and Argentina, Felix Solis wines. from Spain, Waterloo Brewing from Canada, Landshark Lager from the United States, Marston’s beers from England, Edinburgh Gin from Scotland, Scotch single-malt whiskeys Tamdhu, Glengoyne and Smokehead, Barcelo rum from the Dominican Republic, CK Mondavi & Family wines including Charles Krug from Napa, Bols Vodka from Amsterdam, Koyle Family Wines from Chile, Pearse Lyons whiskeys and gins from Ireland and Fontana di Papa wines from Italy.
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”, ” intention ”,“ anticipates ”or“ does not anticipate ”, or“ believes ”, or variations of these words and phrases or state that certain actions, events or results“ could ”,“ could ”,“ would ”, “Could” or “would” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Diamond Estates Wines and Spirits Inc. to be materially different from the future results, performance or achievements expressed or implied by forward-looking statements. 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. These forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the economy in general; consumer interest in the Company’s services and products; funding; competetion; and planned and unanticipated costs. Although the Company recognizes that subsequent events and developments may cause its opinions to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be taken as representing the views of the Company as of a date subsequent to the date of this press release. Although the Company has attempted to identify material factors which could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors which may cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors which may cause actions, events or results are not as expected, 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. Therefore, 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 condensed interim consolidated statements of net income (loss) and comprehensive income (loss) as well as “EBITDA” as a measure. to assess the performance of the Company. EBITDA is another financial measure and is reconciled to net income (loss) and comprehensive income under the heading “Results of operations” in the Company’s MD&A.
EBITDA is an additional financial measure to further help readers assess the Company’s ability to generate operating income before considering Company funding decisions, amortization of property, plant and equipment, and depreciation. intangible assets. EBITDA includes gross margin less operating expenses before financial expenses, depreciation and amortization, non-cash expenses such as stock-based compensation, non-recurring and other unusual items, and income tax. Gross margin is defined as the gross margin excluding depreciation of property, plant and equipment used in production. Operating expenses exclude interest, amortization of property, plant and equipment used in sales and administration, and amortization of intangible assets.
EBITDA does not represent actual cash provided by operating activities, nor is it a recognized measure of financial performance under IFRS. Readers are cautioned that this measure should not be viewed as a replacement for those in the unaudited interim condensed consolidated financial statements prepared in accordance with IFRS. The Company’s definitions of this non-IFRS financial measure may differ from those used by other companies.
For more information please contact:
J. Murray Souter
President and CEO
Diamond Estates Wines & Spirits Inc.
905.641.1042 ext 234
Ryan Conté, CPA, CA, EEE
Diamond Estates Wines & Spirits Inc.
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.
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