Willamette Valley Vineyards Posts Results for 2023

Rhea-AI Summary

Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) reports a loss per common share after preferred dividends, with increased net sales revenues in 2023 compared to 2022. Gross profit and operating expenses also saw notable changes, influenced by factors like direct sales and tasting room sales.

Positive

• Net sales revenues increased by 15.3% in 2023 compared to 2022.
• Gross profit rose by 19.9% in 2023 over the prior year.
• Selling, general, and administrative expenses increased by 22.7% in 2023.
• Loss from operations increased by $660,784 in 2023 compared to 2022.
• Jim Bernau, Founder and CEO, highlights the positive impact of increased gross profit and operational cash flow in 2023.

Negative

• None.

Insights

Market Research Analyst

The reported increase in net sales revenues for Willamette Valley Vineyards is a positive signal, indicating a robust demand for their products, particularly from direct sales which saw a significant jump. This suggests effective marketing strategies and a strong brand presence in the market. However, the rising selling, general and administrative expenses, especially from tasting rooms, highlights the cost-intensive nature of such sales channels. While they can provide a unique customer experience and strengthen brand loyalty, they also come with higher operational costs.

Furthermore, the mention of higher depreciation costs linked to new retail locations suggests a strategic expansion. This is a double-edged sword; on one hand, it positions the company for future growth, but on the other, it pressures current profitability. Investors should weigh the potential long-term benefits of these assets against the short-term financial strain.

Financial Analyst

The reported loss per common share increase is a concern, as it reflects a widening gap between profitability and shareholder returns. The higher preferred stock dividends also imply that common shareholders are facing dilution or a potential reduction in their share of future earnings. This could affect investor sentiment and the stock's attractiveness.

On the flip side, the CEO's statement about the subsiding inflationary pressure points to improved cost management, which could be a sign of a stronger financial stance in the future. This, coupled with the reported improvement in cash from operations, may provide some reassurance to investors about the company's ability to manage cash flow and invest in growth despite current losses.

Wine Industry Analyst

The increase in revenue from direct sales strongly suggests that Willamette Valley Vineyards is capitalizing on the trend of consumer-direct sales, which have been gaining traction in the wine industry. This channel often yields higher margins and can be a critical factor in building direct relationships with consumers. The CEO's confidence in the new retail assets as a hedge against market contraction indicates a strategic move to enhance the customer experience and brand resilience in uncertain market conditions.

However, the wine industry is known for its sensitivity to economic cycles and consumer discretionary spending. The company's performance must be monitored for its ability to sustain growth and manage costs in a highly competitive and potentially volatile market.

SALEM, Ore., March 26, 2024 /PRNewswire/ -- Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) (the "Company"), a leading Oregon producer of Pinot Noir, generated a loss per common share after preferred dividends of $0.65 and $0.51 for the years ended December 31, 2023 and 2022, respectively, an increase of $0.14, or 29.2%, for the year ended December 31, 2023 over the prior year period. The primary reason for this increase was an increase in net loss and higher preferred stock dividends in 2023 compared to 2022.

The Company had net sales revenues of $39,136,114 and $33,934,081 for the years December 31, 2023 and 2022, respectively, an increase of $5,202,033, or 15.3%, for the year ended December 31, 2023 over the prior year period primarily as a result of an increase in revenue from direct sales of $4,786,730, or 30.4% in 2023 compared to 2022, and an increase in revenue from sales to distributors of $415,303 or 2.3% in 2023 compared to 2022.

Gross profit was $22,557,128 and $18,814,096 for the years ended December 31, 2023 and 2022, respectively, an increase of $3,743,032 or 19.9%, for the year ended December 31, 2023 over the prior year period. This increase was generally driven by an increase in sales revenues in 2023.

Selling, general and administrative expenses were $23,764,330 and $19,360,514 for the years ended December 31, 2023 and 2022, respectively, an increase of $4,403,816, or 22.7%, for the year ended December 31, 2023 over the prior year period. This increase was primarily as a result of more sales coming from tasting rooms which have higher selling costs and from newer locations being open for longer in 2023.

Loss from operations was $1,207,202 and $546,418 for the years ended December 31, 2023 and 2022, respectively, an increase of $660,784, for the year ended December 31, 2023 compared to the prior year period. This increase included higher depreciation costs of $1,232,459 in 2023 mostly relating to the investment in new locations.

Jim Bernau, Founder and CEO of the Company said "I believe that our gross profit increasing by approximately 20% in 2023 over 2022 relative to our sales growth of approximately 15% over that same period signals that the substantial inflationary pressure that previously impacted the Company's costs of growing, making and selling our wines has subsided.  Cash from operations improved in 2023, while higher depreciation expenses from the deployment of new retail assets reduced the Company's net profits.  In the event that the wine market changes and contracts, I believe that these new retails assets will aid the Company in ensuring that our brands remain compelling to wine consumers."

For a complete discussion of the Company's financial condition and operating results, see our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the United States Securities and Exchange Commission on EDGAR. 

Willamette Valley Vineyards, Inc. is headquartered at its Estate Vineyard near Salem, Oregon.  The Company's common stock is traded on NASDAQ (WVVI).

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, referred to as the "Securities Act", and Section 21E of the Securities Exchange Act of 1934, as amended, referred to as the "Exchange Act". These forward-looking statements involve risks and uncertainties that are based on current expectations, estimates and projections about the Company's business, and beliefs and assumptions made by management. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates", "predicts," "potential," "should," or "will" or the negative thereof and variations of such words and similar expressions are intended to identify such forward-looking statements. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to: availability of financing for growth, availability of adequate supply of high quality grapes, successful performance of internal operations, impact of competition, changes in wine broker or distributor relations or performance, impact of possible adverse weather conditions, impact of reduction in grape quality or supply due to disease or smoke from forest fires, changes in consumer spending, the reduction in consumer demand for premium wines, and the revenues or costs for any of our four new tasting rooms and restaurants exceeding our expectations. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic economic conditions.

Many of these risks as well as other risks that may have a material adverse impact on our operations and business, are identified in Item 1A "Risk Factors" in our Annual Report on Form 10-K. 

The following is the Company's Statement of Operations for the year ended December 31, 2023 compared to the year ended December 31, 2022:

 

						Year ended
					December 31,
					2023		2022
SALES, NET					$     39,136,114		$     33,934,081
COST OF SALES					16,578,986		15,119,985
GROSS PROFIT					22,557,128		18,814,096
OPERATING EXPENSES:
	Sales and marketing				17,564,103		13,640,290
	General and administrative				6,200,227		5,720,224
		Total operating expenses			23,764,330		19,360,514
LOSS FROM OPERATIONS					(1,207,202)		(546,418)
OTHER INCOME (EXPENSE)
	Interest income				27		5,496
	Interest expense				(594,106)		(367,745)
	Other income, net				114,827		142,529
LOSS BEFORE INCOME TAXES					(1,686,454)		(766,138)
INCOME TAX BENEFIT					487,861		119,646
NET LOSS					(1,198,593)		(646,492)
Preferred stock dividends					(2,047,097)		(1,866,451)
LOSS APPLICABLE TO COMMON SHAREHOLDERS					$     (3,245,690)		$     (2,512,943)
Loss per common share after preferred dividends,
	basic and diluted				$               (0.65)		$               (0.51)
Weighted-average number of
	common shares outstanding, basic and diluted				4,964,529		4,964,529

 

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SOURCE Willamette Valley Vineyards

FAQ

What was the loss per common share after preferred dividends for Willamette Valley Vineyards in 2023?

The loss per common share after preferred dividends was $0.65 for the year ended December 31, 2023.

What was the percentage increase in net sales revenues for Willamette Valley Vineyards in 2023 compared to 2022?

Net sales revenues increased by 15.3% in 2023 compared to 2022.

Where is Willamette Valley Vineyards headquartered?

Willamette Valley Vineyards, Inc. is headquartered at its Estate Vineyard near Salem, Oregon.

On which stock exchange is Willamette Valley Vineyards' common stock traded?

The Company's common stock is traded on NASDAQ under the ticker symbol WVVI.

What did Jim Bernau, Founder and CEO, mention about the gross profit increase in 2023?

Jim Bernau highlighted that the gross profit increasing by approximately 20% in 2023 relative to sales growth signals a positive trend.