Willamette Valley Vineyards Posts Results for Q3 2024

Rhea-AI Summary

Willamette Valley Vineyards (NASDAQ: WVVI) reported Q3 2024 results with a loss per share of $0.17, unchanged from Q3 2023. Sales revenue slightly increased by 0.2% to $9.37 million, driven by a $245,797 increase in direct sales from a new tasting room, offset by a $223,150 decrease in distributor sales. Gross profit margin improved to 62.0% from 60.8%. Operating expenses decreased by 0.4% to $5.94 million. Net loss improved by 13.5% to $282,945 compared to $326,982 in Q3 2023. The company faces challenges from wholesalers and retailers reducing wine inventories amid market pressures.

Positive

• Gross profit margin improved by 1.2 percentage points to 62.0%
• Net loss decreased by 13.5% to $282,945
• Direct sales increased by $245,797 due to new tasting room
• Operating expenses decreased by 0.4% to $5.94 million

Negative

• Posted loss per share of $0.17
• Distributor sales decreased by $223,150
• Wholesalers and retailers reducing wine inventories
• Facing pressure from alternative alcoholic beverages and contract house brands

Insights

Financial Analyst

Willamette Valley Vineyards' Q3 results reveal concerning trends despite marginal improvements. Revenue growth of just 0.2% to $9.37 million masks underlying challenges in the distribution channel, where sales declined. While direct-to-consumer sales improved due to a new tasting room, the 13.5% reduction in net loss to $282,945 isn't particularly impressive given the scale of operations.

The shift toward direct sales has improved gross margins to 62%, but operating expenses remain high at $5.94 million. The CEO's comments about wholesalers reducing inventories and allocating shelf space to alternative beverages signals significant headwinds in the traditional distribution model. The company's strategy to focus on direct-to-consumer channels through its ten locations may help offset these challenges, but the current financial performance suggests a challenging path to profitability.

Market Research Analyst

The wine industry is experiencing a structural shift that poses significant challenges for traditional producers like Willamette Valley Vineyards. Consumer preferences are evolving toward alternative alcoholic beverages, while retailers and wholesalers are prioritizing house brands and managing inventory costs more aggressively due to inflation and interest rate pressures. This market dynamic explains why the company's wholesale channel is underperforming despite its premium positioning in Pinot Noir.

The company's pivot to a direct-to-consumer model through tasting rooms and experiential offerings is strategically sound but requires significant investment and time to scale. The 0.4% reduction in selling, general and administrative expenses suggests room for cost optimization without compromising growth initiatives.

SALEM, Ore., Nov. 12, 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 $0.17 for each of the three months ended September 30, 2024 and 2023 respectively. 

Sales revenue for the three months ended September 30, 2024 and 2023 were $9,370,713 and $9,348,066, respectively, an increase of $22,647, or 0.2%, in the current year period over the prior year period. This increase was caused by an increase in direct sales of $245,797 partly offset by a decrease in sales through distributors of $223,150 in the current year three-month period over the prior year period. The increase in direct sales to consumers in the third quarter of 2024 compared to the same quarter of 2023 was primarily the result of revenues from opening a new tasting room in late 2023. The decrease in revenue from sales through distributors was primarily related to lower case sales in this market.

Gross profit as a percentage of net sales for the three months ended September 30, 2024 and 2023 was 62.0% and 60.8%, respectively, an increase of 1.2 percentage points in the current year period over the prior year period, mostly as a result of a higher percentage of total sales coming from direct sales, which have higher margins than sales through distributors.

Selling, general and administrative expenses for the three months ended September 30, 2024 and 2023 were $5,944,620 and $5,967,346 respectively, a decrease of $22,726, or 0.4%, in the current quarter over the same quarter in the prior year. This decrease was primarily the result of a decrease in selling and marketing expenses of $25,028, or 0.6% being partially offset by an increase in general and administrative expenses of $2,302, or 0.1% in the current quarter compared to the same quarter last year.

Net loss for the three months ended September 30, 2024 and 2023 was $282,945 and $326,982, respectively, a decrease of $44,037, or 13.5%, in the third quarter of 2024 over the same quarter in the prior year.

Jim Bernau, Founder and CEO said, "The Company is continuing to respond to the rapidly changing market.  We are seeing wholesalers and retailers reduce their wine inventories and allocate their shelf space for alternative alcoholic beverages and contract house brands, which we believe is being driven by interest costs, inflation and consumer trends that is putting pressure on retail margins.

We believe our efforts of increasing our direct contact with wine consumers and our many wine enthusiast shareholders, offering wine, culinary and hospitality experiences through our ten locations combined with an aggressive outreach to our wholesalers and their retail and restaurant accounts will lead to positive results."

For a complete discussion of the Company's financial condition and operating results for the third quarter, see our Form 10-Q for the three months ended September 30, 2024, 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 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 three months and nine months ended September, 30, 2024 compared to the three and nine months ended September 30, 2023:

					Three months ended				Nine months ended
					September 30,				September 30,
					2024		2023		2024		2023
SALES, NET					$      9,370,713		$      9,348,066		$    28,506,151		$    28,383,249
COST OF SALES					3,562,599		3,663,488		10,953,625		11,969,630
GROSS PROFIT					5,808,114		5,684,578		17,552,526		16,413,619
OPERATING EXPENSES
	Sales and marketing				4,326,851		4,351,879		12,692,804		12,685,502
	General and administrative				1,617,769		1,615,467		5,061,899		4,676,996
		Total operating expenses			5,944,620		5,967,346		17,754,703		17,362,498
LOSS FROM OPERATIONS					(136,506)		(282,768)		(202,177)		(948,879)
OTHER INCOME (EXPENSE)
	Interest expense, net				(257,192)		(171,272)		(750,573)		(460,309)
	Other income, net				(4,424)		3,714		96,169		82,440
LOSS BEFORE INCOME TAXES					(398,122)		(450,326)		(856,581)		(1,326,748)
INCOME TAX BENEFIT					115,177		123,344		247,809		363,396
NET LOSS					(282,945)		(326,982)		(608,772)		(963,352)
Accrued preferred stock dividends					(563,250)		(511,719)		(1,689,676)		(1,535,158)
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS					$       (846,195)		$       (838,701)		$    (2,298,448)		$    (2,498,510)
Loss per common share after preferred dividends,
	basic and diluted				$              (0.17)		$              (0.17)		$              (0.46)		$              (0.50)
Weighted-average number of
	common shares outstanding, basic and diluted				4,964,529		4,964,529		4,964,529		4,964,529

 

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SOURCE Willamette Valley Vineyards

FAQ

What was Willamette Valley Vineyards (WVVI) revenue in Q3 2024?

Willamette Valley Vineyards reported revenue of $9,370,713 in Q3 2024, a 0.2% increase from $9,348,066 in Q3 2023.

What was WVVI's net loss in Q3 2024?

WVVI reported a net loss of $282,945 in Q3 2024, compared to a net loss of $326,982 in Q3 2023, representing a 13.5% improvement.

What was Willamette Valley Vineyards' gross profit margin in Q3 2024?

The gross profit margin was 62.0% in Q3 2024, an increase of 1.2 percentage points from 60.8% in Q3 2023.

How did WVVI's direct sales perform in Q3 2024?

Direct sales increased by $245,797 in Q3 2024, primarily due to revenues from a new tasting room opened in late 2023.