Diamond Estates Wines & Spirits Reports Q3 2024 Financial Results

In This Article:

Debt recapitalization continues with positive future support

NIAGARA-ON-THE-LAKE, Ontario, February 22, 2024--(BUSINESS WIRE)--Diamond Estates Wines & Spirits Inc. ("Diamond Estates" or "the Company") (DWS-TSX Venture) today announced its financial results for the three and nine months ended December 31, 2023 ("Q3 2024 and "YTD 2024" respectively).

Q3 2024 Summary:

  • Revenue for Q3 2024 was $7.3 million, a decrease of $1.8 million, from $9.1 million in Q3 2023. The Winery division experienced a decrease in sales of $0.7 million and the Agency division by $1.0 million. The declines in the Winery division were primarily driven by excise taxes of $0.2 million, the loss in non-recurring government grants of $0.2 million and a decrease in export sales of $0.3 million. The decline in the Agency division was primarily driven by the loss of a key supplier which contributed to $0.8 million while the remainder is transitional softness in the buy/sell markets;

  • Gross margin1 for Q3 2024 was $1.9 million, a decrease of $1.9 million, from $3.8 million in Q3 2023 while gross margin as a percentage of revenue was 26.2% for Q3 2024 compared to 41.5% in Q3 2023. The decrease in gross margin for the period was from the Winery experiencing a decrease of $1.3 million and the Agency division $0.6 million. The declines in the Winery division are a result of $0.5 million of one-time adjustments, higher overheads experienced from prior short crop vintages across all channels, greater discounts in higher margin channels such as on-site retail and direct to consumer and on-premise, and the loss of non-recurring government grants. The decline experienced in the Agency division comes from the loss of a key supplier and its impacts in the commission and buy/sell market. The company is currently adapting its structure to adjust to the new reality.

  • EBITDA1 decreased by $1.6 million to negative $1.8 million in Q3 2024 from a negative $0.2 million in Q3 2023. However, when considering the fair value of EWG inventories sold, adjusted EBITDA declined by $1.7 million over the same period; and

  • Loss from operations for Q3 2024 was $2.9 million compared to $1.4 million in Q3 2023, a decrease in profitability of $1.5 million. The lower level of profitability compared to revenue is a direct result of the decrease in sales and gross margin and an increase in interest expense quarter over quarter.

Significant Events:

  • On November 1, 2023, the Company entered into a business collaboration agreement between its commercial division, Trajectory Beverage Partners ("TBP"), and Renaissance Wine Merchants Ltd. ("Renaissance") under which Renaissance will manage the combined sales forces.

  • On November 14, 2023, the Company closed a non-brokered private placement through the issuance of 20,000,000 common shares of the Company to Lassonde Industries Inc. at an issue price of $0.45 per common share for an aggregate purchase price of $9,000,000, settled by $8.25 million in cash and conversion of a $750,000 loan..

  • On December 14, 2023, the Province of Ontario announced significant policies and changes to an existing program intended to provide economic support to enhance the Ontario wine industry for years to come. Based on the assumptions in the program, starting in 2024-2025, we estimate eligible sales under the VQA Wine Support Program will qualify for approximately $2.5 million in funding..(cash flow) for the Company.