GRIMSBY, Ontario, Feb. 08, 2023 (GLOBE NEWSWIRE) — Andrew Peller Limited (ADW.A / ADW.B) (“APL” or the “Company”) announced today Sales and EBITA growth for the three months ended December 31, 2022.
FISCAL 2023 HIGHLIGHTS:
- Sales increased 3.2% year-to-date compared to prior year on growth across majority of trade channels and price increases;
- Gross margin 39.4% year-to-date compared to 39.3% in prior year;
- EBITA of $39.3 million year-to-date, consistent with prior year; and
- Net earnings of $6.7 million ($0.16 per Class A Share) for first nine months of fiscal 2023.
“Sales growth continued in the third quarter with solid performance across the majority of our well-established trade channels,” commented John Peller, President and Chief Executive Officer. “While our margins and profitability continue to be negatively impacted by ongoing supply chain challenges and inflationary pressures, we were pleased to see third quarter EBITA improve over the prior year period. We are confident our cost reduction and operational efficiency programs will help return our margins to more normal levels. Looking ahead, by growing sales of our higher margin premium and ultra-premium brands, investing in new products and product segments and maintaining our focus on cost reduction initiatives, we believe we will drive improved performance going forward.”
Sales for the three and nine months ended December 31, 2022 increased 1.4% and 3.2%, respectively. Sales have increased in the majority of the Company’s well-established trade channels with solid growth generated in markets closed for a portion of the prior year due to the pandemic, including at the Company’s ten estate wineries, sales to restaurants and hospitality locations, and through its export business. The growth in these channels was partially offset by a decrease in personal winemaking revenue, which has been impacted by softer post-pandemic demand and distribution. Additionally, the Company has implemented price increases throughout fiscal 2023 to partially offset inflationary pressures, further contributing to an increase in sales compared to the prior year. Despite the strong sales performance, the Company has continued to experience challenges with supply, including wine, glass bottles and other key raw materials, however, these challenges are beginning to stabilize.
Gross margin as a percentage of sales was 40.3% and 39.4% for the three and nine months ended December 31, 2022, respectively, compared to 35.1% and 39.3% respectively, in the prior year. The Company’s cost of goods sold in the first nine months of fiscal 2023 included a reduction of $7.6 million related to the Wine Sector Support Program (“WSSP”) provided by Agriculture Canada as it relates to inventory sold during the nine months ended December 31, 2022. The total WSSP received was $18.1 million and as such, the remaining $10.5 million will be released to cost of goods sold as the related inventory is sold in the fourth quarter of fiscal 2023 and throughout fiscal 2024. The Company expects to receive ongoing payments under this support program. The Company continues to experience certain inflationary cost pressures, including increases in the cost of raw materials such as imported wine, glass bottles and other packaging materials while international freight and shipping charges remain above historical levels. In response to these margin pressures, the Company has implemented price increases throughout fiscal 2023 and is focusing on increasing sales of higher margin VQA products. In addition, the Company is executing numerous production efficiency and cost savings programs aimed at enhancing operating margins including rationalizing stock keeping units (SKUs), evaluating alternate sourcing for imported wine and glass bottles and optimizing logistics and freight.
As a percentage of sales, selling and administrative expenses was 26.5% for the first nine months of fiscal 2023, which has increased from 25.8% in prior year. Selling and administration expenses in fiscal 2023 include the increase in Ontario’s minimum wage when compared to prior year and a return to full operations at the Company.
Earnings before interest, amortization, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes (“EBITA”) was $39.3 million for the nine months ended December 31, 2022 compared to $39.8 million in the prior year. For the three months ended December 31, 2022 EBITA was $15.6 million compared to $12.1 million in the same quarter last year.
Interest expense for the three and nine months ended December 31, 2022 has increased compared to prior year due to higher average debt levels in fiscal 2023 when compared to prior year and increases in interest rates.
In the second quarter of fiscal 2022 the Company completed the sale of its Port Coquitlam, British Columbia property and related assets for total proceeds of approximately $8.8 million, net of transaction costs, generating a realized gain on sale of $7.5 million or $0.21 per Class A share.
Net earnings for the three and nine months ended December 31, 2022 were $3.9 million ($0.09 per Class A Share) and $6.7 million ($0.16 per Class A Share), compared to $3.1 million ($0.07 per Class A Share) and $19.5 million ($0.46 per Class A Share) in the prior year.
Long-term debt increased to $194.9 million at December 31, 2022 from $192.1 million at March 31, 2022. For the nine months ended December 31, 2022, the Company generated cash from operating activities, after changes in non-cash working capital items, of $5.5 million compared to $21.9 million in the prior year. As at December 31, 2022, the Company had unutilized debt capacity in the amount of $138.0 million on its credit facility.
Financial Highlights
(Financial Statements and the Company’s Management Discussion and Analysis for the period can be obtained on the Company’s web site at ir.andrewpeller.com)
| For the three and nine months ended December 31, | Three Months | Nine Months | ||||||||||
| (in $000) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Sales | 104,913 | 103,485 | $304,428 | $295,106 | ||||||||
| Gross margin | 42,290 | 36,294 | 119,833 | 115,963 | ||||||||
| Gross margin (% of sales) | 40.3% | 35.1% | 39.4% | 39.3% | ||||||||
| Selling and administrative expenses | 26,660 | 24,210 | 80,574 | 76,145 | ||||||||
| EBITA | 15,630 | 12,084 | 39,259 | 39,818 | ||||||||
| Interest | 5,273 | 2,424 | 13,902 | 7,175 | ||||||||
| Net unrealized gain on derivative financial instruments | – | (359) | (380) | (1,784) | ||||||||
| Gain on sale of land and property | – | – | – | (7,518) | ||||||||
| Other expenses (income) | (93) | (103) | 517 | 264 | ||||||||
| Net earnings | 3,892 | 3,107 | 6,657 | 19,487 | ||||||||
| Earnings per share – Class A | $0.09 | $0.07 | $0.16 | $0.46 | ||||||||
| Earnings per share – Class B | $0.08 | $0.06 | $0.14 | $0.40 | ||||||||
| Dividend per share – Class A (annual) | $0.246 | $0.246 | ||||||||||
| Dividend per share – Class B (annual) | $0.214 | $0.214 | ||||||||||
| Cash provided by operations | ||||||||||||
| (after changes in non-cash working capital items) | 5,497 | 21,870 | ||||||||||
| Shareholders’ equity per share | $6.16 | $6.35 | ||||||||||
Investor Conference Call
An investor conference call hosted by John Peller, President and CEO and Paul Dubkowski, CFO will be held Thursday February 9, 2023 at 10:00 a.m. ET. To join the conference call please register within one hour of the start time by accessing https://bit.ly/3Gw7chy to receive an instant automated call back. You will need to enter your name, company, and your phone number to receive the call back. You can also dial one of the following numbers to connect through an operator. If connecting with an operator we advise calling ten to fifteen minutes prior to the start time: Local/International: (416) 764-8659, North American Toll Free: (888) 664-6392. The confirmation number for the call is 23421655. The call will be archived on the Company’s website at www.ir.andrewpeller.com.
About Andrew Peller Limited
Andrew Peller Limited is one of Canada’s leading producers and marketers of quality wines and craft beverage alcohol products. The Company’s award-winning premium and ultra-premium Vintners’ Quality Alliance brands include Peller Estates, Trius, Thirty Bench, Wayne Gretzky, Sandhill, Red Rooster, Black Hills Estate Winery, Tinhorn Creek Vineyards, Gray Monk Estate Winery, Raven Conspiracy, and Conviction. Complementing these premium brands are a number of popularly priced varietal offerings, wine-based liqueurs, craft ciders, beer and craft spirits. The Company owns and operates 101 well-positioned independent retail locations in Ontario under The Wine Shop, Wine Country Vintners, and Wine Country Merchants store names. The Company also operates Andrew Peller Import Agency and The Small Winemaker’s Collection Inc., importers and marketing agents of premium wines from around the world. With a focus on serving the needs of all wine consumers, the Company produces and markets premium personal winemaking products through its wholly owned subsidiary, Global Vintners Inc., the recognized leader in personal winemaking products. More information about the Company can be found at www.ir.andrewpeller.com.
The Company utilizes EBITA (defined as earnings before interest, amortization, gain on sale of assets held for sale, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes) to measure its financial performance. EBITA is not a recognized measure under IFRS. Management believes that EBITA is a useful supplemental measure to net earnings, as it provides readers with an indication of earnings available for investment prior to debt service, capital expenditures, and income taxes, as well as provides an indication of recurring earnings compared to prior periods. Readers are cautioned that EBITA should not be construed as an alternative to net earnings determined in accordance with IFRS as indicators of the Company’s performance or to cash flows from operating, investing, and financing activities as a measure of liquidity and cash flows. The Company also utilizes gross margin (defined as sales less cost of goods sold, excluding amortization). The Company’s method of calculating EBITA and gross margin may differ from the methods used by other companies and, accordingly, may not be comparable to measures used by other companies.
Andrew Peller Limited common shares trade on the Toronto Stock Exchange (symbols ADW.A and ADW.B).
FORWARD-LOOKING INFORMATION
Certain statements in this news release may contain “forward-looking statements” within the meaning of applicable securities laws including the “safe harbour provisions” of the Securities Act (Ontario) with respect to APL and its subsidiaries. Such statements include, but are not limited to, statements about the growth of the business; its launch of new premium wines and craft beverage alcohol products; sales trends in foreign markets; its supply of domestically grown grapes; and current economic conditions. These statements are subject to certain risks, assumptions, and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. The words “believe”, “plan”, “intend”, “estimate”, “expect”, or “anticipate”, and similar expressions, as well as future or conditional verbs such as “will”, “should”, “would”, “could”, and similar verbs often identify forward-looking statements. We have based these forward-looking statements on our current views with respect to future events and financial performance. With respect to forward-looking statements contained in this news release, the Company has made assumptions and applied certain factors regarding, among other things: future grape, glass bottle, and wine and spirit prices; its ability to obtain grapes, imported wine, glass, and other raw materials; fluctuations in foreign currency exchange rates; its ability to market products successfully to its anticipated customers; the trade balance within the domestic Canadian and international wine markets; market trends; reliance on key personnel; protection of its intellectual property rights; the economic environment; the regulatory requirements regarding producing, marketing, advertising, and labelling of its products; the regulation of liquor distribution and retailing in Ontario; the application of federal and provincial environmental laws; and the impact of increasing competition.
These forward-looking statements are also subject to the risks and uncertainties discussed in this news release, in the “Risks and Uncertainties” section and elsewhere in the Company’s MD&A and other risks detailed from time to time in the publicly filed disclosure documents of Andrew Peller Limited which are available at www.sedar.com. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and assumptions which could cause actual results to differ materially from those conclusions, forecasts, or projections anticipated in these forward-looking statements. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. The Company’s forward-looking statements are made only as of the date of this news release, and except as required by applicable law, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new information, future events or circumstances or otherwise.
For more information, please contact:
Mr. Paul Dubkowski, CFO and Executive Vice-President, IT
(905) 643-4131
Source: Andrew Peller Limited
