Exhibit 99.1

 

 

 

Truett-Hurst, Inc. Reports Second Quarter and First Half Fiscal 2017 Results

 

Healdsburg, California (February 8, 2017) – Truett-Hurst, Inc. (NASDAQ: THST), which operates an innovative super-premium and ultra-premium wine sales, marketing, and production company based in the acclaimed Dry Creek and Russian River Valleys of Sonoma County, California, reported results for the second quarter of fiscal 2017 which ended on December 31, 2016.

 

First Half FY17 vs. FY16

 

For the six months ended December 31, 2016, total net sales from continuing operations decreased 21.9% compared to the same period in the prior year and totaled $11.6 million. Consolidated gross margin from continuing operations was 33.3%, an increase of 1.1 margin points over the prior year.

 

Wholesale

 

·

Net Sales of $8.5 million (-29.3% or $3.5 million)

 

·

Gross Margin of 22.0% (a decrease of 2.1 margin points)

 

·

Gross Profit of $1.9 million (-$1.0 million)

 

Direct to Consumer (DTC)

 

·

Net Sales of $3.2 million (+8.4% or $0.2 million)

 

·

Gross Margin of 63.5% (a decrease of 1.7 margin points)

 

·

Gross Profit of $2.0 million (+$0.1 million)

 

Operating Expenses

 

Operating expenses for the six months ended December 31, 2016 were $4.2 million compared to $4.4 million in the same period in the prior year, though the expenses expressed as a percentage of net sales increased due to the net sales shortfall. Sales and marketing expenses decreased $0.2 million, 22.4% of net sales vs 19.0% from the prior year period. General and administrative expenses decreased $0.1 million, 13.1% of net sales vs 10.8% from the prior year period.

 

Truett-Hurst, Inc. • 125 Foss Creek Circle • Healdsburg, CA 95448 • tel: 707.431.4423 • fax: 707.395.0289 • email: ir@truetthurstinc.com

 

 

Second Quarter FY17 vs. FY16

 

For the three months ended December 31, 2016, total net sales from continuing operations decreased 33% compared to the same periods in the prior year and totaled $5.7 million. Consolidated gross margin from continuing operations was 35.5%, an increase of 4.5 margin points over the prior year.

 

Wholesale

 

·

Net Sales of $4.0 million (-42.3% or $2.9 million)

 

·

Gross Margin of 22.4% (a decrease of 0.7 margin points)

 

·

Gross Profit of $.9 million (-$0.7 million)

 

Direct to Consumer (DTC)

 

·

Net Sales of $1.8 million (+8% or $0.1 million)

 

·

Gross Margin of 64.4% (an increase of 0.3 margin points)

 

·

Gross Profit of $1.2 million (+$0.1 million)

 

Operating Expenses

 

Operating expenses for the three months ended December 31, 2016 were flat compared to the same period in the prior year.

 

“Consistent with our earlier guidance,” commented Phillip L. Hurst, Truett-Hurst, Inc.’s President and CEO, “Our sales were lower in the first half of FY17 compared to FY16 due to our product mix and a non-recurring launch by a large US retailer.”

 

Earnings Call

 

Truett-Hurst, Inc.’s management will host a conference on February 8, 2017, at 1:30 p.m. PT (4:30 p.m. ET) to discuss the Company's financial results. To listen to the conference call, dial in approximately ten minutes before the scheduled call to 1.888.347.6082 or international at 1.412.902.4286 and request Truett-Hurst, Inc.’s Fiscal 2017 Second Quarter Results Call, or visit our webcast link: https://www.webcaster4.com/Webcast/Page/1132/19356.

 

A supporting presentation, in advance of the conference call, will be available at:

 

http://www.truetthurstinc.com

 

To listen to a replay of the call, dial US Toll Free: 1.877.344.7529 or International Toll: 1.412.317.0088 and enter the replay access code 10100030. The call will be available one hour after the end of the conference call through February 15, 2017 at 9:00 am ET.

 

 

About Truett-Hurst, Inc.

 

Truett-Hurst, Inc. (NASDAQ: THST, www.truetthurstinc.com) is a holding company and its sole asset is the controlling equity interest in H.D.D. LLC., an innovative and fast-growing super-premium, ultra-premium and luxury wine sales, marketing and production company based in the acclaimed Dry Creek and Russian River Valleys of Sonoma County, California. Truett-Hurst, Inc. is headquartered in Healdsburg, California.

 

Forward-Looking Statements

 

This press release and our earnings conference call for the quarter ended December 31, 2016 contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended, that are made as of the date of this press release based upon our current expectations. All statements, other than statements of historical fact, regarding our strategy, future operations, financial position, estimated revenue, projected costs, prospects, plans, opportunities, and objectives constitute “forward-looking statements.” The words “may,” “will,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “potential” or “continue” and similar types of expressions identify such statements, although not all forward-looking statements contain these identifying words. Such forward-looking statements include expectations regarding revenue, income, expenses, for the period ended December 31, 2016. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause such differences include, but are not limited to, a reduction in the supply of grapes and bulk wine available to us; significant competition; any change in our relationships with retailers which could harm our business; we may not achieve or maintain profitability in the future; the loss of key employees; a reduction in our access to, or an increase in the cost of, the third-party services we use to produce our wine; credit facility restrictions on our current and future operations; failure to protect, or infringement of, trademarks and proprietary rights; these factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. For additional information, see our Annual Report on Form 10-K filed on September 28, 2016, or our other reports currently on file with the Securities and Exchange Commission, which contain a more detailed discussion of risks and uncertainties that may affect future results. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

 

 

TRUETT-HURST, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data/per share data)

 

		December 31, 2016				June 30, 2016
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	26			$	4,043
Accounts receivable			2,011				2,678
Inventories, net			19,755				19,918
Bulk wine deposits			-				271
Other current assets			111				125
Total current assets			21,903				27,035
Property and equipment, net			5,437				5,583
Intangible assets, net			501				496
Other assets, net			334				391
Total assets		$	28,175			$	33,505
Liabilities and Equity
Current liabilities:
Lines of credit		$	4,881			$	10,311
Accounts payable			1,492				1,351
Accrued expenses			667				1,348
Depletion allowance			500				610
Due to related parties			32				-
Current maturities of long term debt			516				475
Total current liabilities			8,088				14,095
Long term debt, net of current maturities			3,233				3,189
Total liabilities			11,321				17,284
Equity:
Stockholders’ equity
Preferred stock, par value of $0.001 per share, 5,000,000 shares authorized, none issued and outstanding at December 31, 2016 and June 30, 2016			-				-
Class A common stock, par value of $0.001 per share, 15,000,000 authorized, 4,351,789 and 4,306,609 issued and outstanding at December 31, 2016 and June 30, 2016			4				4
Class B common stock, par value of $0.001 per share, 1,000 authorized, 7 issued and outstanding at December 31, 2016 and June 30, 2016			-				-
Additional paid-in capital			15,945				15,794
Accumulated deficit			(5,330	)			(5,600	)
Total Truett-Hurst, Inc. equity			10,619				10,198
Noncontrolling interest			6,235				6,023
Total equity			16,854				16,221
Total liabilities and equity		$	28,175			$	33,505

 

 

TRUETT-HURST, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data/per share data)

(unaudited)

 

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2016				2015				2016				2015
Sales		$	5,958			$	8,748			$	12,060			$	15,280
Less excise tax			(221	)			(242	)			(438	)			(405	)
Net sales			5,737				8,506				11,622				14,875
Cost of sales			3,700				5,866				7,756				10,086
Gross profit			2,037				2,640				3,866				4,789
Operating expenses:
Sales and marketing			1,380				1,384				2,604				2,822
General and administrative			706				719				1,518				1,609
Loss (gain) on disposal of assets			26				-				43				(1	)
Total operating expenses			2,112				2,103				4,165				4,430
(Loss)  income  from operations			(75	)			537				(299	)			359
Other income (expense)
Interest expense, net			(96	)			(86	)			(176	)			(169	)
Other			101				25				959				(69	)
Total other income (expense), net			5				(61	)			783				(238	)
Net (loss) income before income taxes			(70	)			476				484				121
Income tax expense			(1	)			(1	)			(2	)			(1	)
Net (loss) income from continuing operations			(71	)			475				482				120
Income from discontinued operations, net of tax			-				30				-				45
Net (loss) income attributable to Truett-Hurst, Inc. and H.D.D. LLC			(71	)			505				482				165
Net (loss) income attributable to noncontrolling interest: H.D.D. LLC			(25	)			270				212				(144	)
Net (loss) income attributable to Truett-Hurst, Inc.		$	(46	)		$	235			$	270			$	21
Net (loss) income per share:
Basic per share		$	(0.01	)		$	0.06			$	0.06			$	0.01
Diluted per share		$	(0.01	)		$	0.03			$	0.04			$	0.00
Weighted average shares used in computing net (loss) income per share:
Basic weighted average shares			4,314,553				4,062,341				4,310,559				4,045,634
Diluted weighted average shares			4,314,553				7,239,918				7,510,936				7,200,405

 

 

TRUETT-HURST, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

		Six Months Ended
		December 31,
		2016				2015
Cash flows from operating activities:
Net income		$	482			$	165
Income from discontinued operations, net of tax			-				(45	)
Net income from continuing operations			482				120
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			410				295
Reserve for assets to be abandoned			127				-
Stock-based compensation			151				172
(Gain) loss on fair value of interest rate swap			(130	)			37
Loss (gain) on disposal of assets			43				(1	)
Changes in operating assets and liabilities, net
Accounts receivable			667				(836	)
Inventories			163				1,930
Bulk wine deposits			271				320
Other current assets			22				104
Accounts payable			141				(248	)
Accrued expenses			(557	)			228
Depletion allowance			(110	)			120
Due to related parties			32				104
Cash provided by discontinued operations			-				55
Net cash provided by operating activities			1,712				2,400
Cash flows from investing activities:
Acquisition of property and equipment			(371	)			(368	)
Acquisition of intangible and other assets			(18	)			(53	)
Proceeds from sale of assets			5				2
Net cash used in investing activities			(384	)			(419	)
Cash flows from financing activities:
Net (payments on) proceeds from line of credit			(5,430	)			1,229
Proceeds from long term debt			387				443
Payments on long term debt			(302	)			(214	)
Net cash (used in) provided by financing activities			(5,345	)			1,458
Net change in cash and cash equivalents			(4,017	)			3,439
Cash and cash equivalents at beginning of period			4,043				1,578
Cash and cash equivalents at end of period		$	26			$	5,017
Supplemental disclosure of cash flow information:
Cash paid for interest		$	174			$	169
Cash paid for income taxes		$	2			$	-
Non-cash financing activity:
Conversion of equipment line of credit to term loan		$	387			$	500

 

For more information, contact:

Truett-Hurst, Inc.

Evan B. Meyer,

Chief Financial Officer

Phone: 707.431.4423

Fax: 707.395.0289

Email: evan@truetthurstinc.com