Vintage Wine Estates, Inc.

Hello, everybody, and welcome to the Vintage One Estates Incorporated fiscal year and fourth quarter 2021 earnings call. My name is Sam, and I'll be coordinating your call today. If you wish to ask a question during the presentation, you may do so by pressing star followed by one on your telephone keypad. I'll now hand you over to your host, Anna Kate Heller from Investor Relations to begin. Anna Kate, please go ahead.

Thank you. Good morning, and thanks for joining us on Vintage Wine Estate's fourth quarter and fiscal year 2021 earnings conference call. You should have a copy of our earnings release that crossed the wires yesterday after the market. You should also have a copy of our release announcing the acquisition of Vaness, a direct-to-consumer platform company specializing in wine clubs. If you do not, they can be found on our website at VintageWineEstate.com under the Investor Relations heading. We also have available on the website slides that we will reference during our conversation today. Joining on the call today are Pat Roney, Founder and CEO, Terry Wheatley, President, and Kathy DeViller, CFO. Pat and Terry will provide an overview of BWE's fiscal year results, its strategy for growth, and the outlook for fiscal 2022, after which we will open the call for questions. Management will be making some forward-looking statements during this presentation and also during the Q&A session. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These risks and uncertainties and other factors are provided in the release, on the slides, and in the company's filings with the Securities and Exchange Commission. You can find these documents on our website or at sec.gov. I'll also point out that during today's call, we will discuss some non-GAAP financial measures which management believes are useful in evaluating the company's performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. You can find reconciliations of comparable GAAP with non-GAAP measures in the tables that accompany yesterday's release and slides. And now, I'd like to turn the call over to Teri Wheatley.

Teri Wheatley Thank you, Anna Kate. And welcome everyone to our first financial results conference call as a public company. Now please, if you would, turn to slide four. These are certainly exciting times for vintage wine estates. We successfully completed going public and the business combination transaction with bespoke capital that infused capital into the vintage wine estates. For those that may not be familiar with us, Vintage Wine Estates is one of the largest, fastest-growing wine companies in the United States. While you may not recognize the name VWE, you likely do know many of the brands, such as Layer Cake, Cameron Hughes, Clopagas, VR Cone, Firespeed, Bar Dog, Cundi, Cherry Pie, and many others. VWE has profitably grown over the last decade both organically and with more than 20 acquisitions in the last 10 years, two of which have been announced in the brief time since we became a public company in June of this year. This includes the nest acquisition we announced just last night. We have an aggressive, organic and acquisitive growth strategy and believe we have the business model, the infrastructure and the team to execute on that plan. In fact, we delivered on our growth goals for the year and believe our fiscal 2021 results validate our ability to execute on our strategy. Net revenue grew 16% in fiscal 2021. We achieved pro forma adjusted EBITDA of over 46 million, and we sold nearly 2 million cases of wine. Please now look at slide five. Importantly, as we have transformed into a public company, We have made and continue to make investments to build a scalable organization that we believe will provide increasing operating leverage as we grow. Our finance and accounting team has been challenged with the additional burden of the business combination and going public transaction and then the closing and the audit of fiscal 2021. This challenge was exacerbated by the sudden death of a key employee, and the difficulty in identifying and hiring staff. We have brought on two new seasoned personnel in SEC reporting. We've retained outsourced support and continue to look to build the team. The finance and accounting team are busy implementing the necessary process and controls to enable repeatable processes with the elimination of error and waste. We are also fortunate to have Russell Joy joining us as Chief Operating Officer. His deep experience in the industry, operational expertise, and a strong accounting background we expect will serve us very well. Our acquisitions also bring talent in many forms that we expect to leverage as we grow. Let me talk about some opportunities. of the conditions of the wine industry and how our omnichannel presence provides a strong advantage to drive growth. Volume growth in the wine has been positive, albeit at a slower rate than value growth, with a 3% increase in domestic wine volume to $313 million. We believe we're on track to outpace the industry growth. Looking forward, market commentators expect market growth trends to remain positive, although without the benefit of the COVID bump. Now let me review with you briefly the result from each of the segments. One of the key strengths is our well-diversified operating segments, wholesale, direct-to-consumer, and business-to-business. In our wholesale segment, net revenue decreased 3.3% to 72.9 million, while operating income increased 1.8 to 15 million. Wholesale wine sales have benefited over the year from increases in core priority brands and innovation in the off-premise channel. However, this was more than offset by the declines in the on-premise due to the COVID-19 pandemic. Some core brand highlights include Bardog, which has grown 68% in meals and sales dollars to now be a nearly $7 million brand. It's demonstrating strong growth across retail on-premise and off-premise channels. Our Firesteed brand has also performed very well, growing to be of similar size with Nielsen sales increasing 9%. An overall shift in mix to super premium and luxury winery brands helped expand our wholesale margin. A decrease in general and administrative expenses due to COVID-19 restrictions in the market provided the segment with some cost savings, which contributed to the overall increase in wholesale operating income for the year. In new strategic initiatives, in April 2021, our wholesale operations launched the eGrocery Group, which is exclusively focused on digital product syndication and digital optimization. of VWA wholesale products to drive digital shelf conversion. With a specific focus on omni-channel retailers, pure play, third and fourth party platforms, and marketplaces, by June 30, 2021, RE Grocery had already launched A-plus content syndication to Albertsons.com, Kroger.com, Target.com, Harris-Peter.com, Amazon.com, Instacart, and Shipt. In our business-to-business segment, we had an excellent year with net revenue increasing 43% to $77.4 million while operating income increased 21% to $17.9 million. The strong results in the segment are a reflection of our successful innovation in both wine and spirits. We continue to offer high-quality brands with an emphasis on engaging and connecting with with customers. Mix in the segment did impact margins from the lower volumes delivered through a key customer at a lower average margin. We believe our approach to the segment of the business is strong, offering us continued opportunities for market share growth. Now our direct-to-consumer segment continued to achieve very strong growth, with net revenue increasing by 20% to $66.6 million while operating income increased 60% to $11.4 million. Operating margin expanded nicely in this segment as well. The COVID-19 consumer behavior shift drove significant gains in e-commerce, wine clubs, and QVC for 2021. Our direct-to-consumer channels were ready both in technical scale and experience to weather COVID. Gains in this channel were a direct result of our fiscal 2020 and our fiscal 19 customer promotion platform implementation. Tasting rooms, while closed, found sales in SMS, email, and virtual event guest engagement. Cameron Hughes continued to see healthy growth with good contribution margin, and our Windsor telemarketing showed gains despite physical corporate events closures highlighting the fiscal 19 and fiscal 20 investment in the brand site redesign and our outbound marketing to drive customer acquisition. QVC achieved record revenue, which was a result of increased on-air programming time dedicated to the wine category, the addition of Zulily and new brand partnerships. We expect this segment to remain a very strong growth driver of the business with our DTC capabilities further enhanced by the acquisition of the Sommelier Company and Van Ness. Now with that, let me turn it over to Pat to talk more about our results, the recent acquisitions, and our outlook. Pat?