NIAGARA-ON-THE-LAKE, ONTARIO -- (Marketwired) -- 11/20/14 -- Diamond Estates Wines & Spirits Inc. ("Diamond Estates" or "the Company") (TSX VENTURE: DWS) today announced its second quarter results for the fiscal period ending September 30, 2014 ("Q2 2015" and "YTD 2015").
The Company generated a profit in Q2 2015 of $116,320, a substantial improvement from the Q2 2014 loss of $2,431,770. Sales for Q2 2015 were $5,863,300 compared to $5,255,155 for Q2 2014, representing an increase of 11.6%. Gross profit for Q2 2015 was up 28.2% over the prior year, to $3,065,401 from $2,391,051. Gross margin for Q2 2015 was 52.3%, an increase of almost 15% compared to 45.5% for Q2 2014. Operating expenses for Q2 2015 decreased by $476,718 compared to the same period in the prior year.
On a year to date (YTD) basis, the Company had a net loss in 2015 of $81,360 compared to $2,770,544 in 2014. YTD 2015 sales were $11,029,876 compared to $11,244,785 in YTD 2014, representing a minimal decline of 1.9%. YTD gross profit for 2015 increased to $5,651,598 in 2015 from $5,185,715 in YTD 2014, while gross margin for YTD 2015 was up 5.0% to 51.2% compared to 46.2% for YTD 2014. Operating expenses decreased by $436,729 in YTD 2015 over YTD 2014.
The Company generated positive cash flow from operations for YTD 2015 of $462,054 compared to negative cash flow from operations for YTD 2014 of $1,312,919, an increase of $1,774,973, comprised of the following major components:
Increase in gross profit $ 465,883
Decrease in operating expense 436,729
Decrease in interest expense 229,977
Decrease in financing expenses 347,079
Other 295,305
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$ 1,774,973
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Sales for Q2 2015 were up $608,000 over Q2 2014 with the winery division accounting for the majority of the increase from export sales. Sales for YTD 2015 are very consistent with YTD 2014, showing a small decline of 1.9%, attributable to the timing of export sales. Overall winery sales in YTD 2015 are up $146,000 (1.9%) from YTD 2014. The timing of export sales is more evenly spread than in the prior year, which explains the apparent small year over year decline. This was offset by domestic sales increases, including direct sales from the winery, which were up significantly as a result of a contract to supply wine to VIA Rail and increased sales to bars and restaurants. Gross margin for the winery division for YTD 2015 was up 2.7% compared to YTD 2014 on the combined impact of price increases, product mix and higher throughput. Gross margin for the agency division for YTD 2015 was up 5.6% compared to YTD 2014 largely as a result of the strong sales performance in Ontario and Atlantic Canada.
"We are pleased that Diamond Estates was profitable in this quarter," stated J. Murray Souter, President & CEO of Diamond Estates. "Over the past 12 months, we committed to making this Company profitable and we are now achieving what we set out to do. Our continued focus on profitability and cost management has resulted in improved margins and positive cash flow from operations. Adjusted for seasonality, we anticipate the improvement to continue into future periods. The recent merger of our agency business with the Kirkwood Group to form Kirkwood Diamond Canada should result in improved operating margins and increased sales and distribution of our products and brands through the balance of the year and beyond. Additionally, many of the new brands that we have recently launched are beginning to gain traction in the marketplace and will contribute to the improving financial position of the Diamond Estates."
About Diamond Estates Wines and Spirits Inc.
Diamond Estates Wines and Spirits Inc. is a producer, marketer and distributor of wines and spirits in Canada. The company operates two wineries in the Niagara region of Ontario producing VQA and blended wines under such well-known brand names as 20 Bees, EastDell, Lakeview, Dois Amigos, Dan Aykroyd, Benchmark and Seasons. The company also imports fine wines and spirits from around the world and serves as the marketing and sales agent for these brands in all regions of the country. These brands include Fat Bastard wines from France, Fireball Whiskey Shooter from Canada, Hpnotiq Liqueur from France, Anciano wines from Spain, Francois Lurton wines from France and Argentina and a number of top bourbons. For further information on the company, please visit the company's SEDAR profile at www.sedar.com.
This press release contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "estimates", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this press release. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to: the economy generally; consumer interest in the services and products of Company; financing; competition; and anticipated and unanticipated costs. While the Company acknowledges that subsequent events and developments may cause its views to change, the Company specifically disclaim any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the views of the Company as of any date subsequent to the date of this press release. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
Diamond Estates Wines & Spirits Inc. common shares trade on the TSX Venture Exchange (symbol DWS).
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Contacts:
Diamond Estates Wines & Spirits Inc.
J. Murray Souter
President & CEO
905-641-1042 Ext 234
jmurraysouter@diamondwines.com
Diamond Estates Wines & Spirits Inc.
Alan Stratton, CPA, CA
CFO
905-641-1042 Ext 225
astratton@diamondwines.com
