Mr. John Peller reports

ANDREW PELLER LIMITED REPORTS MARGIN AND PROFIT GROWTH FOR FISCAL 2024

Andrew Peller Ltd. today released results for the three and 12 months ended March 31, 2024. All amounts are expressed in Canadian dollars unless otherwise stated.

Fourth quarter 2024 highlights

• Revenue was $85.0-million, up 9.4 per cent compared with $77.7-million in the prior year;
• Gross margin increased to $35.6-million (41.8 per cent) from $22.1-million (28.4 per cent) in Q4 2023;
• EBITA (earnings before interest, taxes, and amortization) increased to $9.3-million, from ($1.2-million) in Q4 2023;
• Net loss of $6.9-million (17 cents per Class A share), compared with $10.0-million (24 cents per Class A share) in Q4 2023.

Fiscal 2024 highlights:

• Revenue of $385.9-million compared with $382.1-million in the prior year.
• Gross margin was 39.0 per cent, up from 37.1 per cent in the prior year;
• EBITA of $50.3-million, up 32.4 per cent from $38.0-million in the prior year;
• Net loss of $2.9-million (seven cents per Class A share), versus $3.4-million (eight cents per Class A share) last year;
• Dividends of 6.15 cents per Class A share and 5.35 cents per Class B share to be paid on July 12, 2024.

"Our 2024 financial results were highlighted by meaningful margin expansion as well as significant growth in EBITA, which reached more than $50-million for the full year," commented John Peller, president and chief executive officer. "The diversification and breadth of our operations and brands also allowed us to generate solid top-line performance, with healthy growth in our largest channel offsetting a near-term reduction in traffic at our estates and the impact of the previously announced excise exemption repeal. As we look ahead, we believe the business is well positioned to deliver above-category sales performance, combined with further margin expansion and EBITA growth."

Financial highlights

(Financial statements and the company's management discussion and analysis for the period can be obtained on the company's website.)

Financial review

Revenue for the three months ended March 31, 2024, increased 9.4 per cent compared with the prior year's fourth quarter due primarily to the $5.8-million recognized as other revenue relating to the revised Ontario VQA support program.

Revenue for the year ended March 31, 2024, increased 1.0 per cent over the prior year. The majority of the company's well-established trade channels performed well during the year, particularly provincial liquor stores, restaurants and hospitality locations, as well as sales in the export channel due to the improvement in international travel. This strong performance was offset by softness in sales from the estate wineries due to lower guest traffic and forest fires in the west. In fiscal 2024 there was a $6.3-million reduction in sales resulting from the repeal of the federal excise duty. The company has implemented price increases to partially offset the excise exemption repeal.

Gross margin as a percentage of sales increased to 41.8 per cent and 39.0 per cent for the three months and year ended March 31, 2024, respectively, from 28.4 per cent and 37.1 per cent in the prior year. Gross margin in the fourth quarter and the fiscal year benefited from the inclusion of the Ontario VQA support program as described herein while continuing to be impacted by inflationary cost pressures in imported wine, glass bottles, packaging materials, and international freight and shipping charges. Management believes these inflationary cost pressures have stabilized. In response to these margin pressures, the company has implemented price increases and is executing numerous production efficiency and cost savings programs aimed at enhancing operating margins, such as renegotiating freight rates for raw materials and evaluating alternate sourcing for glass bottles and other components. During the 2024 fiscal year, these programs have resulted in $9.3-million of cost savings.

As a percentage of sales, selling and administrative expenses rose to 42.1 per cent and 28.4 per cent for the three months and year ended March 31, 2024, respectively, compared with 30.0 per cent and 27.2 per cent in the prior year. Selling and administrative expenses in the fourth quarter included $6.5-million relating to the previously disclosed retirement allowance and consulting agreements entered into as part of John Peller's retirement and transition and $3.0-million in legal and advisory fees incurred by certain shareholders in connection with these agreements. Excluding these one-time expenses, selling and administrative expenses would have been 31.0 per cent and 26.0 per cent for the three months and year ended March 31, 2024, respectively

Earnings before interest, amortization, loss on debt extinguishment and financing fees, CEO (chief executive officer) retirement and transition costs, net unrealized gains and losses on derivative financial instruments, other (income) expenses, and income taxes (EBITA) was $9.3-million in the fourth quarter of fiscal 2024, up from a loss of $1.2-million in the fourth quarter of fiscal 2023. EBITA increased to $50.3-million for the year ended March 31, 2024, compared with $38.0-million in the prior year.

Interest expense for the three months and year ended March 31, 2024, increased compared with prior year due to higher average debt levels in fiscal 2024 when compared with prior year. Management believes the new credit facility entered on June 13, 2023, and corresponding interest rate swap will continue to contribute to reductions in the cost of borrowing going forward.

Other expenses (income), net, decreased in fiscal 2024 compared with the prior year due primarily to a one-time $2.8-million overhead restructuring initiative completed in the fourth quarter of the prior year.

The company incurred a net loss of $6.9-million (loss of 17 cents per Class A share) for the fourth quarter of fiscal 2024 compared with a net loss of $10.0-million (loss of 24 cents per Class A share) in the prior year and a net loss of $2.9-million (seven cents per Class A share) for the year ended March 31, 2024, compared with a net loss of $3.4-million (eight cents per Class A share) in the prior year.

Investor conference call

The company will hold a conference call to discuss the results on Wednesday, June 19, 2024, at 10 a.m. ET. John Peller, president and chief executive officer, and Paul Dubkowski, chief financial officer, will host the call, with a question and answer period following management's presentation.

Conference call dial-in details

Date:  Wednesday, June 19, 2024

Time:  10 a.m. ET

Dial-in number

Local Toronto/international:  416-764-8659

North American toll-free:  888-664-6392

Conference ID:   69675274

Webcast:  A live webcast will be available at the company's website.

Replay:  Following the live call, a recording will be available on the company's investor relations website.

About Andrew Peller Ltd.

Andrew Peller is one of Canada's leading producers and marketers of quality wines and craft spirits. The company's award-winning premium and ultrapremium Vintners' Quality Alliance (VQA) brands include Peller Estates, Trius, Thirty Bench, Wayne Gretzky, Sandhill, Red Rooster, Black Hills Estate, Tinhorn Creek, Gray Monk Estates, Raven Conspiracy and Conviction. Complementing these premium brands are a number of popularly priced varietal offerings, wine based liqueurs, craft ciders 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. (GVI), the recognized leader in personal wine-making products.

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