Willamette Valley Vineyards Posts a Profit for Q1 2020
SALEM, Ore., May 13, 2020 /PRNewswire/ -- Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) (the "Company"), a leading Oregon producer of Pinot Noir, generated earnings applicable to common shareholders of $530,630, or $0.11 cents per share, for the first quarter of 2020, up from $170,024 or $0.03 cents per share, for the first quarter in the prior year, representing a $360,606, or 212.1%, increase in income applicable to common shareholders in the first three months of 2020 when compared to the first three months of 2019. This increase was the result of increased net income.
Net income for the three months ended March 31, 2020 and 2019 was $787,082 and $426,476, respectively, an increase of $360,606, or 84.6%, in the current year period over the prior year period. This increase is primarily the result of an increase in income from operations being partially offset by an increase in the income tax provision in the first quarter of 2020 compared to the same quarter in 2019.
Sales for the three months ended March 31, 2020 and 2019 were $6,521,895 and $4,998,786, respectively, an increase of $1,523,109, or 30.5%, in the current year period over the prior year period. This increase was mainly caused by an increase in sales through distributors of $1,290,974 combined with an increase in direct sales to customers of $232,135 in the current year three month period over the prior year period. The increase in sales through distributors is primarily the result of new product placements and growth in the Company's brand in the first quarter of 2020 when compared to same quarter of 2019. The increase in sales through direct sales was mostly attributable to an increase in telephone and internet sales and the opening of the Wineworks facility in Folsom, California, during the first quarter of 2020.
Gross profit for the three months ended March 31, 2020 and 2019 was $3,912,042 and $3,280,636, respectively, an increase of $631,406, or 19.2%, in the current year period over the prior year period. This increase is primarily the result of increased sales revenues being partially offset by increased cost of sales in the first quarter of 2020 compared to the same period in 2019.
Selling, general and administrative expenses for the three months ended March 31, 2020 and 2019 was $2,829,504 and $2,716,198, respectively, an increase of $113,306, or 4.2%, in the current year period over the prior year period. This increase was primarily the result of an increase in administration expenses.
Jim Bernau, Founder and President of the winery, said, "We are pleased with the increased revenues and profitability achieved in the first quarter of 2020 when compared to the same quarter of 2019. We believe this has put us in a stronger position as we adapt our business to face the challenges brought about by the COVID-19 pandemic."
Although the Company has not experienced significant disruptions to its supply chain network due to the COVID-19 pandemic or to the government responses to the pandemic, all of the Company's tasting rooms have been closed in March 2020 in compliance with shelter-in-place orders imposed by state governments, which we expect may negatively impact our direct to consumer sales. In response to the closing of the Company's tasting rooms, the Company launched curbside pick-ups, complimentary shipping specials with minimum purchase and a new wine delivery service for locals, which the Company is hopeful will mitigate some of the expected declines in direct to consumer sales.
The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict, as the response to the pandemic is in its early stages and information is rapidly evolving. The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted.
For a complete discussion of the Company's financial condition and operating results for the first quarter, see our Form 10-Q for the three months ended March 31, 2020, as filed with the United States Securities and Exchange Commission on EDGAR.
Willamette Valley Vineyards, Inc. is headquartered at its Estate Vineyard near Salem, Oregon. The Company's common stock is traded on NASDAQ (WVVI).
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are identified by such words and phrases as "expects," "thinks," "believes," "anticipates" and words of similar import. Such forward-looking statements are subject to risks and uncertainties and actual results could differ materially from those projected. Such risks and uncertainties include, but are not limited to: availability of financing for growth, availability of adequate supply of high quality grapes, successful performance of internal operations, impact of competition, changes in wine broker or distributor relations or performance, impact of possible adverse weather conditions, impact of reduction in grape quality or supply due to disease, the ability of our planned winery in Dundee Oregon and planned micro-winery in Folsom California to generate revenues in excess of costs, the impact of the COVID-19 pandemic and the policies of United States federal, state, and local governments in response to such pandemic, the impact of governmental regulatory decisions and other risks set forth under Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019, and in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, each as filed with the United States Securities and Exchange Commission.
The following is the Company's Statement of Income for the three months ended March 31, 2020 compared to the three months ended March 31, 2019:
Three months ended
COST OF SALES
Sales and marketing
General and administrative
Total operating expenses
INCOME FROM OPERATIONS
OTHER INCOME (EXPENSE)
Other income, net
INCOME BEFORE INCOME TAXES
INCOME TAX PROVISION
Accrued preferred stock dividends
INCOME APPLICABLE TO COMMON SHAREHOLDERS
Earnings per common share after preferred dividends, basic and diluted
Weighted-average number of common shares outstanding
SOURCE Willamette Valley Vineyards