Company Overview

Crimson Wine Group is a wine company that generates revenue from selling wine to wholesalers and consumers. The company produces and sells premium wines primarily from vineyards it owns in California and Oregon.

Financial Highlights

Revenue - Total revenue for the first quarter of 2024 was $15.9 million, up 5% from $15.2 million in the first quarter of 2023. Revenue increased in both wholesale and direct-to-consumer channels.

Profitability - Gross profit was $7.7 million (48% of revenue) in the first quarter of 2024, up from $6.9 million (46% of revenue) in the first quarter of 2023. However, Crimson had a small net loss of $0.6 million in both periods.

Cash Flow - Crimson used $3.7 million in operating activities in the first quarter of 2024, compared to using $3.2 million in the first quarter of 2023. The company generated $4.8 million from investing activities in the latest quarter.

Business Segment Performance

Wholesale

• Revenue increased 10% to $9.1 million
• Volume growth driven by domestic and export sales
• Gross margin expanded from 37% to 39%

Direct-to-Consumer

• Revenue rose 2% to $6.1 million
• Sales increased in ecommerce and tasting rooms
• Gross margin declined slightly from 66% to 65%

Other (bulk wine/grapes, custom winemaking, events, etc.)

• Revenue decreased 24% to $0.7 million
• Lower bulk wine sales was primary driver

Costs and Expenses

Cost of Goods Sold - COGS was $8.2 million (52% of revenue) in the first quarter of 2024 compared to $8.3 million (54% of revenue) in the prior year period.

Operating Costs

• Sales and marketing expenses increased 12% to $4.8 million
• General and administrative costs rose 9% to $3.8 million

Interest and Taxes

• Interest expense declined 7% to $0.2 million
• Effective tax rate was 27.7% vs. 28.2% last year

Liquidity and Capital Resources

As of March 31, 2024, Crimson had:

• $10.7 million outstanding on a term loan maturing in 2040
• $6.8 million outstanding on a term loan maturing in 2037
  
• $60 million available on a revolving credit facility expiring in 2028
• No amounts borrowed on the credit facility to date

The company believes it has sufficient capital resources to meet its needs over the next 12 months.

Crimson spent $0.5 million on capital expenditures and paid $1.3 million for share repurchases in the first quarter of 2024.

Outlook

Crimson expects full year 2024 results to benefit from increased wholesale revenue and profitability as well as gross margin expansion. However, inflationary pressures, potential supply chain disruptions, and uncertain economic conditions could impact financial performance.

The company remains focused on direct-to-consumer sales growth through wine clubs, ecommerce, and tasting rooms. Investments to enhance climate resilience and manage long-term grape sourcing are also strategic priorities.