Willamette Valley Vineyards Posts a Profit for Q2 2020

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Aug 12, 2020, 17:36 ET

SALEM, Ore., Aug. 12, 2020 /PRNewswire/ -- Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) (the "Company"), a leading Oregon producer of Pinot Noir, generated income applicable to common shareholders of $363,969, or $0.07 cents per share, for the second quarter of 2020, up from $103,459 or $0.02 cents per share, for the second quarter in the prior year, representing a $260,510, or 251.8%, increase in income applicable to common shareholders compared to the second quarter of 2019.

Sales revenue for the second quarters of 2020 and 2019 were $5,568,654 and $5,790,837, respectively, a decrease of $222,183, or 3.8%, in the current year period over the prior year period. This decrease was mainly caused by a decrease in direct sales of $156,802 and a decrease in sales through distributors of $65,381 in the current year quarter over the prior year period. The decrease in direct sales to consumers was primarily the result of retail sales decreases in tasting room revenue, hospitality and kitchen sales mostly due to the temporary closure and restrictions on the operation of our tasting rooms resulting from the COVID-19 pandemic. The decrease in revenue from sales through distributors was primarily attributed to lower sales to the on-premise market as many of these establishments have been closed or had other restrictions placed on them due to the COVID-19 pandemic.

Gross profit for the second quarters of 2020 and 2019 was $3,501,532 and $3,498,358, respectively, an increase of $3,174, or 0.1%, in the second quarter of 2020 over the same quarter in the prior year.

Selling, general and administrative expense for the second quarters of 2020 and 2019 was $2,555,958 and $2,901,927 respectively, a decrease of $345,969, or 11.9%, in the current quarter over the same quarter in the prior year. This decrease was primarily the result of a decrease in selling expenses of $292,588, or 15.3% and a decrease in general and administrative expenses of $53,381, or 5.4% in the current quarter compared to the same quarter last year.

Net income for the second quarters of 2020 and 2019 was $620,421 and $359,911, respectively, an increase of $260,510, or 72.4%, in the second quarter of 2020 over the same quarter in the prior year.

Jim Bernau, Founder and CEO of the winery, said "The winery has shown remarkable resilience during the Pandemic due to the brand's strength in grocery and direct shipments to consumers," said Jim Bernau, Founder and CEO, "Our employees' resourcefulness in protecting their fellow employees and guests while driving sales and making excellent wines is inspiring."

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 continuing to evolve. 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 second quarter, see our Form 10-Q for the three months ended June 30, 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 June 30, 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 and six months ended June 30, 2020 compared to the three and six months ended June 30, 2019:

			Three months ended		Six months ended
			June 30,		June 30,
			2020	2019	2020	2019

SALES, NET			$ 5,568,654	$ 5,790,837	$ 12,090,549	$ 10,789,623
COST OF SALES			2,067,122	2,292,479	4,676,975	4,010,629

GROSS PROFIT			3,501,532	3,498,358	7,413,574	6,778,994

OPERATING EXPENSES
	Sales and marketing		1,613,998	1,906,586	3,362,038	3,681,586
	General and administrative		941,960	995,341	2,023,424	1,936,539
		Total operating expenses	2,555,958	2,901,927	5,385,462	5,618,125

INCOME FROM OPERATIONS			945,574	596,431	2,028,112	1,160,869

OTHER INCOME (EXPENSE)
	Interest income		5,713	840	15,230	10,286
	Interest expense		(105,133)	(111,088)	(210,875)	(221,502)
	Other income, net		5,800	8,091	100,802	121,100

INCOME BEFORE INCOME TAXES			851,954	494,274	1,933,269	1,070,753

INCOME TAX PROVISION			(231,533)	(134,363)	(525,766)	(284,366)

NET INCOME			620,421	359,911	1,407,503	786,387

Accrued preferred stock dividends			(256,452)	(256,452)	(512,904)	(512,904)

INCOME APPLICABLE TO COMMON SHAREHOLDERS			$ 363,969	$ 103,459	$ 894,599	$ 273,483

Earnings per common share after preferred dividends, basic and diluted			$ 0.07	$ 0.02	$ 0.18	$ 0.06

Weighted-average number of common shares outstanding			4,964,529	4,964,529	4,964,529	4,964,529