WILLAMETTE VALLEY VINEYARDS INC

Previous wording

The Company sold 43,208 and 42,387 cases of produced wine during the three months ended March 31, 2024 and 2023, respectively, an increase of 821 cases, or 2.0% in the current year period over the prior year period. The increase in wine case sales was primarily the result of having more locations and more availability of some vintages in the quarter when compared to the prior year period.

Current wording

The Company sold 91,102 and 96,269 cases of produced wine during the six months ended June 30, 2024 and 2023, respectively, a decrease of 5,167 cases, or 5.4% in the current year period over the prior year period. The decrease in wine case sales was primarily the result of decreased case sales through distributors.

Previous wording

At March 31, 2024, wine inventory included 147,351 cases of bottled wine and 658,454 gallons of bulk wine in various stages of the aging process. Case wine is expected to be sold over the next 12 to 24 months and generally before the release date of the next vintage. The Winery bottled 57,908 cases during the three months ended March 31, 2024.

Current wording

At June 30, 2024, wine inventory included 183,974 cases of bottled wine and 456,315 gallons of bulk wine in various stages of the aging process. Case wine is expected to be sold over the next 12 to 24 months and generally before the release date of the next vintage. The Winery bottled 138,253 cases during the six months ended June 30, 2024.

Previous wording

James Suckling rated the Company’s 2021 Elton Pinot Noir 92 points and the 2021 Signature Cuvée Pinot Noir 91 points. He also rated the Company’s 2021 Estate Pinot Noir 91 points, Dijon Clone Chardonnay 91 points and the 2022 Pinot Gris 90 points.

Current wording

James Suckling rated the 2021 Elton Chardonnay 91 points.

Previous wording

Sales revenue for the three months ended March 31, 2024 and 2023 was $8,803,080 and $8,308,940, respectively, an increase of $494,140, or 5.9%, in the current year period over the prior year period. This increase was caused by an increase in revenues from direct sales of $214,507 and an increase in revenues from shipments to distributors of $279,633 in the current year’s three-month period over the same period in the prior year. The increase in direct sales to consumers was primarily the result of higher wine club revenues and having an additional tasting room open in 2024 when compared to 2023. The increase in revenue from the distributors was primarily attributed to higher prices in the current year three-month period over the same period in the prior year.

Current wording

Sales revenue for the three months ended June 30, 2024 and 2023 were $10,332,358 and $10,726,243, respectively, a decrease of $393,885, or 3.7%, in the current year period over the prior year period. This decrease was caused bya decrease in sales through distributors of $597,059 partly offset by an increase in direct sales of $203,174 in the current year three-month period over the prior year period. The decrease in revenue from sales through distributors was primarily related to lower case sales in this market. The increase in direct sales to consumers was primarily the result of opening a new tasting room in late 2023. Sales revenue for the six months ended June 30, 2024 and 2023 were $19,135,438 and $19,035,183, respectively, an increase of $100,255, or 0.5%, in the current year period over the prior year period. This increase was caused byan increase in revenues from direct sales of $417,682 partly offset by a decrease in revenues from sales through distributors of $317,427 in the current year period over the prior year period. The increase in revenues from direct sales to consumers was primarily the result of an extra tasting room in the current year. The decrease in sales through distributors was primarily the result of a decrease in off-premise sales.

Previous wording

Cost of sales for the three months ended March 31, 2024 and 2023 was $3,530,358 and $3,830,477, respectively, a decrease of $300,119, or 7.8%, in the current period over the prior year period. This change was primarily the result of the change in the mix of products sold in the first quarter of 2024 when compared to the same quarter in 2023.

Current wording

Cost of Sales for the three months ended June 30, 2024 and 2023 were $3,860,668 and $4,475,665, respectively, a decrease of $614,997, or 13.7%, in the current period over the prior year period. This change was primarily the result of fewer products sold in the current quarter compared to the same quarter last year. Cost of Sales for the six months ended June 30, 2024 and 2023 were $7,391,026 and $8,306,142, respectively, a decrease of $915,116 or 11.0%, in the current period over the prior year period. This change was primarily the result of a reduction in product sales in the first six months of 2024 when compared to the same period in 2023.

Previous wording

Selling, general and administrative expenses for the three months ended March 31, 2024 and 2023 was $5,875,299 and $5,453,413, respectively, an increase of $421,886, or 7.7%, in the current quarter over the same quarter in the prior year. This increase was primarily the result of an increase in selling expenses of $44,202, or 1.1% and an increase in general and administrative expenses of $377,684, or 25.7% in the current quarter compared to the same quarter last year. Selling expenses increased in 2024 compared to 2023 primarily as a result of having an additional tasting room location in 2024. General and administrative expenses increased in the first quarter of 2024 compared to the same quarter of 2023 primarily as a result of higher legal costs.

Current wording

Selling, general and administrative expenses for the three months ended June 30, 2024 and 2023 was $5,934,784 and $5,941,739 respectively, a decrease of $6,955, or 0.1%, in the current quarter over the same quarter in the prior year. This decrease was primarily the result of a decrease in selling and marketing expenses of $11,872, or 0.3% being partially offset by an increase in general and administrative expenses of $4,917, or 0.3% in the current quarter compared to the same quarter last year. Selling, general and administrative expense for the six months ended June 30, 2024 and 2023 was $11,810,083 and $11,395,152, respectively, an increase of $414,931, or 3.6%, in the current year period over the prior year period. This increase was primarily the result of an increase in selling and marketing expenses of $32,330, or 0.4% combined with an increase in general and administrative expenses of $382,601, or 12.5% in the current year period compared to the same period in 2023. General and administrative expenses increased in the first six months of 2024 compared to the same period in the prior year primarily as a result of higher legal costs.

Previous wording

The income tax benefit for the three months ended March 31, 2024 and 2023 was $212,407 and $280,963, respectively, a decrease of $68,556 or 24.4%, in the first quarter of 2024 over the same quarter in the prior year, primarily as a result of a lower pre-tax loss in the first quarter of 2024, compared to the same quarter in 2023. The Company’s estimated federal and state combined income tax rate for the three months ended March 31, 2024 and 2023 was 28.9% and 27.4% respectively.

Current wording

The income tax expense for the three months ended June 30, 2024 and 2023 was $79,775 and $40,911, respectively, an increase of $38,864 or 95.0%, in the second quarter of 2024 over the same quarter in the prior year mostly as a result of the higher pre-tax income in the second quarter of 2024, compared to the same quarter in 2023. The Company’s estimated federal and state combined income tax rate was 28.9% and 27.4% for the three months ended June 30, 2024 and 2023, respectively. The income tax benefit for the six months ended June 30, 2024 and 2023 was $132,632 and $240,052, respectively, a decrease of $107,420 or 44.7% in the current year period over the prior year period, mostly a result of lower pre-tax loss in the first six months of 2024, compared to the same period in 2023. The Company’s estimated federal and state combined income tax rate was 28.9% and 27.4% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Net loss for the three months ended March 31, 2024 and 2023 was $521,805 and $744,823, respectively, a decrease of $223,018, or 29.9%, in the first quarter of 2024 over the same quarter in the prior year. The decrease in net loss for the first quarter of 2024, compared to the comparable period in 2023, was primarily the result of higher prices of products sold in 2024.

Current wording

Net income for the three months ended June 30, 2024 and 2023 was $195,978 and $108,453, respectively, an increase of $87,525, or 80.7%, in the second quarter of 2024 over the same quarter in the prior year. Net loss for the six months ended June 30, 2024 and 2023 was $325,827 and $636,370, respectively, a decrease of $310,543, or 48.8%, in the current year period over the prior year period. The increase in net income for the second quarter and decrease in net loss for the first half of 2024, compared to the comparable periods in 2023, was primarily the result of higher prices for products sold in 2024.

Previous wording

Net loss applicable to common shareholders for the three months ended March 31, 2024 and 2023 was $1,084,982 and $1,256,542, respectively, a decrease of $171,560, or 13.7%, in the first quarter of 2024 over the same quarter in the prior year. The decrease in loss applicable to common shareholders in the first quarter of 2024, compared to the same period of 2023, was the result of a lower net loss being partially offset by a higher accrued preferred stock dividend in the current period.

Current wording

Net loss applicable to common shareholders for the three months ended June 30, 2024 and 2023 was $367,271 and $403,267, respectively, a decrease of $35,996, or 8.9%, in the second quarter of 2024 over the same quarter in the prior year. Net loss applicable to common shareholders for the six months ended June 30, 2024 and 2023 was $1,452,253 and $1,659,809, respectively, a decrease of $207,556, or 12.5%, in the current year period over the prior year period. The decrease in loss applicable to common shareholders in the second quarter and the first six months of 2024, compared to the same period of 2023, was the result of a lower net loss being partially offset by a higher accrued preferred stock dividend in the current period.

Previous wording

At March 31, 2024, the Company had a working capital balance of $21.6 million and a current working capital ratio of 2.87:1.

Current wording

At June 30, 2024, the Company had a working capital balance of $22.8 million and a current working capital ratio of 3.08:1.

Previous wording

At March 31, 2024, the Company had a cash balance of $256,472. At December 31, 2023, the Company had a cash balance of $238,482.

Current wording

At June 30, 2024, the Company had a cash balance of $279,807. At December 31, 2023, the Company had a cash balance of $238,482.

Previous wording

Total cash used for operating activities in the three months ended March 31, 2024 was $3,012,769. Cash used in operating activities for the three months ended March 31, 2024 was primarily associated with reduced grapes payable and increased inventories, being partially offset by depreciation and amortization.

Current wording

Total cash used for operating activities in the six months ended June 30, 2024 was $2,212,072. Cash used in operating activities for the six months ended June 30, 2024 was primarily associated with reduced grapes payable and increased inventories, being partially offset by depreciation and amortization.

Previous wording

Total cash used in investing activities in the three months ended March 31, 2024 was $330,298. Cash used in investing activities for the three months ended March 31, 2024 consisted of cash used on property and equipment and vineyard development costs.

Current wording

Total cash used in investing activities in the three months ended June 30, 2024 was $1,188,276. Cash used in investing activities for the six months ended June 30, 2024 consisted of cash used on property and equipment and vineyard development costs.

Previous wording

Total cash generated from financing activities in the three months ended March 31, 2024 was $3,361,057. Cash generated from financing activities for the three months ended March 31, 2024 primarily consisted of proceeds from the issuance of Preferred Stock and proceeds from the line of credit and long-term debt, being partially offset by the repayment of long-term debt.

Current wording

Total cash generated from financing activities in the six months ended June 30, 2024 was $3,441,673. Cash generated from financing activities for the six months ended June 30, 2024 primarily consisted of proceeds from the issuance of Preferred Stock and proceeds from long-term debt, being partially offset by the repayment of long-term debt.

Previous wording

In December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank (the “Credit Agreement”) that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories, as defined in the agreement. The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal. In July 2021, the Company renewed the Credit Agreement until July 31, 2023. In November 2022, the Company increased the borrowing line up to $5,000,000. In July 2023 the line of credit was renewed for an additional two years. The Company had an outstanding line of credit balance of $3,320,928 at March 31, 2024, at an interest rate of 8.0%, and an outstanding line of credit balance of $2,684,982 at December 31, 2023, at an interest rate of 8.0%.

Current wording

In December of 2005, the Company entered into a revolving line of credit agreement with Umpqua Bank (the “Credit Agreement”) that allows borrowing up to $2,000,000 against eligible accounts receivable and inventories, as defined in the agreement. The revolving line bears interest at prime less 0.5%, with a floor of 3.25%, is payable monthly, and is subject to renewal. In July 2021, the Company renewed the Credit Agreement until July 31, 2023. In November 2022, the Company increased the borrowing line up to $5,000,000. In July 2023 the line of credit was renewed for an additional two years. The Company had an outstanding line of credit balance of $2,334,415 at June 30, 2024, at an interest rate of 8.0%, and an outstanding line of credit balance of $2,684,982 at December 31, 2023, at an interest rate of 8.0%.

Previous wording

As of March 31, 2024, the Company had a 15-year installment note payable of $1,074,712, due in quarterly payments of $42,534, associated with the purchase of property in the Dundee Hills AVA.

Current wording

As of June 30, 2024, the Company had a 15-year installment note payable of $1,049,587, due in quarterly payments of $42,534, associated with the purchase of property in the Dundee Hills AVA.

Previous wording

As of March 31, 2024, the Company had a total long-term debt balance of $9,962,186, including the portion due in the next year, owed to AgWest, exclusive of debt issuance costs of $102,677. As of December 31, 2023, the Company had a total long-term debt balance of $7,590,659, exclusive of debt issuance costs of $105,989.

Current wording

As of June, 2024, the Company had a total long-term debt balance of $10,832,629, including the portion due in the next year, owed to AgWest, exclusive of debt issuance costs of $99,365. As of December 31, 2023, the Company had a total long-term debt balance of $7,590,659, exclusive of debt issuance costs of $105,989.