Emerging Growth Institutional Investor Forum. Paul Forgue CFO January 12, 2015

Transcription

1 Emerging Growth Institutional Investor Forum Paul Forgue CFO January 12, 2015

2 Safe Harbor Statement This presentation (including the presentation and any subsequent questions and answers) contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Such forward-looking statements are only predictions and are not guarantees of future performance. Any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties, certain assumptions and factors relating to the operations and business environments of Truett-Hurst, Inc. and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forward-looking statements. These risk factors, include, but are not limited to, a reduction in the supply of grapes and bulk wine available to us; significant competition; any change in our relationships with retailers could harm our business; we may not achieve or maintain profitability in the future; the loss of key employees; a reduction in our access to, or an increase in the cost of, the third-party services we use to produce our wine could harm our business; credit facility restrictions on our current and future operations; failure to protect, or infringement of, trademarks and proprietary rights; these factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report or detailed in our periodic filings (including Forms 8-K, 10-K and 10-Q) or other documents filed with the Securities and Exchange Commission. For more detailed information on us, please refer to our filings with the Securities and Exchange Commission, which are readily available at or through the our Investor Relations website at For additional information, see our annual report for the period ended June 30, 2014 on Form 10-K filed on September 29, 2014, or our other reports currently on file with the Securities and Exchange Commission, which contain a more detailed discussion of risks and uncertainties that may affect future results. We do not undertake to update any forward-looking statements unless otherwise required by law. 2

3 Truett Hurst, Inc. (NASDAQ: THST) A fast growing, innovative, award winning wine company located in the acclaimed Dry Creek and Russian River Valleys in Sonoma County, California. Established in late 2007 the company achieved annual sales of $22 million in FY2014 with compound annual growth rate of 70% since The Company s revenues are diversified between direct to consumer (two tasting rooms), retail exclusive (private label), national brands and Internet. 3

4 Truett Hurst Inc. Founding partners include Phil and Sylvia Hurst, Paul and Heath Dolan Established in late 2007 with the creation of Truett Hurst Winery Approximately 400,000 cs. annual production Key Customers: 4

5 Executive Officers Phillip L. Hurst Chief Executive Officer Phillip L. Hurst began his career in the wine industry in 1985 at Fetzer Vineyards when he was hired by Paul Dolan to help make premium wines and build the brand. Fetzer Vineyards was sold to the Brown-Forman Corporation in 1992, and Phil left in 1998 to run International Sales and Marketing for Golden State Vintners, Inc. which needed to bolster the senior management team for the launch of its initial public offering. During his time at Golden State Vintners, Inc. ( ), Mr. Hurst met his future partners in what was to become one of the world s largest private label beer, wine and spirits companies, Winery Exchange Inc. As co-founder and Senior Vice President of Sales and Marketing from 1999 to 2007, helped grow the company to over $100 million in sales in less than 10 years. Mr. Hurst sold his stake in the company to partner with his longtime friend and mentor, Paul Dolan, to follow their dream of buying and building super-premium wineries and vineyards in California s premier appellations. Mr. Hurst has a winemaking degree from University of California-Davis. Mr. Hurst has served as President, Chief Executive Officer and a managing member of the LLC since 2007 and as President, Chief Executive Officer and Director of Truett-Hurst, Inc. since The Nominating and Governance Committee and Board nominate for re-election Mr. Hurst to serve on our Board of Directors due to his extensive knowledge of our operations, competitive challenges and opportunities gained through his position as our President and Chief Executive Officer as well as his extensive experience and education in winemaking. Paul Forgue Chief Financial Officer & Chief Operations Officer Prior to joining Truett Hurst, Inc in 2014, Mr. Forgue spent over a decade working with Alvarez & Marsal. In the time with Alvarez & Marsal, Mr. Forgue worked with multiple companies in a broad variety of industries from healthcare to manufacturing, specialty retail to luxury car distribution. In these engagements, Mr. Forgue held multiple senior financial and operational roles including acting Chief Financial Officer. Mr. Forgue started his career in the Houston office of PricewaterhouseCoopers. In 2011 and 2012, Mr. Forgue lived with his family in Asia where he successfully helped build Alvarez & Marsal s China business and executed engagements throughout the PRC and South East Asia. Mr. Forgue has an BA in Economics from the University of Dallas and an MBA from the Jesse H. Jones School of Administration at Rice University. Mr. Forgue, who grew up in Oklahoma, has been a resident of Sonoma County since 2002 and currently serves as the Co-Chair of The Healdsburg School s Board of Trustees. 5

6 Winemaker - Virginia Ginny Lambrix VP Winemaking & Vineyards for all Truett Hurst Inc. brands and Equity Partner Increasing external recognition of exceptional wine quality Recent Robert Parker Scores (December 2014 Issue): 95 Points, 12 Truett Hurst Burning Man Petite Sirah 94 Points, 12 Truett Hurst Red Rooster Zinfandel 93 Points, 12 Truett Hurst Rattler Rock Zinfandel 90 Points, 12 VML Moon Pinot Noir 89 Points, 12 VML Earth Pinot Noir 89 Points, 12 VML Stars Pinot Noir 87 Points, 12 VML RRV Pinot Noir 89 Points, 13 VML RRV Chardonnay 87 Points, 13 VML RRV SB These are the most individually crafted and designed wines I have seen since I first encountered the meticulous craftsmanship and artwork of Manfred Krankl at Sine Qua Non Robert Parker 6

7 U.S. wine sales are $35 billion annually 2013: +3% Volume, +5% Value 7

8 Truett Hurst Performance CAGR: Net Revenue: Gross Profit: 69.8% 70.4% Strong performance Gaining market share 8

9 Growth Plans for 2015 New Customer Acquisition The Kroger Co. Target Product Line Extensions Existing customers expanding offerings Innovation Square going broad market while maintaining Total Wines & More Wraps expanding while maintaining Safeway Paper experienced some difficulty, continued strong interest Cans helped us close a big new customer (Kroger) Combination of market dynamics + company strategy = reasonable probability of achieving similar growth as FY14 9

10 FY15Q1 Overview Revenue growth of 20% with net sales of $6.5 million (an increase of $1.1 million versus prior quarter) Overall gross margin percent increased to 38% from 33% and gross profit dollars grew 36% to $2.4 million (an increase of $0.6 million versus prior year) Operating expenses of $2.5 million $0.4 million incremental investment in sales and marketing $0.2 million increase in general and administrative 10

11 Core Brands

12 Truett Hurst Winery Established in 2007 Focuses on ultra-premium Dry Creek Valley appellation wines One of Dry Creek Valley s most visited tasting rooms Biodynamic certification in

13 VML Winery Established in 2011 Named for Ginny Virginia Marie Lambrix Focused on Russian River Pinot Noir and Chardonnay Packaging reflects Ginny s commitment to natural production techniques 13

14 Colby Red Cause based innovation partnering with Daryl Groom (100pt. Winemaker) and his son, Colby Proceeds donated to local heart health charities Cabernet based, five variety blend Over $500 thousand raised for heart health charities to date 14

15 Healdsburg Ranches Outstanding quality at a value price High on premise sales percentage New packaging rolled out October

16 Innovation & Design

17 California Winecraft Innovative ready-to-drink wine based beverages patterned on classic mixed wine combinations that have been worldwide favorites for decades, and in some cases, centuries: Mataro s Punch: Sonoma Brew: NorCal Squeeze: Chateau Vanille: red wine and fruit juice (sangria) red wine and cola (calimocho) sauvignon blanc, lemon and line (white wine spritzer) chardonnay and vanilla (adult cream soda) Launching exclusively with The Kroger Company one of the worlds largest retailers with over 2,600 retail locations in 34 states operating under two dozen banner names including Kroger, City Market, Dillions, Food for Less, Fred Meyer, Fry s, Harris Teeter, Jay C, King Soopers, QFC, Ralphs, and Smiths. 17

18 Paperboy World s FIRST paper wine bottle 80% lighter than glass bottles Recyclable Hikes, concerts, or beach parties It stays cooler longer Goes anywhere 18

19 Design Recognition 19

20 New Brand Development

21 Bewitched Reserve 21

22 Stonegate Cabernet 22

23 Financial Highlights Q1 FY15

24 FY15Q1 Financial Highlights FY 14 FY 15 Q1 15 v 14 Q1 Q2 Q3 Q4 Q1 B / (W) % D Net sales 5,386 5,996 5,160 5,515 6,482 1, % Gross profit 1,789 2,121 1,752 1,767 2, % Gross Margin % 33.2% 35.4% 34.0% 32.0% 37.6% 4.4% Sales and marketing 1,154 1,399 1,377 1,551 1,565 (411) 35.6% General and administrative (207) 28.1% Other - (1) (2) Total Operating Expenses (1) 1,890 1,986 2,390 2,402 2,510 (620) Income (loss) from Operations (101) 135 (638) (635) (75) % Net income (loss) before non-controlling interests (139) 111 (625) (631) (150) (11) (1) Non-cash stock compenstion expense: Sales and marketing General and administrative (47) (24) (2) Operating expenses as a percentage of Net Sales Sales and marketing 21.4% 23.3% 26.7% 28.1% 24.1% -2.7% General and administrative 13.7% 9.8% 11.9% 13.8% 14.5% -0.8% 24

25 FY15Q1 Financial Highlights Q B / (W) % D Net Sales Wholesale 4,022 4, % Direct to Consumer 928 1, % Internet 436 1, % 5,386 6,482 1, % Gross Profit Wholesale 1,055 1, % Direct to Consumer % Internet % 1,789 2, % Gross Margin Wholesale 26.2% 27.5% 1.3% Direct to Consumer 60.0% 64.8% 4.8% Internet 40.6% 47.5% 6.9% 33.2% 37.6% 4.4% 25

26 Ownership Structure HDD LLC Ownership Class A Shares (Fully Diluted) Members THI Total Outstanding Unconverted Equity LLC Units Incentives Total As of Initial Public Offering 4,102,644 2,700,000 6,802,644 2,700,000 4,102, ,000 7,054,644 Changes through 12/31/14: 60.3% 39.7% 100.0% 38.3% 58.2% 3.6% 100.0% LLC Conversions (1,019,184) 1,019, ,019,184 (1,019,184) 0 0 Vesting of Equity Incentives IPO Date ,000 0 (112,000) 0 Post IPO Equity Incentives Equity Incentives Granted - RSA / RSU , ,629 Equity Incentives Granted - Options , ,000 Equity Incentives Vested ,802 0 (16,802) , , ,629 As of 12/31/14 3,083,460 3,719,184 6,802,644 3,847,986 3,083, ,827 7,336, % 54.7% 100.0% 52.5% 42.0% 5.5% 100.0% Increase in Class A Shares (excluding unvested equity incentives) 1.9% Increase in Class A Shares (fully diluted) 4.0% 26

27 Why THST? Large addressable market size Seasoned management team with incentives aligned with public stockholders Industry leading growth and innovation Diversified revenue stream DTC, Internet, Private Label, National Brands Retailer Relationships 6 of top 15 US retailers Strong margins getting stronger 27

28 Thank You! Paul Forgue CFO & COO (707)