SALINAS, Calif., July 3, 2024 /PRNewswire/ -- Scheid Vineyards Inc. (dba Scheid Family Wines) (OTC Markets: SVIN) announced today its financial results for the fiscal year ended February 29, 2024. Scott Scheid, President and CEO, commented, "As has been widely reported in the media, the wine industry has faced considerable challenges this past year. Declining wine consumption, inventory destocking, rising interest rates and significant increases in the costs of doing business are just a few of these challenges. One of the side effects of these conditions is the accumulation of bulk wine on the market as businesses seek to hold less inventory, coupled with a larger than average 2023 harvest. As a large wine grape grower using only 60% of our estate vineyard production for our own brands, we sell the balance to other wineries each year. This year we've been faced with selling bulk wine at below cost and, consequently, are taking a $15.0 million non-cash write-down of our bulk wine inventories. Writing down our bulk wine inventory to market is the prudent course of action and better sets us up for future success." Mr. Scheid continued, "Due to these difficult circumstances, we did not meet certain financial covenants with our lenders and did not make a principal payment that became due on March 1, 2024. We are in default under our debt agreements and are currently negotiating forbearance agreements with our lenders, as well as seeking alternative financing arrangements. In addition, we are looking to monetize certain real estate assets to reduce our debt and cure defaults. This monetization effort is consistent with the evolution of our business from a grower to a branded wine enterprise.  We have work to do but our team is laser-focused on growing sales, making necessary changes, and getting through this difficult part of the cycle." Financial Results Total revenues remained relatively flat from the previous year, decreasing to $68.0 million for the fiscal year ended February 29, 2024, from $68.5 million in fiscal 2023. After a slow start to fiscal 2024 shipments, cased goods sales increased 3%, to $46.3 million in fiscal 2024, from $44.9 million in fiscal 2023. In addition, the Company's winery processing and storage revenues increased 12%, to $9.6 million from $8.5 million, which was offset by a decrease in bulk wine and grape sales of 25%, to $8.8 million from $11.8 million. Due to the downturn in the California wine market and a large 2023 vintage harvest, grape and bulk wine prices have seen significant declines. As a result, the Company recorded a $15.0 million non-cash write-down of its available for sale bulk wine inventories to properly reflect their recorded value to market at February 29, 2024. Before the write-down, gross profit decreased 1%, to $17.5 million in fiscal 2024, from $17.8 million in fiscal 2023. Gross margins remained at 26% for each period. After the write-down, gross profit decreased 86% to $2.5 million for fiscal 2024, from $17.8 million in 2023. Sales and marketing expenses decreased 12%, to $10.8 million, from $12.2 million, as the Company reorganized its sales and marketing departments in late 2022. These expenses were 16% of total revenues for fiscal 2024, compared to 18% for fiscal 2023. General and administrative expenses decreased 15%, to $6.9 million, from $8.1 million. Before the write-down, loss from operations decreased 93%, to $0.2 million in fiscal 2024, from $2.6 million in fiscal 2023. After the write-down, loss from operations increased for fiscal 2024 to $15.2 million, an increase of $12.6 million, due to the non-cash write-down of bulk wine inventories of $15.0 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased to a loss of $10.0 million, from earnings of $5.9 million. Interest expense rose 45%, to $6.9 million, from $4.8 million, due to increased borrowings and increases in interest rates on the Company's variable rate debt. Average interest rates on Company debt increased to 6.3% for fiscal 2024, from 4.9% for fiscal 2023. During fiscal 2023, the Company recognized a gain from the forgiveness of a $3.7 million loan made to the Company pursuant to the Paycheck Protection Plan ("PPP"). During the same period, the Company settled a class action lawsuit which alleged violations of California wage and hour employment laws for $1.25 million.  In total, the Company reported a $20.6 million net loss for the year ended February 29, 2024, compared to a $2.2 million net loss for the year ended February 28, 2023.   Year Ended February 292024