SCHEID FAMILY WINES REPORTS SECOND QUARTER FISCAL 2024 RESULTS

SALINAS, Calif., Oct. 16, 2023

Financial Results

Total revenues were $27.7 million, down $2.7 million, a decrease of 9%. This decrease was driven by the Company's cased goods sales which decreased 6%, from $23.9 million to $22.5 million, and a decrease in bulk wine sales of 28%, from $2.9 million to $2.1 million.

Gross margin decreased slightly from 23% in fiscal 2023 to 20% in fiscal 2024, primarily as result of the change in sales mix and increases in product production costs.  Sales and marketing expenses decreased 14%, from $6.6 to $5.7 million, as the Company reorganized its sales and marketing departments in late 2023. These expenses were 21% of total revenues in the first six months of fiscal 2024 and 22% in fiscal 2023. General and administrative costs decreased 16%, from $4.4 million to $3.7 million. Interest expense rose 57%, from $2.0 million to $3.0 million, due to increased borrowings and increases in interest rates on the Company's variable rate debt. Average interest rates on Company debt increased from 4.6% during the six first six months of fiscal 2023 to 6.1% during the current period.

During the six months ended August 31, 2022, the Company received forgiveness from the Small Business Association of a $3.7 million loan made to the Company pursuant to the Paycheck Protection Plan ("PPP") administered by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Company recognized a gain for such forgiveness in fiscal 2023. In addition, in the 2023 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 net loss of $4.9 million in the first six months of fiscal 2024, as compared to a net loss of $1.4 million in fiscal 2023.

2023 Harvest Update

The 2023 grape harvest began in late September, approximately three weeks later than a normal harvest season on the Central Coast, due to a cool summer growing season that has affected all of California. Mr. Scott Scheid, President and CEO of the Company, stated, "We are currently about 40% complete with harvest, as compared to 80% completion at this time during the 2022 harvest. Overall yields are trending close to slightly above the Company's five-year average yields. Our winemaking team is impressed with the quality thus far; the winter rains and extended growing season have lent themselves to favorable conditions for producing high quality wine grapes."