For Further Information:
Scheid Vineyards Inc. (Nasdaq SCM: SVIN)
305 Hilltown Road
Salinas, CA 93908
(831) 455-9990
CONTACT: Scott Scheid, President and CEO
Mike Thomsen,
Chief Financial Officer
For Immediate Release:
November 16, 2005
SCHEID
VINEYARDS INC. REPORTS THIRD QUARTER RESULTS
President
Comments on Late 2005 Harvest; Preliminary Results; Yields up 50%
SALINAS, CA – November 16, 2005 - Scheid Vineyards Inc.
(Nasdaq SCM: SVIN) announced today its
preliminary financial results for the third quarter ended September 30, 2005.
For the three months ended
September 30, 2005, sales of grapes were 41% lower than the same quarter last
year, decreasing to $7,978,000 from $13,484,000. Net income decreased by 77% to $322,000 from $1,399,000,
resulting in earnings of $0.06 per share, down from $0.26 per share reported in
2004.
For the nine months ended September
30, 2005, total revenues were 39% lower than the same period last year, decreasing
to $9,795,000 from $16,062,000. A net
loss of $622,000 was reported, resulting in a loss of $0.12 per share for the
first nine months of 2005, compared to a profit of $92,000, or earnings of
$0.02 per share, in the 2004 period.
Mike Thomsen, CFO, stated, “This
substantial reduction in revenues was due to the timing of grapes sales, caused
primarily by cool weather during the 2005 growing season. Harvest started slowly and has run about
three weeks later than normal. As of
September 30th, approximately 32% of the Company’s producing acres
had been harvested, compared to 80% as of the same date in 2004.”
Mr. Thomsen continued by stating,
“In addition to grapes sold directly to wineries, the Company converts some of
its grapes into bulk wine to be sold later, either pursuant to contracts or for
the speculative market, which affects the timing of revenue recognition. As of September 30, 2005, approximately
8,650 tons of grapes had been harvested, of which 3,450 tons were converted
into bulk wine. Through September 30,
2004, the Company had harvested 14,000 tons, of which 3,500 tons had been
converted to bulk wine. Hence, the
tonnage of grapes delivered directly to customer wineries in 2005 was down by
approximately 50% when compared to 2004.”
Scott D. Scheid, CEO, stated, “With
completion of the harvest expected by the end of November, it is clear that
this will be the largest grape crop in the thirty-three year history of the
Company. We expect our grape crop
tonnage to be approximately 50% larger than in 2004. Although the harvest has
not yet been completed, we estimate that grape sale revenues will be in excess
of $20,000,000 for the fiscal year ending December 31, 2005, an increase of 25%
from grape sale revenues of fiscal 2004. Industry-wide results are not yet available for 2005, but it is
projected to be one of the largest grape harvests in the history of California
– with excellent quality overall.”
Mr. Scheid then cautioned, “Review of the past
shows that, due to vine stress and other factors, very large harvests are
generally followed by average or below average size crops the next year. Further, due to the potential year to year
carryover of bulk wine, grape and wine prices would be expected to soften the
year following a bumper crop.”
“The Company’s new winery facility began operations, as
scheduled, on September 2, 2005, and has been processing both red and white
grapes. Approximately 10,500 tons of the Company’s grapes will be made into bulk
wine in 2005, as compared to 6,400 tons in 2004, an increase of 64%. The timing of shipments of bulk wine is
dictated by the needs of customers, so recognition of revenues can and do shift
from one fiscal year to the next.
Therefore, bulk wine sales for 2005 cannot be reasonably determined at
this time, but the Company does expect wine sales for fiscal 2005 to be greater
than in 2004.”
“In addition to producing wine for
the Company’s own account, our winery processes grapes on a fee-for-service
basis for other wineries and growers.
We expect such winery processing revenues will be in excess of
$1,200,000 for 2005.”
“We caution that the use of ratios and amounts of historical
cost of sales and other expenses deducted in calculating net income should not
be expected to provide an indication of gross profit or net income to be
reported by the Company for fiscal 2005.”
Scheid Vineyards Inc. (www.scheidvineyards.com) is an
independent producer of premium wine grapes and bulk wine. The Company operates approximately 5,700
acres of vineyards, primarily in Monterey County, California. The Company sells
most of its grape production under short and long-term grape and bulk wine
contracts to wineries producing high quality table wine. The Company also operates a winery with an
approximately 11,000 ton processing capability in which the Company produces
bulk wine, as well as a small amount of ultra premium wine under its own label.
Note: This press
release contains forward-looking statements concerning expectations for the
2005 harvest, the Company=s
2005 financial performance and anticipated crop yields in 2006. These forward-looking statements can
generally be identified as such because the context of the statement will
include such words as the Company “estimates” or words of similar import. Similarly, statements that describe the
Company=s future
operating performance, financial results, plans, objectives or goals are also
forward-looking statements. Such
forward looking statements are subject to certain factors, risks and
uncertainties which could cause actual results to differ materially from those
currently anticipated. Such factors,
risks and uncertainties include, but are not limited to, (i) success in
planting, cultivating and harvesting of existing and new vineyards, including
the effects of weather conditions, (ii) the potential effect on the Company=s vineyards of certain
diseases, insects and pests, including the glassy-winged sharpshooter, (iii)
effects of variances in grape yields and prices from harvest to harvest due to
agricultural, market and other factors and relatively fixed farming costs, (iv)
success in, and the timing of, future acquisitions, if any, of additional properties
for vineyard development and related businesses as well as variability in
acquisition and development costs, (v) consumer demand and preferences for the
wine grape varieties produced by the Company, (vi) general health and social
concerns regarding consumption of wine and spirits, (vii) the size and growth
rate of the California wine industry, (viii) seasonality of the wine grape
producing business, (ix) increases or changes in government regulations
regarding environmental impact, water use, labor or consumption of alcoholic
beverages, (x) competition from other producers and wineries, (xi) proposed
expansion of the Company=s
wine business, (xii) the Company=s
dependence on a small number of clients for the purchase of a substantial
portion of the Company=s
grape production, (xiii) the availability of financing on terms acceptable to
the Company, and (xiv) the Company=s
labor relations. These and other
factors, risks and uncertainties are discussed in greater detail under the
caption “Business - Cautionary Information Regarding Forward Looking Statements@ in the Company=s Annual Report on Form
10-KSB filed with the Securities and Exchange Commission on March 31,
2005. Stockholders, potential investors
and other readers are urged to consider these factors carefully in evaluating
the forward-looking statements and are cautioned not to place undo reliance on
such forward-looking statements. The
forward-looking statements made herein are only made as of the date of this
press release and the Company undertakes no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.