Willamette Valley Vineyards(WVVI) - 2025 Q4 - Annual Report

Wine Production and Sales - The Company produced and sold wines under various labels, with Pinot Noir being the flagship varietal priced between $25 to $120 per bottle[20] - The winery produced approximately 158,707 cases (377,333 gallons) of wine in 2025, down from 253,974 cases in 2024[59] - The Company sold approximately 173,014 cases of wine in 2025, a decrease of 13,405 cases, or 7.2%, compared to 186,419 cases in 2024[144] - Total wine case sales decreased by approximately 13,405 cases, or 7.2%, to 173,014 cases in 2025 compared to 186,419 cases in 2024[169] - The Company operates vineyards, wineries, and tasting rooms, focusing on premium wines such as Pinot Noir and Chardonnay[217] Financial Performance - The Company reported a net loss of $917,685 for the year ended December 31, 2025, compared to a net loss of $117,894 for 2024, representing an increase in net loss of $799,791[147] - Net sales revenues decreased by $2,585,320, or 6.5%, to $37,197,122 in 2025 from $39,782,442 in 2024, primarily due to lower direct sales and sales to distributors[149] - The gross profit for 2025 was $22,492,520, down $1,702,936, or 7.0%, from $24,195,456 in 2024, attributed to lower sales revenues[156] - Selling, general and administrative expenses increased by $305,094, or 1.3%, to $23,928,692 in 2025 from $23,623,598 in 2024, mainly due to higher selling costs[158] - The gross margin percentage slightly decreased to 60.5% in 2025 from 60.8% in 2024, reflecting higher discounts offered[157] - The Company had cash balances of $410,886 and a working capital balance of $24.6 million as of December 31, 2025[184] - Total net sales for the year ended December 31, 2025, were $37,197,122, a decrease of 6.6% from $39,782,442 in 2024[209] - The company reported a net loss of $917,685 for 2025, compared to a net loss of $117,894 in 2024, indicating a significant increase in losses[209] Market Trends and Competition - The U.S. wine volume decreased by approximately 2% to 329 million cases, with revenue declining by 1.6% to around $74.3 billion in 2025 compared to 2024[26] - Direct-to-consumer wine shipping volume dropped by 15% year-over-year to 5.4 million cases, with value down 6% to $3.7 billion in 2025[27] - The wine industry is highly competitive, with significant competition from larger California wineries that have greater resources[77] - A reduction in consumer demand for premium wines could harm the Company's business, influenced by economic conditions and health concerns[102] Production Capacity and Facilities - The Company owns and leases approximately 1,018 acres of land, with 801 acres suitable for vineyard planting, aiming to grow approximately 69% of the grapes needed for its production capacity of 654,000 gallons (275,000 cases)[41] - The Company's Estate Winery has a production capacity of up to 275,000 cases (654,000 gallons) of wine per year, with approximately 158,707 cases (377,333 gallons) produced in 2025[118] - The Tualatin Estate Winery adds approximately 28,000 cases (66,000 gallons) of wine production capacity to the Company[119] - The Company has an estimated aggregate production capacity of 720,000 gallons (303,000 cases) per year, providing significant competitive advantages over most Oregon wineries[78] Sales and Distribution - Direct sales accounted for approximately 54.4% of the company's net sales in 2025, compared to 53.4% in 2024[72] - In 2025, sales to distributors and wine brokers contributed approximately 45.6% of the Company's revenue from operations, compared to 46.6% in 2024[73] - Direct-to-consumer sales accounted for 54.4% of total revenue in 2025, up from 53.4% in 2024[170] Employee and Operational Insights - The Company employs approximately 158 full-time and 141 part-time employees as of December 31, 2025[84] - The Company has expanded its culinary offerings, including daily food pairings and community-style wine dinners[69] - The Company operates seven additional tasting rooms across various locations, enhancing its market presence[71] Debt and Financial Obligations - As of December 31, 2025, the Company's outstanding long-term debt was approximately $15.0 million, with $3.1 million drawn under its short-term line of credit[94] - The company incurred an aggregate principal balance of $15,184,395 on four mortgages for its winery facilities as of December 31, 2025[62] - Interest expense increased by $151,542, or 14.9%, to $1,167,722 for the year ended December 31, 2025, primarily due to higher average loan balances[160] Regulatory and Risk Factors - The Company is subject to extensive regulation by various authorities, which could negatively affect its financial condition and operations[104] - The Company faces risks from agricultural factors, including diseases and weather conditions that could adversely affect grape supply and profitability[87] - The Company is subject to a federal alcohol tax of $1.07 per gallon for wines up to 16.0% alcohol content, with higher alcohol wines taxed at $1.57 per gallon[80] - The Company pays a state excise tax of $0.67 per gallon for wines with alcohol content at or below 14.0% and $0.77 per gallon for wines above 14.0% sold in Oregon[81] Shareholder and Stock Information - The Company's common stock is thinly traded, resulting in lower liquidity compared to other investments[106] - The Company may face liabilities associated with the offer and sale of its Preferred Stock, which could impact its financial condition[107] - The Company's ability to pay dividends on its Preferred Stock is contingent upon available funds and may be limited by existing credit facilities[108] - Preferred stock dividends remained constant at $2,252,941 for both 2025 and 2024[209] Other Financial Metrics - The Company had total liabilities of $41,547,424 in 2025, up from $39,783,410 in 2024, marking an increase of 4.4%[206] - Shareholders' equity decreased to $66,188,175 in 2025 from $69,233,730 in 2024, a decline of 4.4%[207] - Total current assets increased to $39,005,575 in 2025 from $36,919,057 in 2024, reflecting a growth of 5.9%[204]