OTC:CWGL
Crimson Wine Group, Ltd
A Canadian-based beverage manufacturer with $73M in 2024 revenue and strong cash generation capabilities trading on the OTC market.
Key Metrics
Investment Thesis
Bull Case
The stock offers an attractive entry point for investors seeking exposure to the resilient wine and spirits industry with a solid cash flow from operations of $2.7M. The company's robust balance sheet, featuring $21.0M in ending cash and low current liabilities relative to assets, provides flexibility for strategic acquisitions or debt repayment.
Bear Case
Investors should be cautious due to the large retained earnings deficit of -$92.3M which may indicate historical profitability challenges or aggressive past financing activities. The significant non-cash adjustments totaling -$17.8M alongside high marketing expenses of $18.6M could signal underlying operational inefficiencies or a need for heavy spending to maintain market share.
About Crimson Wine Group, Ltd
Crimson Wine Group, Ltd. is a diversified beverage company operating primarily in the wine and spirits sector across North American markets. The firm generates revenue through the production and distribution of premium wines, spirits, and non-alcoholic beverages, leveraging a substantial current asset base to manage inventory cycles effectively.
Analysis
Management Discussion
In 2024, the company reported $73.0M in revenue with a net profit of $851,000, showing resilience after a dip from 2023 levels. While operating cash flow remains positive at $2.7M, the significant increase in inventory change ($4.9M) and substantial share repurchases ($2.4M) suggest management is balancing growth capital needs with shareholder returns.
Industry Overview
The global wine and spirits industry is characterized by shifting consumer preferences toward premiumization and sustainable sourcing, creating opportunities for established players with strong distribution networks. Competition remains intense with price sensitivity high in economic downturns, requiring continuous innovation in product lines to retain consumer loyalty.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $74.2M | $72.4M | $73.0M |
| Cost of Revenue | $41.5M | $38.7M | $37.9M |
| Gross Profit | $32.8M | $33.7M | $35.1M |
| Operating Expenses | $30.8M | $31.7M | $35.0M |
| Operating Income | $2.0M | $2.0M | $68.0K |
| G&A | $13.1M | $13.9M | $15.6M |
| Marketing | $17.4M | $17.8M | $18.6M |
| Stock-Based Comp | $364.0K | $497.0K | $-124.0K |
| D&A | $5.9M | $6.2M | $7.1M |
| Depreciation | — | $6.2M | $7.1M |
| Amortization | $1.3M | $1.3M | $1.3M |
| Other OpEx | $306.0K | $37.0K | $805.0K |
| Non-Operating Income | $-511.0K | $2.3M | $1.1M |
| Interest Expense | $926.0K | $826.0K | — |
| Pre-Tax Income | $1.5M | $4.3M | $1.1M |
| Income Tax | $381.0K | $1.1M | $270.0K |
| Continuing Ops | $1.1M | $3.1M | $851.0K |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $1.1M | $3.1M | $851.0K |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $1.1M | $3.1M | $851.0K |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $97.6M | $98.6M | $98.0M |
| Cash & Equivalents | $25.7M | $22.8M | $21.0M |
| Marketable Securities | $0 | $0 | $0 |
| Accounts Receivable | $6.8M | $7.7M | $9.4M |
| Inventory | $51.7M | $58.1M | $62.1M |
| Other Current Assets | $13.3M | $10.1M | $5.5M |
| Long-Term Assets | $121.2M | $123.5M | $120.2M |
| PP&E (Net) | $113.4M | $116.5M | $114.4M |
| Intangibles | $6.5M | $5.8M | $4.5M |
| Goodwill | $1.3M | $1.3M | $1.3M |
| Other LT Assets | $0 | $0 | $0 |
| Total Assets | $218.8M | $222.1M | $218.2M |
| Current Liabilities | $13.0M | $14.6M | $13.1M |
| Current Debt | $1.1M | $1.1M | $1.1M |
| Deferred Revenue | $392.0K | $666.0K | $390.0K |
| Other Current Liab | $11.5M | $12.8M | $11.6M |
| Long-Term Liabilities | $18.8M | $19.3M | $18.4M |
| Long-Term Debt | $17.7M | $16.5M | $15.4M |
| Other LT Liab | $1.1M | $2.8M | $3.0M |
| Total Liabilities | $31.8M | $33.9M | $31.6M |
| Shareholders' Equity | $187.0M | $188.2M | $186.6M |
| Paid-In Capital | $278.1M | $278.6M | $278.5M |
| Retained Earnings | $-91.2M | $-90.7M | $-92.3M |
| AOCI | $-49.0K | $88.0K | $164.0K |
| Total L&E | $218.8M | $222.1M | $218.2M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $1.1M | $3.1M | $851.0K |
| Non-Cash Adjustments | $7.9M | $-7.0M | $-2.4M |
| Working Capital Changes | $-1.5M | $9.8M | $4.2M |
| Cash from Operations | $7.5M | $6.0M | $2.7M |
| Capital Expenditures | $7.6M | $9.0M | $5.4M |
| Cash from Investing | $-6.4M | $-5.1M | $-906.0K |
| Debt Repayments | $1.1M | $1.1M | $1.1M |
| Share Buybacks | $7.0M | $2.6M | $2.4M |
| Cash from Financing | $-8.1M | $-3.7M | $-3.5M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-7.0M | $-2.9M | $-1.7M |
| Beginning Cash | $32.7M | $25.7M | $22.8M |
| Ending Cash | $25.7M | $22.8M | $21.0M |
Frequently Asked Questions
How does Crimson Wine Group, Ltd make money?
Premium Wine Production and Distribution, Spirits Manufacturing and Sales, Non-Alcoholic Beverage Lines, and Direct-to-Consumer E-commerce Channels.
What are the main risks for CWGL?
High volatility in global commodity prices affecting the cost of revenue, significant working capital tied up in large inventory balances relative to receivables, sensitivity to foreign exchange fluctuations on imported grapes or equipment, and regulatory risks regarding alcohol taxation and distribution laws.
What is CWGL's competitive advantage?
Strong balance sheet with over $98M in current assets providing liquidity for inventory expansion, established brand equity in premium wine categories, and a cost-efficient operating model reflected by healthy gross profit margins despite rising costs.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.