1. Truett-Hurst, Inc. FY17 Q3 Earnings Call
May 11, 2017
NASDAQ: THST

2. Agenda Financial Update
Third Quarter: FY17 vs. FY16 Statement of Operations
Nine Months Ended March 31, 2017: FY17 vs. FY16 Statement of Operations
Nine Months Ended March 31, 2017: FY17 vs. FY16 Segment Analysis
Select Balance Sheet Data
Bank and Credit Facility Update
Business Update
Wine Ratings
Operations and Production
Sales and Marketing
Q&A
Appendix – Ownership Structure
5/11/17

3. FINANCIAL UPDATE
5/11/17

4. Third Quarter: FY17 vs. FY16
5/11/17

5. Nine Months Ended March 31, 2017: FY17 vs. FY16
5/11/17

6. Third Quarter: FY17 vs. FY16 Q3 - FY17 vs. FY16
Revenue of $5.3 million increased $0.4 million or 8.9% over FY16
Wholesale increased $0.4 million or 12.4%
DTC was flat compared to prior year
Overall gross margin of 37.9% increased 2.8 percentage points over FY16
Wholesale increased 4.6 percentage points
DTC improved 1.5 percentage points
Operating expenses were $0.1 million higher or 7.5% vs. the prior year
5/11/17

7. Nine Months Ended March 31, 2017: FY17 vs. FY16
YTD Q3 - FY17 vs. FY16
Revenue of $17.0 million decreased $2.8 million or 14.2% compared to prior year
Wholesale was $3.1 million lower or 19.9%
DTC increased $0.3 million or 5.9%
Overall gross margin of 34.7% increased 1.8 percentage points over FY16
Wholesale decreased 0.1 percentage point
DTC decreased 0.8 percentage points
Operating expenses were $0.1 million or 2.1% lower vs. the prior year
5/11/17

8. Nine Months Ended March 31, 2017: Segment Analysis
5/11/17

9. Select Balance Sheet Data
5/11/17

10. Bank and Credit Facility Update
FY17 Q2 and Q3 Covenant Waiver
As indicated in the 8-K dated May 10, 2017, the Company was notified by its lender the $0.8 million gain recorded in FY17 Q1 related to the VML/Westside Road lease termination was disallowed and excluded from the definition of EBITDA for purposes of calculating the debt service coverage ratio covenant
The lender’s position changed the Company’s compliance with the covenant from “pass” to “fail” for FY17 Q2 and Q3
The Company disagrees with the lender’s interpretation of the EBITDA definition contained in the loan agreement
The lender is currently working in good faith with the Company to develop a renewal plan for the existing credit facility that expires on July 29, 2017
5/11/17

11. BUSINESS UPDATE
5/11/17

12. Ratings - Robert Parker & North Coast Wine Challenge
VML Sauv Blanc 89pts Cresta Ridge Chard Knowlton Farms Chard Starscape Pinot Cresta Ridge Pinot San Remo Pinot Truett Hurst Bluebird Sauv Blanc Swallowtail Chard Black Sheep 88
VML GOLD 2014 Cresta Ridge Chard 93pts Truett Hurst GOLD/BEST OF CLASS
2014 Burning Man Petite Sirah 98pts
GOLD Grist Zinfandel 96pts
GOLD Bluebird Sauv Blanc 94pts
5/11/17

13. Business Update – Operations and Production
VML Tasting Room:
The VML Tasting Room on Westside Road was closed and relocated to our Dry Creek estate property at the end of December 2016
Since then, VML and Truett Hurst have occupied the same tasting room facility
On May 3rd we received a building permit to remodel the existing barrel room on the Dry Creek property into the new VML Tasting Lounge
Construction will commence on May 17th and occupancy of the new space is scheduled for August 15th
Dry Creek and Russian River Valley Production:
We currently process approximately 700 tons of ultra-premium grapes at the leased Westside Road winery
The winery portion of the lease at Westside Road terminates on May 31st and the Company has leased space in the Sugarloaf custom crush facility to replace the current Westside Road production location
As part of the June 1st move to Sugarloaf in Sonoma, the Company purchased additional replacement tanks and winery equipment to process its fruit at Sugarloaf
The Company holds a 40,000 case winery permit for the Dry Creek estate and is evaluating the potential build-out of this winery for its long-term production needs
5/11/17

14. Business Update – Sales and Marketing
Continue growing existing items and select new products for the Company’s Focus 5 retail customers
Newly strengthened distributor partners are now increasing their selling efforts for both our Retail Exclusive Brands and our National Brands
Important upcoming National Accounts meetings at the winery in Healdsburg
We recently expanded our sales resources
Western Regional Sales Manager
Senior Director Eastern Sales
New Retail Exclusive proposals to large National Chains
Colby distribution continues to grow and is being considered for another year on United Airlines International Business Class
Marketing
Evaluating social media marketing investments for the DTC segment
Partnering with large retailers for in store tastings, displays, and seasonal promotions
5/11/17

15. Q&A
5/11/17

16. APPENDIX
5/11/17

17. Ownership Structure
5/11/17

18. Contact Information
Phillip L. Hurst
Chief Executive Officer, President T: M:
Evan B. Meyer
Chief Financial Officer T: M: