Cover
Cover - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Sep. 21, 2023 | Jan. 31, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jul. 31, 2023 | ||
Current Fiscal Year End Date | --07-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-40240 | ||
Entity Registrant Name | The Duckhorn Portfolio, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 81-3866305 | ||
Entity Address, Address Line One | 1201 Dowdell Lane | ||
Entity Address, City or Town | Saint Helena | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 94574 | ||
City Area Code | 707 | ||
Local Phone Number | 302-2658 | ||
Title of 12(b) Security | Common Stock, par value $0.01 per share | ||
Trading Symbol | NAPA | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 705,566 | ||
Entity Common Stock, Shares Outstanding | 115,316,308 | ||
Documents Incorporated by Reference | Portions of the Definitive Proxy Statement for the registrant’s Fiscal 2024 Annual Meeting of Stockholders to be held on January 19, 2024 are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K. | ||
Entity Central Index Key | 0001835256 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Jul. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Firm ID | 238 |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | San Francisco, California |
Consolidated Statements of Fina
Consolidated Statements of Financial Position - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Current assets: | ||
Cash | $ 6,353 | $ 3,167 |
Accounts receivable trade, net | 48,706 | 37,026 |
Inventories | 322,227 | 285,430 |
Prepaid expenses and other current assets | 10,244 | 13,898 |
Total current assets | 387,530 | 339,521 |
Property and equipment, net | 323,530 | 269,659 |
Operating lease right-of-use assets | 20,376 | 23,375 |
Intangible assets, net | 184,227 | 191,786 |
Goodwill | 425,209 | 425,209 |
Other assets | 6,810 | 1,963 |
Total assets | 1,347,682 | 1,251,513 |
Current liabilities: | ||
Accounts payable | 4,829 | 3,382 |
Accrued expenses | 38,246 | 29,475 |
Accrued compensation | 16,460 | 12,893 |
Current operating lease liabilities | 3,787 | 3,498 |
Current maturities of long-term debt | 9,721 | 9,810 |
Other current liabilities | 1,417 | 944 |
Total current liabilities | 74,460 | 60,002 |
Long-term debt, net of current maturities and debt issuance costs | 223,619 | 213,748 |
Operating lease liabilities | 16,534 | 19,732 |
Deferred income taxes | 90,216 | 90,483 |
Other liabilities | 445 | 387 |
Total liabilities | 405,274 | 384,352 |
Commitments and contingencies (Note 15) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 500,000,000 shares authorized; 115,316,308 and 115,184,161 issued and outstanding at July 31, 2023, and July 31, 2022, respectively | 1,153 | 1,152 |
Additional paid-in capital | 737,557 | 731,597 |
Retained earnings | 203,122 | 133,824 |
Total The Duckhorn Portfolio, Inc. stockholders’ equity | 941,832 | 866,573 |
Non-controlling interest | 576 | 588 |
Total stockholders’ equity | 942,408 | 867,161 |
Total liabilities and stockholders’ equity | $ 1,347,682 | $ 1,251,513 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Income Statement [Abstract] | |||
Net sales (net of excise taxes of $5,446, $5,115 and $4,855 respectively) | $ 402,996 | $ 372,510 | $ 336,613 |
Cost of sales | 187,307 | 187,330 | 169,265 |
Gross profit | 215,689 | 185,180 | 167,348 |
Selling, general and administrative expenses | 109,711 | 97,743 | 89,816 |
Casualty loss (gain), net (Note 18) | 0 | 123 | (6,559) |
Income from operations | 105,978 | 87,314 | 84,091 |
Interest expense | 11,721 | 6,777 | 13,618 |
Other income, net | (212) | (2,214) | (6,505) |
Total other expenses, net | 11,509 | 4,563 | 7,113 |
Income before income taxes | 94,469 | 82,751 | 76,978 |
Income tax expense | 25,183 | 22,524 | 21,008 |
Net income | 69,286 | 60,227 | 55,970 |
Less: Net loss (income) attributable to non-controlling interest | 12 | (37) | 6 |
Net income attributable to The Duckhorn Portfolio, Inc. | $ 69,298 | $ 60,190 | $ 55,976 |
Earnings per share of common stock: | |||
Basic (in dollars per share) | $ 0.60 | $ 0.52 | $ 0.52 |
Diluted (in dollars per share) | $ 0.60 | $ 0.52 | $ 0.52 |
Weighted average shares of common stock outstanding: | |||
Basic (in shares) | 115,233,324 | 115,096,152 | 106,681,496 |
Diluted (in shares) | 115,407,624 | 115,363,578 | 106,934,853 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Total The Duckhorn Portfolio, Inc. stockholders’ equity | Common stock | Additional paid-in capital | Retained earnings | Non-controlling interest |
Beginning balance (in shares) at Jul. 31, 2020 | 101,713,460 | |||||
Beginning balance at Jul. 31, 2020 | $ 654,604 | $ 654,047 | $ 1,017 | $ 535,372 | $ 117,658 | $ 557 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 55,970 | 55,976 | 55,976 | (6) | ||
Dividend to parent | (100,000) | (100,000) | (100,000) | |||
Initial public offering, net of issuance costs (shares) | 13,333,333 | |||||
Initial public offering, net of issuance costs | 180,842 | 180,842 | $ 133 | 180,709 | ||
Equity-based compensation (Note 16) | 10,822 | 10,822 | 10,822 | |||
Ending balance (in shares) at Jul. 31, 2021 | 115,046,793 | |||||
Ending balance at Jul. 31, 2021 | 802,238 | 801,687 | $ 1,150 | 726,903 | 73,634 | 551 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 60,227 | 60,190 | 60,190 | 37 | ||
Initial public offering, net of issuance costs | (270) | (270) | (270) | |||
Issuance of common stock under equity incentive plans (in shares) | 175,003 | |||||
Issuance of common stock under equity incentive plans | 1 | 1 | $ 3 | (2) | ||
Equity-based compensation (Note 16) | 5,523 | 5,523 | 5,523 | |||
Shares withheld related to net share settlement (in shares) | (53,677) | |||||
Shares withheld related to net share settlement | $ (845) | (845) | $ (1) | (844) | ||
Issuance of employee stock purchase plan (in shares) | 16,042 | 16,042 | ||||
Issuance of employee stock purchase plan | $ 287 | 287 | 287 | |||
Ending balance (in shares) at Jul. 31, 2022 | 115,184,161 | 115,184,161 | ||||
Ending balance at Jul. 31, 2022 | $ 867,161 | 866,573 | $ 1,152 | 731,597 | 133,824 | 588 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 69,286 | 69,298 | 69,298 | (12) | ||
Issuance of common stock under equity incentive plans (in shares) | 150,882 | |||||
Issuance of common stock under equity incentive plans | 1 | 1 | $ 1 | |||
Equity-based compensation (Note 16) | 6,290 | 6,290 | 6,290 | |||
Shares withheld related to net share settlement (in shares) | (46,957) | |||||
Shares withheld related to net share settlement | $ (680) | (680) | (680) | |||
Issuance of employee stock purchase plan (in shares) | 28,222 | 28,222 | ||||
Issuance of employee stock purchase plan | $ 350 | 350 | 350 | |||
Ending balance (in shares) at Jul. 31, 2023 | 115,316,308 | 115,316,308 | ||||
Ending balance at Jul. 31, 2023 | $ 942,408 | $ 941,832 | $ 1,153 | $ 737,557 | $ 203,122 | $ 576 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Cash flows from operating activities | |||
Net income | $ 69,286 | $ 60,227 | $ 55,970 |
Adjustments to reconcile net income to net cash from operating activities: | |||
Deferred income taxes | (267) | 3,817 | 2,029 |
Depreciation and amortization | 27,768 | 23,427 | 21,343 |
Loss (gain) on disposal of assets | 157 | (528) | 7 |
Change in fair value of derivatives | 34 | (1,695) | (5,848) |
Amortization of debt issuance costs | 975 | 1,608 | 1,623 |
Loss on debt extinguishment | 0 | 0 | 272 |
Equity-based compensation | 6,290 | 5,523 | 10,822 |
Inventory reserve adjustments | 722 | 4,363 | 1,054 |
Change in operating assets and liabilities: | |||
Accounts receivable trade, net | (11,679) | (3,773) | (6,789) |
Inventories | (33,894) | (18,818) | (23,480) |
Prepaid expenses and other assets | 2,281 | (3,293) | (6,593) |
Other assets | (917) | 1,258 | (333) |
Accounts payable | 1,549 | (262) | (45) |
Accrued expenses | 7,002 | 7,681 | 7,627 |
Accrued compensation | 3,567 | (3,953) | 8,171 |
Deferred revenue | (6) | (2,830) | (1,045) |
Other current and non-current liabilities | (2,776) | (3,920) | (513) |
Net cash provided by operating activities | 70,092 | 68,832 | 64,272 |
Cash flows from investing activities | |||
Purchases of property and equipment | (72,843) | (44,644) | (13,689) |
Proceeds from sales of property and equipment | 271 | 910 | 122 |
Net cash used in investing activities | (72,572) | (43,734) | (13,567) |
Cash flows from financing activities | |||
Dividend to parent | 0 | 0 | (100,000) |
Proceeds from issuance of common stock pursuant to the initial public offering, net of underwriters’ discounts and commissions | 0 | 0 | 187,500 |
Payments under line of credit | (121,000) | (98,000) | (263,000) |
Borrowings under line of credit | 24,000 | 84,000 | 143,500 |
Issuance of long-term debt | 225,833 | 0 | 38,131 |
Payments of long-term debt | (120,166) | (11,347) | (51,918) |
Repayment of capital lease | 0 | 0 | (8) |
Proceeds from employee stock purchase plan | 350 | 287 | 0 |
Taxes paid related to net share settlement of equity awards | (680) | (845) | 0 |
Debt issuance costs | (2,671) | 0 | (260) |
Payments of deferred offering costs | 0 | (270) | (6,658) |
Net cash provided by (used in) financing activities | 5,666 | (26,175) | (52,713) |
Net increase (decrease) in cash | 3,186 | (1,077) | (2,008) |
Cash - Beginning of year | 3,167 | 4,244 | 6,252 |
Cash - End of year | 6,353 | 3,167 | 4,244 |
Supplemental cash flow information | |||
Interest paid, net of amount capitalized | 10,393 | 5,179 | 12,620 |
Income taxes paid | 11,562 | 17,674 | 22,743 |
Non-cash investing activities | |||
Property and equipment additions in accounts payable and accrued expenses | $ 3,360 | $ 1,694 | $ 1,369 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Position (Parenthetical) - $ / shares | Jul. 31, 2023 | Jul. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 115,316,308 | 115,184,161 |
Common stock, shares outstanding (in shares) | 115,316,308 | 115,184,161 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Income Statement [Abstract] | |||
Excise taxes | $ 5,446 | $ 5,115 | $ 4,855 |
Description of business
Description of business | 12 Months Ended |
Jul. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of business | Description of business The Duckhorn Portfolio, Inc. (formerly known as Mallard Intermediate, Inc. until its name change on February 23, 2021) and its subsidiaries (the "Company" or "Management"), headquartered in St. Helena, CA, produce luxury and ultra-luxury wine across a portfolio of winery brands, including Duckhorn Vineyards, Decoy, Goldeneye, Paraduxx, Migration, Canvasback, Calera, Kosta Browne, Greenwing and Postmark. Unless the context indicates otherwise, references to the “Company” or “Management” refer to The Duckhorn Portfolio, Inc. and its subsidiaries, which include Mallard Buyer Corporation, Heritage Wine, LLC, Duckhorn Wine Company, Canvasback Wine, LLC, Waterfowl Wine, LLC, Heritage Vineyard, LLC, KB Wines Corporation, Selway Wine Company and Domaine M.B., LLC, which wholly owns Chenoweth Graham, LLC, an entity holding a majority interest in Bootlegger’s Hill, LLC (“Bootlegger’s Hill”). The Company’s revenue is comprised of wholesale and DTC sales. Wholesale revenue is generated through sales directly to California retailers and restaurants, sales to distributors and agents located in other states throughout the U.S. and sales to export distributors that sell internationally. DTC revenue results from individual consumers purchasing wine directly from the Company through club membership, the Company’s website or tasting rooms located in Napa Valley, California; Anderson Valley, California; Sebastopol, California; Hollister, California; and Walla Walla, Washington. The Company owns or controls, through long-term leases, certain high-quality vineyards throughout Northern and Central California and Washington. Vinification takes place at wineries owned, leased or under contract with third parties predominately located in Napa Valley, California; Anderson Valley, California; Hopland, California; Hollister, California; San Luis Obispo, California; Sebastopol, California; and Walla Walla, Washington. Fiscal year The Company’s fiscal year ends on July 31. Unless otherwise stated, references to particular years or quarters refer to the Company’s fiscal years and the associated periods in those fiscal years. Initial public offering In March 2021, the Company completed its IPO of common stock, in which it sold 13.3 million shares. The shares began trading on the NYSE on March 18, 2021. The shares were sold at an IPO price of $15.00 per share, resulting in net proceeds to the Company of approximately $180.8 million, after deducting underwriting discounts and commissions of $12.5 million and deferred offering costs of approximately $6.7 million. Concurrently with the pricing of the IPO, the Company’s Board of Directors approved the conversion of 42,579,137 Class M Units previously issued under the 2016 Equity Incentive Plan to shares of common stock previously owned by the Company’s parent company, Mallard Holdco, Inc. See Note 16 (Equity-based compensation) for additional information on the Company’s equity incentive plans and the related financial statement impacts. Secondary offerings In April 2023, the Company completed a secondary offering where certain existing stockholders sold 6,000,000 shares of common stock at a price of $15.35 per share. The Company did not receive any of the proceeds from the sale of the shares by the existing stockholders. In connection with the offering, the Company incurred costs of $0.4 million for Fiscal 2023, which are reflected in selling, general and administrative expenses on the Consolidated Statement of Operations. In the first quarter of Fiscal 2022, the Company completed a secondary offering where certain existing stockholders sold 12,000,000 shares of common stock at a price of $20.50 per share. In November 2021, an additional 626,467 shares of common stock were sold pursuant to the partial exercise of the underwriters’ option to purchase additional shares. The Company did not receive any of the proceeds from the sale of the shares by the existing stockholders. In connection with the offering, the Company incurred costs of $0.6 million and $0.4 million, respectively, for Fiscal 2022 and 2021. In the fourth quarter of Fiscal 2022, the Company completed another secondary offering where certain existing stockholders sold 5,000,000 shares of common stock at a price of $19.25 per share. The Company did not receive any of the proceeds from the sale of the shares by the existing stockholders. In connection with the offering, the Company incurred costs of $0.2 million for Fiscal 2022, which are reflected in selling, general and administrative expenses on the Consolidated Statement of Operations. |
Basis of presentation and signi
Basis of presentation and significant accounting policies | 12 Months Ended |
Jul. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation and significant accounting policies | Basis of presentation and significant accounting policies Basis of presentation The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP and the regulations of the SEC. Principles of consolidation The consolidated financial statements include the accounts of The Duckhorn Portfolio, Inc. and its subsidiaries, including a consolidated VIE of which the Company has determined it is the primary beneficiary. All intercompany balances and transactions are eliminated in consolidation. Certain reclassifications to previously reported financial information have been made to conform to the current period presentation. Functional currency The Company and all subsidiary legal entities are domiciled in the U.S. The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar. Accounting estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Operating segment The Company has one operating segment and one reportable segment. The Company’s Chief Operating Decision Maker reviews operating performance and makes decisions to allocate resources at the consolidated company level. Revenue recognition The Company’s net sales reflect the sale of wine domestically in the U.S. to wholesale distributors, direct to trade accounts in California and DTC, as well as sales of wine to export distributors that sell internationally. The Company recognizes revenue when the performance obligation is fulfilled and control of the promised good is transferred to the customer in an amount that reflects the consideration for which the Company is expected to be entitled to receive in exchange for those products. Each contract includes a single performance obligation to transfer control of the product to the customer. Control is transferred when the product is either shipped or delivered, depending on the shipping terms, at which point the Company recognizes the transaction price for the product as revenue. The Company has elected to account for shipping and handling costs that are billed to customers as a fulfillment activity rather than as separate performance obligations. Shipping and handling costs are included in net sales in the Consolidated Statements of Operations. The Company has elected to record excise taxes as a reduction to net sales, which are recognized in the Consolidated Statements of Operations when the related product sale is recognized. When the Company receives payment from a customer prior to transferring the product under the terms of a contract, the Company records deferred revenue, which represents a contract liability. The Company’s deferred revenue is primarily comprised of cash collected from DTC members for purchases ahead of the wine shipment date. The Company does not recognize revenue until control of the wine is transferred and the performance obligation is met. See Note 3 for additional information regarding the contract liability. The transaction price includes reductions attributable to consideration given to customers through various incentive programs, including depletion-based incentives paid to distributors, volume discounts and pricing discounts on single transactions. This variable consideration is estimated and recognized as a reduction of the transaction price based on the expected amounts at the time of revenue recognition for the related sale. The determination of the reduction of the transaction price for variable consideration requires certain estimates and judgements that affect the amounts of revenue recognized and if a change to an estimate occurs in a future period, it is recorded as identified. The Company estimates this variable consideration using the expected value method by taking into account factors such as the nature of the incentive program, historical information, current consumer product trends and availability of actual results. The Company pays depletion-based incentives to its distributors for meeting specific depletion targets and reviews the allowances using a portfolio approach, grouping contracts with similar attributes. The allowances are reassessed at each reporting date to reflect changes in facts and circumstances that could impact allowance estimates. Volume pricing discounts are given for meeting volume levels on an individual contract basis. Each incentive is treated as a reduction to the transaction price at the time of revenue recognition. Due to the nature of the arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. Consideration given to customers totaled $57.5 million, $66.3 million and $63.8 million for Fiscal 2023, 2022 and 2021, respectively, which is recognized as a reduction to net sales in the Consolidated Statements of Operations. There were no material constraints on estimates for the periods then ended. Products are sold for cash or on credit terms. Credit terms are established in accordance with local and industry practices, and typically require payment within 30-90 days of delivery or shipment, as dictated by the terms of each agreement. The Company does not account for significant financing components as its payment terms are less than one year, and the Company determines the terms at contract inception. The Company’s sales terms do not allow for the right of return except for matters related to manufacturing defects, which are not material. Cost of sales Cost of sales includes all bulk wine production costs, winemaking, bottling, packaging, warehousing and shipping and handling costs. Costs associated with the Company’s leased vineyards or owned estate properties include annual farming costs and amortization of vineyard development expenditures. Costs incurred for wines that age longer than one year prior to sale, including winemaking and processing costs, continue to be capitalized into inventory until the wine is bottled and available for sale. Advertising costs Advertising costs, including direct and promotional marketing costs, are expensed as incurred and were $6.5 million, $6.6 million and $6.0 million for Fiscal 2023, 2022 and 2021, respectively. Advertising costs are recognized in selling, general and administrative expenses in the Consolidated Statements of Operations. Cash and cash equivalents Cash and cash equivalents include cash on hand and on deposit. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. There were no cash equivalents as of July 31, 2023 and 2022. Accounts receivable trade, net Accounts receivable trade, net consists of amounts owed to the Company for sales of the Company’s products on credit and are reported at net realizable value. Interest is accrued on past-due amounts when required by trade laws in a given jurisdiction. The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments. The Company determines this allowance based on historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions and reasonable forecasts. Accounts receivable are written off when determined to be uncollectible. Recoveries of accounts receivable previously written off are recognized in income when received. Charges related to credit loss on accounts receivable were $0.4 million and $0.5 million in Fiscal 2022 and 2021, respectively. Recoveries and reductions in the allowance for credit loss were $0.4 million in Fiscal 2022. Charges related to credit loss in Fiscal 2023 and recoveries and reductions related to credit loss in Fiscal 2023 and 2021 were immaterial. The allowance for credit losses as of July 31, 2023 and 2022 was $0.5 million and $0.4 million, respectively. Inventories Inventory primarily includes bulk and bottled wine and is carried at the lower of cost (calculated using the first-in-first-out method) or net realizable value. The cost basis for inventory includes the costs related to winemaking. Inventory also includes deferred crop costs, which consist of vineyard and related farming costs incurred each harvest season. Such costs begin aggregating when one harvest is completed and end at the completion of the next harvest, spanning a period that can range from November to October of the subsequent calendar year, but may vary due to the variable nature of agriculture, including weather and other events. Consistent with industry practices, the Company classifies inventory as a current asset, although a substantial portion of inventory may be aged for periods longer than one year prior to being sold due to the specific aging requirements for a given wine variety and vintage. On an ongoing basis, the Company evaluates the cost estimate and assumptions. As required, the Company records valuation adjustments to the carrying value of its inventories based on periodic reviews of slow-moving, obsolete and excess inventory to determine the need for reserves by comparing inventory carrying values with their net realizable values upon ultimate sale or disposal. Aging inventory, prior to bottling, is classified as work in process. The Company reduces the carrying value of inventories that are obsolete or for which market conditions indicate cost will not be recovered to estimated net realizable value. The Company’s estimates of net realizable value are based on analysis and assumptions including, but not limited to, historical experience, as well as Management’s judgement with respect to future demand and market conditions. Reductions to the carrying value of inventories are recorded in cost of sales in the Consolidated Statements of Operations, in the period Management determines the conditions first arise which indicate the cost may not be recoverable. Property and equipment, net Property and equipment, net are reported at cost and are depreciated using the straight-line method using the following useful lives: Category of Property and Equipment Useful Lives (years) Buildings and improvements 4-42 Machinery and equipment 3-20 Vineyards and improvements 5-20 Barrels 1-2 Leasehold improvements are depreciated over the shorter of the useful life of the asset or the remaining term of the lease using the straight-line method. Expenditures for major repairs and maintenance which extend the useful lives of property and equipment are capitalized. All other maintenance expenditures, including planned major maintenance activities, are expensed as incurred. Gains or losses from property and equipment disposals are recognized in other income, net in the Consolidated Statements of Operations. The Company capitalizes vineyard development costs when developing new vineyards or improving existing vineyards, whether owned or leased. These costs principally consist of the costs of the vines and expenditures related to labor and materials to prepare the vineyard and construct vine trellises. Interest is capitalized during the active construction period for major capital projects. Goodwill and intangible assets Goodwill arising from business combinations is determined as the excess of the fair value of consideration transferred, plus the fair value of any non-controlling interests in an acquiree, over the fair value of the identifiable net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets determined to have an indefinite useful life are not amortized but are tested for impairment at least annually or if events and circumstances indicate that the carrying value may not be recoverable. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Management may elect not to perform the qualitative assessment and perform only a quantitative impairment test as of the measurement date. The Company selected June 30th of each fiscal year as the date to perform annual impairment testing. Indefinite-lived intangible assets include trade names and lane rights. The Company’s trade names provide value from the utility of the winery brands for the foreseeable future. Lane rights represent the Company’s rights to storage capacity at the Wine Service Cooperative for the life of the facility at guaranteed pricing. Customer relationships are amortized on a straight-line basis over their estimated useful lives and that amortization is recognized in selling, general and administrative expenses. The Company did not record any impairment charges related to goodwill or intangible assets for Fiscal 2023, 2022 or 2021. Long-lived asset impairment Long-lived assets deemed to have definite lives, which principally consist of property and equipment, customer relationships, and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The assessment of impairment is based on the estimated undiscounted future cash flows from operating activities compared with the carrying value of the asset. If the undiscounted future cash flows of an asset are less than the carrying value, a write-down will be recorded, measured by the amount of the difference between the carrying value and the fair value of the asset. No impairments were identified related to definite-lived assets for Fiscal 2023, 2022 or 2021. Accounting for asset acquisitions The Company follows the guidance in ASC Topic 805, Business Combinations , for determining whether an acquisition meets the definition of a business combination or asset acquisition. For acquisitions that are accounted for as acquisitions of assets, the Company records the acquired tangible and intangible assets and assumed liabilities, if any, based on each asset’s and liability’s relative fair value at the acquisition date to the total purchase price plus capitalized acquisition costs. The method for determining relative fair value varies depending on the type of asset. See Note 4 (Acquisition) for additional information. Debt issuance costs The Company incurred debt issuance costs associated with the debt facilities, including the revolving line of credit, as further described in Note 10 (Debt). Term loan debt issuance costs are presented as a reduction from the corresponding liability, long-term debt, net of current maturities and debt issuance costs, in the Consolidated Statements of Financial Position. Revolving credit debt issuance costs are classified as an other asset in the Consolidated Statements of Financial Position, regardless of whether or not there are any outstanding borrowings under the revolving credit facility. Debt issuance costs are amortized to interest expense over the life of the loan to maturity using the straight-line method, which is not materially different from the effective interest method. Derivative instruments The Company recognizes derivative instruments as assets or liabilities on the Consolidated Statements of Financial Position and measures these instruments at fair value. The Company enters into derivative instruments to manage exposure to changes in interest rates and foreign currency fluctuations. The Company has certain derivative instruments subject to master netting agreements that provide for net-settlement of amounts payable or receivable related to multiple derivative transactions with the same counterparty. The Company presents all derivatives on a gross basis in the Consolidated Statements of Financial Position. Collateral is generally not required of the Company or of the counterparties to the master netting agreements, and no cash collateral was received or pledged under such agreements as of July 31, 2023 and 2022. Management has neither designated these instruments as cash-flow hedges nor elected hedge accounting. Changes in the consolidated fair value of these financial instruments are recognized in other income, net, in the Consolidated Statements of Operations, see Note 11 (Derivative instruments) and Note 12 (Fair value measurements) for additional information. The Company does not enter into derivative agreements for trading or speculative purposes. Fair value measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments are measured in the financial statements in accordance with an established fair value hierarchy, which emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. See Note 12 (Fair value measurements) for the valuation methodologies used for instruments measured at fair value. Income taxes Income taxes are recognized using enacted tax rates and are accounted for based on the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the consolidated financial statement and tax bases of assets and liabilities at the applicable statutory tax rates. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company evaluates the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization include the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax rate on future earnings. Tax benefits from uncertain tax positions are recognized if it is more likely than not the tax positions will be sustained on examination by the applicable taxing authorities based on the technical merits of the position. The tax benefit is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company’s income tax provision includes the net impact of changes in the liability for unrecognized tax benefits. Interest related to income tax matters is recognized in interest expense and penalties are reflected in operating expenses. See Note 13 (Income taxes) for additional information. Leases Effective August 1, 2021, the Company adopted ASU No. 2016-02, Leases (Topic 842) . Service arrangements are evaluated to determine whether they contain a lease at inception. Leases are classified as either finance leases or operating leases based on criteria in Topic 842. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s secured incremental borrowing rate. The Company’s incremental borrowing rate for a lease is the rate of interest it would pay to borrow on a collateralized basis over a similar term to the lease in a similar economic environment. The Company applied incremental borrowing rates on a lease-by-lease basis. Right-of-use assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term operating leases that have a term of one year or less. The Company recognizes expenses for short-term operating leases on a straight-line basis over the lease term. Permitted under the guidance, financial statements for reporting periods beginning after August 1, 2021 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported and disclosed in accordance with historical accounting guidance. Certain of the Company’s operating leases have variable rental payments based on changes in a consumer price index or a production index that trigger rental increases. Additionally, certain of the Company’s operating leases include variable payments for items such as property taxes, insurance, maintenance and other operating expenses associated with leased assets. Certain grower purchase agreements under which the Company contracts for grapes to meet production needs contain variable payments based on tonnage yield, grape quality and grape prices. Variable lease payments are excluded from the calculations of the right-of-use assets and are recognized in the financial statements in the period in which the obligation is incurred and payment variability removed. Any variable payments related to grapes purchased for inventory production would generally be recognized during harvest as yield size and quality can be determined, and the Company accepts the grapes at a production facility. The cost of grapes purchased to produce wine is recognized in inventory until the wine is sold, and amounted to $71.0 million and $68.1 million in July 31, 2023 and 2022, respectively. The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company reviews relevant impairment indicators of its right-of-use assets in accordance with ASC Topic 360, Impairment or Disposal of Long-Lived Assets . Stock split On March 9, 2021, the Company’s Board of Managers approved a 1,017,134.6-for-1 stock split to the Company’s common stock, which was immediately effective. All share and per share data included in these consolidated financial statements give effect to the stock split and have been retroactively adjusted for all periods presented. Preferred stock The Company has 100,000,000 shares of $0.01 par value preferred stock authorized, none of which are issued and outstanding. Earnings per share In accordance with ASC Topic 260, Earnings Per Share , earnings per share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period, excluding forfeitures. Diluted earnings per common share is computed using the weighted-average number of common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock options and upon the vesting of restricted stock. See Note 19 (Earnings per share) for additional information. Variable interest entities The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC Topic 810, Consolidations . These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements. Bootlegger’s Hill, which was acquired as part of the Kosta Browne acquisition, is a VIE and the Company is the primary beneficiary of that VIE. This conclusion considers the Company’s ownership percentage, which entitles the Company to receive most of the benefits and absorb most of the risk, as well as the ability to exercise significant influence over the operating and financial decisions of the VIE. The Company consolidates 100% of the operational results of Bootlegger’s Hill, while also reflecting on the Consolidated Statements of Operations and Financial Position the 23.8% non-controlling interest, which is held by outside investors at both Fiscal 2023 and 2022. At July 31, 2023 and 2022, the Company’s ownership percentage of the sole identified VIE was 76.2%. The total net assets of the VIE included on the Consolidated Statements of Financial Position were $2.3 million and $2.4 million at July 31, 2023 and 2022, respectively. The fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in ASC Topic 820, Fair Value Measurement . The assets and liabilities, which may only be used to settle its own obligations, are primarily related to property, equipment and working capital accounts, which generally represent the amounts owed by or to the Company for grape sales under current contracts and farming costs. Significant customers and concentrations of credit risk The Company’s five largest customers, which are each wholesale customers, represented in total approximately 51%, 46% and 48% of net sales for Fiscal 2023, 2022 and 2021, respectively. There were no significant concentrations of revenue or credit risk related to DTC sales. Of the largest five customers, three wholesale customers each represented 10% or more of the Company’s net sales. The percentages for each of these significant customers for the periods presented are as follows: Fiscal years ended July 31, 2023 2022 2021 Customer A 18 % 16 % 15 % Customer B 16 % 14 % 16 % Customer C 10 % 9 % 10 % Financial instruments potentially subjecting the Company to concentrations of credit risk consist primarily of bank demand deposits in excess of Federal Deposit Insurance Corporation limits, as well as trade receivables. The majority of the Company’s wine sales are made through distributors. Receivables associated with such sales are not collateralized. The Company monitors credit risk associated with its customers on a regular basis and management is of the opinion that there is no significant or unusual credit exposure as of July 31, 2023. The same three wholesale customers, shown in the net sales table above, represent 10% or more of the Company’s trade accounts receivable balance for the periods presented. The percentages for each of these significant customers as of the periods presented are as follows: July 31, 2023 2022 Customer A 24 % 22 % Customer B 16 % 14 % Customer C 15 % 8 % Equity-based compensation Equity awards issued in exchange for services rendered by the Company’s employees, officers or directors are accounted for pursuant to ASC Topic 718, Compensation-Stock Compensation. The Company measures equity awards at fair value at their grant date. Compensation cost is recognized in selling, general and administrative expenses or is capitalized into inventory over the requisite service period (generally the vesting period), net of actual forfeitures as incurred. For awards with performance-based conditions impacting the timing or number of awards vesting, compensation cost is recognized when a performance condition is probable of being met. If a performance condition is not met, no compensation cost is recognized and any previously recognized compensation cost is reversed. The Company estimates the fair value of certain awards using a Black-Scholes option pricing model. The Company values shares purchased under the ESPP using a Black-Scholes option valuation model. See Note 16 (Equity-based compensation) for additional information. Accounting pronouncements As an “emerging growth company” as established by the Jumpstart Our Business Startups Act of 2015, the Company was permitted to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Prior to Fiscal 2022, the Company had elected to use the adoption dates available to private companies. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Recently adopted accounting pronouncements In March 2020, the Financial Accounting Standards Board issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), and further issued subsequent amendments to the initial guidance. The Company adopted the standard effective August 1, 2022, the first day of Fiscal 2023. The adoption of the standard did not have a material impact on the Consolidated Financial Statements or the related disclosures. As previously disclosed in the Annual Report on Form 10-K for the year ended July 31, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842) using the modified retrospective transition method as of the first day of Fiscal 2022. The impact of the adoption of ASC 842 on previously reported interim financial statements during the year ended July 31, 2022, included the recognition of right-of-use ("ROU") assets and lease liabilities for operating leases. The adoption of ASC 842 also resulted in reclassifying certain lines within operating activities in the Consolidated Statement of Cash Flows due to changes in operating assets and liabilities for the related accounts. These changes to previously disclosed amounts conform to the current period presentation. No other new accounting pronouncements issued or effective as of July 31, 2023 have had, or are expected to have, a material impact on the Consolidated Financial Statements or the related disclosures. |
Revenue
Revenue | 12 Months Ended |
Jul. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregated revenue information The following table presents the percentages of consolidated net sales disaggregated by sales channels: Fiscal years ended July 31, 2023 2022 2021 Wholesale - Distributors 67.9 % 66.3 % 65.3 % Wholesale - California direct to trade (a) 17.1 17.9 16.9 DTC (b) 15.0 15.8 17.8 Net sales 100.0 % 100.0 % 100.0 % _________________________________________________________ (a) Includes bulk and grape sales of $0.7 million, $3.1 million and $0.8 million for Fiscal 2023, 2022 and 2021, respectively. (b) Includes shipping and handling revenue of $2.7 million, $2.3 million and $2.6 million for Fiscal 2023, 2022 and 2021, respectively. The following table presents the percentages of consolidated net sales disaggregated by brand: Fiscal years ended July 31, 2023 2022 2021 Duckhorn Vineyards & Decoy 79.2 % 78.5 % 76.3 % Other winery brands 20.8 21.5 23.7 Net sales 100.0 % 100.0 % 100.0 % Net sales disaggregated by geographic area comprised of the following: Fiscal years ended July 31, (in thousands) 2023 2022 2021 United States $ 379,255 $ 348,910 $ 318,389 Canada 7,327 7,769 5,355 Other international 16,414 15,831 12,869 Net sales $ 402,996 $ 372,510 $ 336,613 Contract balances Changes in the contract liability balance during the periods presented comprised of the following: Fiscal years ended July 31, (in thousands) 2023 2022 2021 Outstanding at beginning of period $ 272 $ 3,102 $ 4,148 Increase (decrease) attributable to: Upfront payments 32,952 30,018 33,257 Revenue recognized (32,855) (32,179) (34,069) Refund (303) (669) (234) Outstanding at end of period $ 66 $ 272 $ 3,102 Revenue recognized during Fiscal 2023, which was included in the opening contract liability balance for those periods, was primarily revenue from DTC sales. In Fiscal 2023, the Company recognized revenue of $0.3 million which was included in the opening contract liability balance for the corresponding period. |
Acquisition
Acquisition | 12 Months Ended |
Jul. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition | Acquisition Geyserville winery On June 22, 2023, the Company purchased a production winery and seven acres of planted Cabernet Sauvignon in Alexander Valley, Sonoma County, California. Under the terms of the purchase agreement, the Company acquired certain production and storage assets, as well as vineyard assets, for a purchase price of $54.6 million. The purchase price, inclusive of transaction costs, was comprised of cash on hand and $15.0 million from the Company’s New Credit Facility. The acquisition was accounted for as an asset acquisition in accordance with ASC Topic 805, Business Combinations , as the Company did not acquire a substantive process. Therefore, the Company ratably allocated $0.3 million of direct, third-party transaction costs to the tangible assets acquired based on each asset's relative fair value. The allocation of the purchase consideration to the assets acquired and liabilities assumed, on the acquisition date, as part of the transaction is as follows: (in thousands) Amount Purchase consideration $ 54,261 Add: Third-party transaction costs 327 Total purchase consideration $ 54,588 Assets acquired and liabilities assumed Machinery and equipment $ 28,600 Buildings and improvements 20,823 Land 5,561 Vineyards and improvements 367 Liabilities (763) Total assets acquired and liabilities assumed $ 54,588 The estimated fair values of assets acquired were determined with the assistance of a valuation specialist, using Level 3 inputs as defined under ASC Topic 820, Fair Value Measurement, |
Inventories
Inventories | 12 Months Ended |
Jul. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories were comprised of the following: July 31, (in thousands) 2023 2022 Finished goods $ 145,355 $ 108,989 Work in progress 161,795 162,337 Raw materials 15,077 14,104 Inventories $ 322,227 $ 285,430 In the period the Company determines a reserve is required, the Company recognizes a charge to cost of sales for the excess of the carrying value over net realizable value. As of July 31, 2023 and 2022, the Company’s inventory reserve was $0.9 million and $5.1 million, respectively. During Fiscal 2022, the Company reserved excess inventory levels of seltzer products of approximately $4.3 million. The Company capitalizes into inventories depreciation related to property and equipment used in the production of inventory. For Fiscal 2023 and 2022, the amount capitalized was $18.3 million and $14.2 million, respectively. The Company also capitalizes lease costs related to leases used in the production of inventory. For Fiscal 2023 and 2022, the amount capitalized was $4.6 million and $4.2 million, respectively. In addition, the Company capitalizes share-based compensation costs related to employees involved in the production of inventory which amounted to $1.2 million and $0.8 million for Fiscal 2023 and 2022, respectively. |
Property and equipment, net
Property and equipment, net | 12 Months Ended |
Jul. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Property and equipment, net Property and equipment, net was comprised of the following: July 31, (in thousands) 2023 2022 Land $ 141,888 $ 136,328 Buildings and improvements 92,960 70,813 Machinery and equipment 81,984 52,619 Vineyards and improvements 44,896 44,759 Barrels 34,944 30,067 Construction in progress 11,866 5,664 Property and equipment, gross 408,538 340,250 Less: accumulated depreciation and amortization (85,008) (70,591) Property and equipment, net $ 323,530 $ 269,659 Depreciation expense recognized in selling, general and administrative expenses was $1.9 million, $1.7 million, $1.2 million for Fiscal 2023, 2022 and 2021. See Note 5 (Inventories) for depreciation expense capitalized into inventory. Asset acquisitions In Fiscal 2023, the Company purchased a production winery and seven acres of planted Cabernet Sauvignon in Alexander Valley, Sonoma County, California for $54.6 million, see Note 4 (Acquisition) for additional information. In Fiscal 2022, the Company completed the purchase of four California vineyards of approximately 340 acres, and related assets for a total of $32.7 million. |
Leases
Leases | 12 Months Ended |
Jul. 31, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company’s operating leases in which it is the lessee are primarily for certain vineyards, office space, tasting rooms, production facilities and certain grower purchase agreements associated with the purchase of grape tonnage yielded from specific vineyard blocks. As of July 31, 2023 and 2022, the Company did not have any finance leases. The Company’s leases have various terms with initial terms ranging from one Upon acquisition of the Geyserville winery, the Company became the lessor in an existing operating lease for the production facility. The Company recorded lease income of $0.4 million for Fiscal 2023, recorded in net sales in the Consolidated Statements of Operations. The lease term expires February 2024 with no option for renewal. Remaining lease payments the Company will receive in Fiscal 2024 are $1.9 million. The Company elected the practical expedient to combine lease and nonlease components. The amounts and classification of the Company’s leases in the Consolidated Statements of Financial Position are as follows: July 31, (in thousands) Balance Sheet Classification 2023 2022 Assets: Operating lease right-of-use assets Operating lease right-of-use assets $ 20,376 $ 23,375 Liabilities: Operating lease liabilities Current operating lease liabilities 3,787 3,498 Operating lease liabilities Operating lease liabilities 16,534 19,732 Total lease liabilities $ 20,321 $ 23,230 Lease costs The components of lease cost reported in the Consolidated Financial Statements were as follows: July 31, (in thousands) 2023 2022 Operating lease costs: Lease cost $ 4,361 $ 4,239 Variable lease cost (a) 1,363 1,137 Short-term lease cost 66 96 Less: Sublease income (132) (20) Total lease costs $ 5,658 $ 5,452 _________________________________________________________ (a) Variable lease cost includes payments for property taxes, insurance, maintenance and grower purchase agreements. Variable lease cost is recorded in the period in which variability is removed. See Note 15 (Commitments and contingencies) for estimated variable cost of grower purchase agreements to be recognized in fiscal 2024 related to the 2023 harvest, subject to grape yield sizes and the Company accepting grapes under its quality control provisions. See Note 5 (Inventories) for lease costs capitalized into inventory. Lease term and discount rate Weighted average remaining lease terms and discount rates consisted of the following: July 31, 2023 2022 Operating leases: Weighted average remaining lease term (in years) 7.08 7.75 Weighted average discount rate 3.65 % 3.53 % Maturity of operating lease liabilities A summary of the remaining lease payments of operating lease liabilities (leases with terms in excess of one year) for the next five fiscal years and thereafter as of July 31, 2023 were as follows: (in thousands) Operating lease liabilities 2024 $ 4,386 2025 4,255 2026 2,909 2027 2,822 2028 2,428 Thereafter 6,278 Total lease payments 23,078 Less: interest (2,757) Total lease liabilities $ 20,321 Supplemental cash flow information Supplemental and other information related to leases comprised of the following: July 31, (in thousands) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,273 $ 3,534 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 636 $ 232 Comparative information as reported prior to the adoption of ASC 842 |
Goodwill and other intangible a
Goodwill and other intangible assets | 12 Months Ended |
Jul. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangible assets | Goodwill and other intangible assets Goodwill At each of July 31, 2023 and 2022, the goodwill balance was $425.2 million. Other intangible assets Intangible assets were comprised of the following: July 31, 2023 (in thousands) Gross carrying amount Accumulated amortization Net Definite-lived intangible assets: Customer relationships $ 92,720 $ (49,393) $ 43,327 Total definite-lived intangible assets 92,720 (49,393) 43,327 Indefinite-lived intangible assets: Trade names 139,600 — 139,600 Lane rights 1,300 — 1,300 Total indefinite-lived intangible assets 140,900 — 140,900 Total other intangible assets $ 233,620 $ (49,393) $ 184,227 July 31, 2022 (in thousands) Gross carrying amount Accumulated amortization Net Definite-lived intangible assets: Customer relationships $ 92,720 $ (41,834) $ 50,886 Total definite-lived intangible assets 92,720 (41,834) 50,886 Indefinite-lived intangible assets: Trade names 139,600 — 139,600 Lane rights 1,300 — 1,300 Total indefinite-lived intangible assets 140,900 — 140,900 Total other intangible assets $ 233,620 $ (41,834) $ 191,786 Impairment Assessment Pursuant to ASC Topic 350, Intangibles—Goodwill and Other , the Company performs an annual impairment test for potential impairment of indefinite-lived intangible assets. Assets are tested more frequently if factors indicate impairment may exist. The Company’s impairment testing of the trade name intangible assets compares the fair value of each trade name with its carrying value, with any excess of carrying value recognized as an impairment loss. The Company estimates the fair value of the trade names using the Relief-from-Royalty method. Management applies significant judgment in determining the fair value of intangible assets, which involves the use of estimates and assumptions including future net sales attributable to the trade names and selection of appropriate royalty and discount rates. The Company did not record any impairment charges related to goodwill or trade names for Fiscal 2023, 2022 or 2021. Amortization expense The Company’s amortization expense was $7.6 million for Fiscal 2023 and 2022 and $7.7 million for Fiscal 2021. Estimated future amortization expense for each of the following five fiscal years and thereafter is as follows: (in thousands) Amount 2024 $ 7,560 2025 7,560 2026 7,560 2027 7,560 2028 7,560 Thereafter 5,527 Total $ 43,327 |
Accrued expenses
Accrued expenses | 12 Months Ended |
Jul. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued expenses | Accrued expenses Accrued expenses were comprised of the following: July 31, (in thousands) 2023 2022 Trade spend (a) $ 12,721 $ 15,319 Income taxes payable (b) 11,019 — Deferred compensation liability (c) 3,261 2,142 Barrel purchase 2,589 988 Accrued professional fees 599 3,191 Accrued invoices and other accrued expenses 8,057 7,835 Accrued expenses $ 38,246 $ 29,475 _________________________________________________________ (a) Trade spend refers to estimated amounts the Company owes to distributors for depletion-based incentives. See further discussion in Note 2 (Basis of presentation and significant accounting policies). (b) Effective March 2023, the IRS postponed certain tax filings and payment deadlines, until October 2023, in areas designated with eligible Federal Emergency Management Agency declarations. During Fiscal 2023, the Company deferred federal and state tax payments and expects to pay the deferred amount in the first quarter of fiscal 2024. (c) See discussion in Note 14 (Employee benefit plans) regarding the Company’s deferred compensation plan and related cash surrender value life insurance policies the Company intends to use in settling the plan liability. The cash surrender value of the life insurance policies were $2.7 million and $1.8 million at July 31, 2023 and 2022, respectively. |
Debt
Debt | 12 Months Ended |
Jul. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt, net was comprised of the following: July 31, (in thousands) 2023 2022 Revolving line of credit $ 13,000 $ 110,000 Term loan, first lien 220,832 110,117 Capital expenditure loan (a) — 5,049 Total debt 233,832 225,166 Less: Current maturities of long-term debt (9,721) (9,810) Total long-term debt 224,111 215,356 Debt issuance costs (b) (492) (1,608) Total long-term debt, net of current maturities and debt issuance costs $ 223,619 $ 213,748 _________________________________________________________ (a) The capital expenditure loan under the Original Credit Agreement was replaced as part of the refinancing and execution of the New Credit Agreement. As of July 31, 2023, the Company has not drawn on the delayed draw term loan under the New Credit Agreement. (b) At July 31, 2023, debt issuance costs are the costs associated with the term loan facility. Debt issuance costs of $2.8 million associated with the revolving credit and delayed draw term loan facilities are recorded in other assets on the Consolidated Statements of Financial Position. Under the Original Credit Facility, the revolving credit facility debt issuance costs were treated consistently with those of the term debt facilities as the Company did not intend to repay the revolving credit facility in full prior to its maturity. At July 31, 2022, $1.3 million of the debt issuance costs are associated with the revolving credit facility. As of July 31, 2023 , the Company had unused capacity of $412.0 million under the revolving line of credit, excluding the incremental seasonal borrowing amount of an additional $30.0 million of capacity. Amendment to the Original Credit Agreement Prior to entering the New Credit Agreement, effective August 30, 2022, Mallard Buyer Corp., Selway Wine Company and certain other subsidiaries of The Duckhorn Portfolio, Inc. (collectively, the “Borrowers”) entered into Amendment No. 8 to the Original Credit Agreement, to extend the maturity date of all facilities to November 1, 2023 and to transition from a LIBOR based interest rate to a Term SOFR based interest rate plus applicable margins defined by the terms of the Original Credit Facility. The transaction did not result in any additional cash proceeds. New Credit Agreement Effective November 4, 2022, the Borrowers entered into the New Credit Agreement which amends and restates, in its entirety, the Original Credit Agreement. The New Credit Agreement provides for $675.8 million in first lien senior secured credit facilities consisting of (i) a $425.0 million revolving credit facility, (ii) a $225.8 million term loan facility and (iii) a $25.0 million delayed draw term loan facility. The maturity date for loans borrowed under the New Credit Agreement is November 4, 2027. The term loan facility in the New Credit Agreement replaces the $135.0 million term loan tranche one facility, $25.0 million term loan tranche two facility and $25.0 million capital expenditure facility under the Original Credit Agreement. The New Credit Agreement allows the Borrowers, at any time, to request additional term loans, revolver commitments and delayed draw term loan commitments in an aggregate amount of up to $400.0 million (the “Incremental Facility”). The lenders are not under any obligation to provide the Incremental Facility, and the Incremental Facility is subject to certain customary conditions precedent and other limitations. Borrowings under the revolver portion of the New Credit Agreement generally bear interest based on the sum of Term SOFR plus a loan margin based on average availability as follows: (a) less than or equal to 33% of average availability, a loan margin of 1.50%, (b) greater than 33% and less than or equal to 66% of average availability, a loan margin of 1.25%, and (c) greater than 66% of average availability, a loan margin of 1.00%. The weighted average interest rate, including unused line fees, on outstanding borrowings under the revolver portion of the credit facilities was 6.3% during Fiscal 2023. Borrowings under the term loan and delayed draw portions of the New Credit Agreement generally bear interest based on the sum of (i) Term SOFR plus (ii) a credit spread adjustment of 10 basis points for 1-month and 3-month interest periods and 15 basis points for a six-month interest period plus (iii) a loan margin of 1.625%. The weighted average interest rate on outstanding borrowings under the term loan portions of the credit facilities was 6.3% during Fiscal 2023. The New Credit Agreement also includes an unused line fee and contains customary representations and warranties and affirmative and negative covenants for agreements of this type. In addition, the New Credit Agreement requires compliance with the following financial covenants, in each case commencing from fiscal quarter ending January 31, 2023: (i) a debt to capitalization ratio not to exceed 0.55:1.00, measured at the end of each fiscal quarter and (ii) a fixed charge coverage ratio not to be less than 1.15:1.00, measured at the end of each fiscal quarter. As of both July 31, 2023 and 2022, the Company was not in violation of any financial covenant. The Company incurred approximately $3.3 million in debt issuance costs, including bank financing fees and third party legal and other professional fees in closing the New Credit Agreement, of which approximately $2.4 million were capitalized in accordance with ASC Topic 470, Debt . The fees associated with the revolving and delayed draw term facilities were capitalized to other assets and the fees associated with the term loan facility were capitalized to long-term debt, net of current maturities and debt issuance costs on the Consolidated Statement of Position. The capitalized debt issuance costs are amortized as interest expense over the term of the New Credit Agreement. Other related charges incurred of $0.9 million that were not capitalized during the period are reflected in other income, net in the Consolidated Statement of Operations. Included in interest expense in the Consolidated Statements of Operations, and separately presented on the Consolidated Statements of Cash Flows, is amortization related to debt issuance costs of $1.0 million, $1.6 million and $1.6 million for Fiscal 2023, 2022 and 2021. Amendments to the New Credit Agreement Effective February 6, 2023, the Company entered into Amendment No. 1 to the Amended and Restated First Lien Loan and Security Agreement. The changes in the amendment are administrative in nature and did not impact the Company’s outstanding debt or related debt covenants. The amendment did not result in any additional cash proceeds or changes in commitment amounts. Effective May 2, 2023, the Company entered into Amendment No. 2 to the Amended and Restated First Lien Loan and Security Agreement. The amendment amends and restates the definition of fixed charge coverage ratio in the New Credit Agreement to replace unfinanced capital expenditures with maintenance capital expenditures in the calculation of the fixed charge coverage ratio. The amendment did not result in any additional cash proceeds or changes in commitment amounts. As of July 31, 2023, the required revolving line of credit and long-term debt repayments for each of the following five fiscal years and thereafter are as follows: (in thousands) Amount 2024 $ 9,721 2025 9,721 2026 9,721 2027 9,721 2028 194,947 Thereafter — Total $ 233,832 |
Derivative instruments
Derivative instruments | 12 Months Ended |
Jul. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative instruments | Derivative instruments The Company manages exposure to interest rates and foreign currency movements by entering into derivative contracts from time to time, as movements in such markets could impact the Company's financial results. The changes in estimated fair values of derivative instruments result from changes in interest rates and foreign currency exchange rates. Such changes serve to offset exposure in related business assets or liabilities. The Company is exposed to credit loss in the event of nonperformance by a counterparty. Certain of the Company’s derivative instruments are subject to master netting agreements. In certain circumstances, this agreement allows the Company to net-settle amounts payable or receivable related to multiple derivative transactions with the same counterparty. The fair values of derivative instruments are presented on a gross basis, even when the derivative instruments are subject to master netting arrangements. Collateral is generally not required of the Company or of the counterparties to the master netting agreements, and no cash collateral was received or pledged under such agreements as of July 31, 2023 or July 31, 2022. The Company does not enter into derivative instruments for trading or speculative purposes. The Company’s accounting policies do not apply hedge accounting treatment to derivative instruments. As of July 31, 2023, the Company held the following interest rate swap agreement, which fixed the interest rate on the applicable notional amount of outstanding variable rate debt: Notional amount (in thousands) Interest rate Effective date Expiration date $100,000 3.735% January 4, 2023 November 4, 2027 The total notional amounts of the Company’s derivative instruments outstanding are as follows: July 31, (in thousands) 2023 2022 Interest rate swap contracts $ 100,000 $ 100,000 Foreign currency forward contracts 5,610 2,793 Total derivative instruments not designated as hedging instruments $ 105,610 $ 102,793 Effective September 30, 2022, the Company amended its interest rate swap initially entered into in March 2020, which expired on March 23, 2023, to transition from a LIBOR-based floating rate to a Term SOFR based floating rate. On January 4, 2023, the Company entered into an interest rate swap that partially mitigates the risk to the Company due to potential future Term SOFR movements by trading floating rate payments for fixed rate payments on an applicable notional amount of outstanding variable rate debt. As discussed in Note 15 (Commitments and contingencies), the Company manages annual barrel purchases by engaging domestic and foreign cooperages to provide specified barrel quantities on agreed delivery dates. A significant portion of these invoices are paid in Euros. In order to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate, the Company enters into foreign currency forward contracts, generally aligning settlement dates with expected barrel deliveries and the anticipated timing of payments to various coopers. Results of period derivative activity The estimated fair value and classification of derivative instruments on the Consolidated Statements of Financial Position at July 31, 2023 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contracts Other assets $ 1,117 Other liabilities $ — Foreign currency forward contracts Prepaid expenses and other current assets 69 Other current liabilities — Total derivatives not designated as hedging instruments $ 1,186 $ — The estimated fair value and classification of derivative instruments on the Consolidated Statements of Financial Position at July 31, 2022 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contracts Prepaid expenses and other current assets $ 1,443 Other liabilities $ — Foreign currency forward contracts Prepaid expenses and other current assets — Other current liabilities 223 Total derivatives not designated as hedging instruments $ 1,443 $ 223 The amounts and classification of the gains and losses in the Consolidated Statements of Operations related to derivative instruments not designated as hedging instruments are as follows: Fiscal years ended July 31, (in thousands) Classification 2023 2022 2021 Interest rate swap contracts Other income, net $ 326 $ (1,923) $ (5,961) Foreign currency forward contracts Other income, net (292) 228 113 Total loss (gain) $ 34 $ (1,695) $ (5,848) |
Fair value measurements
Fair value measurements | 12 Months Ended |
Jul. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair value measurements | Fair value measurements The Company applies a fair value hierarchy pursuant to ASC Topic 820, Fair Value Measurement , which consists of three levels of inputs used to measure fair value: Level 1 - Inputs to fair value are quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs to fair value are based on observable data other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data such as interest rates or yield curves for substantially the full term of the instrument; and Level 3 - Inputs to fair value are based on unobservable data for the instrument and are supported by little or no market activity. Following is a description of the valuation methodologies used for instruments measured at fair value in the Consolidated Financial Statements, as well as the general classification of such instruments under the valuation hierarchy. Interest rate swap contracts : The fair value of the Company’s interest rate swap agreement is estimated with the assistance of a third party, using inputs that can be corroborated by observable market data (Level 2 of the fair value hierarchy). Foreign currency forward contracts : The fair value of the Company’s outstanding foreign currency forward contracts is estimated with the assistance of a third party, using inputs that can be corroborated by observable market data (Level 2 of the fair value hierarchy). Deferred compensation plan : Contributions to the Company’s deferred compensation plan are managed by a third-party administrative agent. The fair value of the total contributed plan assets and liabilities are based on inputs that can be corroborated by observable market data (Level 2 of the fair value hierarchy). The Company’s other financial instruments consist mainly of cash, accounts receivable, accounts payable, accrued expenses and debt. The carrying value of all other financial instruments, except debt, approximates fair value due to the short-term nature of these assets and liabilities. The carrying value of the Company’s debt approximates fair value as the interest rates are variable and reflective of market rates (Level 2 of the fair value hierarchy). The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at July 31, 2023, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Interest rate swap contracts $ — $ 1,117 $ — Foreign currency forward contracts $ — $ 69 $ — Deferred compensation plan asset $ — $ 2,670 $ — Liabilities: Deferred compensation liability $ — $ 3,261 $ — The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at July 31, 2022, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Interest rate swap contracts $ — $ 1,443 $ — Deferred compensation plan asset $ — $ 1,753 $ — Liabilities: Foreign currency forward contracts $ — $ 223 $ — Deferred compensation liability $ — $ 2,142 $ — |
Income taxes
Income taxes | 12 Months Ended |
Jul. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company’s income tax provision represents U.S. federal and state income taxes. The provision for income taxes was as follows: Fiscal years ended July 31, (in thousands) 2023 2022 2021 Current: Federal $ 19,184 $ 13,844 $ 14,431 State 6,266 4,864 4,549 Total current income taxes 25,450 18,708 18,980 Deferred: Federal (262) 2,080 2,809 State (5) 1,736 (781) Total deferred income taxes (267) 3,816 2,028 Income tax expense $ 25,183 $ 22,524 $ 21,008 The significant components of deferred tax assets (liabilities) were comprised of the following: July 31, (in thousands) 2023 2022 Deferred tax assets: Inventory $ 2,385 $ — Operating lease liabilities 5,201 5,935 Accrued liabilities 1,579 1,118 State taxes 1,411 1,136 Equity-based compensation 1,041 550 Other 158 523 Total deferred tax assets 11,775 9,262 Deferred tax liabilities: Inventory — (1,116) Property and equipment (48,448) (41,658) Intangible assets (45,607) (46,018) Operating lease asset (5,216) (5,972) Interest rate swap (286) (368) Prepaid expenses (2,434) (2,156) Casualty gain (Note 18) — (2,457) Total deferred tax liabilities (101,991) (99,745) Net deferred tax liabilities $ (90,216) $ (90,483) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Other significant temporary differences that impact the Company’s deferred taxes primarily relate to the tax basis of assets that were acquired in business combinations that remain at historical bases although the assets were recorded at fair value for financial reporting purposes. The differences primarily relate to property and equipment and intangible assets. Other temporary differences include differing depreciation and inventory costing methods. Goodwill associated with a prior period acquisition of the Company created a permanent difference. The Company considers the realizability of deferred tax assets, evaluating whether it is more likely than not that some or all of the deferred tax assets will not be realized. As of July 31, 2023 and 2022, the Company determined it is more likely than not that it will realize the benefits of these deductible differences. Accordingly, the Company has recorded no valuation allowances. The following table reconciles the Company’s actual income tax provision to the expected statutory tax rate: Fiscal years ended July 31, 2023 2022 2021 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes 5.3 6.4 3.9 Equity-based compensation — 0.1 2.6 Other 0.4 (0.3) (0.2) Effective tax rate 26.7 % 27.2 % 27.3 % The Company and its subsidiaries file a consolidated federal income tax return and individual or consolidated state tax returns based on the tax laws of each jurisdiction where the Company operates. The Company is subject to taxation in the jurisdictions in which it operates. The Company continues to remain subject to examination by U.S. federal authorities for the fiscal years ended July 31, 2020 through 2022 and for various state authorities, primarily for the fiscal years ended July 31, 2015 through 2022. The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. There were no material interest and penalties for Fiscal 2023, 2022 or 2021. As of July 31, 2023 and 2022, the total amount of gross unrecognized tax benefits was $0.5 million and $0.4 million, as a result of certain research and development tax credits, all of which if recognized, would impact the Company’s effective tax rate. The aggregate change in the balance of gross unrecognized tax benefits is as follows: July 31, (in millions) 2023 2022 Beginning balance $ 0.4 $ — Gross increase related to prior year tax positions 0.1 0.4 Ending balance $ 0.5 $ 0.4 |
Employee benefit plans
Employee benefit plans | 12 Months Ended |
Jul. 31, 2023 | |
Retirement Benefits [Abstract] | |
Employee benefit plans | Employee benefit plans Defined contribution plan The Company sponsors a defined contribution 401(k) plan pursuant to which eligible employees may defer a portion of their compensation. All full-time and part-time employees are eligible to participate. Defined contribution expense includes the plan administration fees and is reduced by forfeitures. The Company made mandatory safe harbor and discretionary employer contributions during the year totaling 10% of eligible compensation, and no other profit-sharing contributions were approved for Fiscal 2023, 2022 and 2021. The Company contributed $5.2 million, $4.6 million and $3.8 million to the plan for Fiscal 2023, 2022 and 2021, respectively. Deferred compensation retirement plan The Company offers to certain qualifying members of management, at the Company’s discretion, the ability to participate in the Company’s deferred compensation plan which is subject to Section 409(a) of the Internal Revenue Code. For such employees, when discretionary employer contributions to the 401(k) plan would exceed the maximum allowable 401(k) contribution, the balance of the contribution is made into the 409(a) plan. Participating employees may elect to defer compensation under the plan, and the Company may make discretionary contributions on participants’ behalf. Employee contributions vest immediately. Discretionary contributions are made by the Company as approved by the Company’s Board of Directors and are subject to a three-year cliff vesting schedule. Company contributions to the plan totaled $0.3 million, $0.4 million and $1.1 million for Fiscal 2023, 2022 and 2021, respectively. The deferred compensation liability was $3.3 million and $2.1 million as of July 31, 2023 and 2022, respectively. See Note 12 (Fair value measurements) for additional information. Future payments related to the deferred compensation plan will be funded with cash surrender value life insurance contracts which are payable to the Company upon the death of a participating employee. These plan assets are general assets of the Company, which are subject to creditors. The cash surrender value of the life insurance policies totaled $2.7 million and $1.8 million as of July 31, 2023 and 2022, respectively, and is included in other non-current assets on the Consolidated Statements of Financial Position. |
Commitment and contingencies
Commitment and contingencies | 12 Months Ended |
Jul. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and contingencies | Commitments and contingencies Long-term purchase contracts The Company has entered certain grape purchase contracts with various growers to supply a significant portion of its future grape requirements for wine production. The lengths of the contracts vary from one For the 2023 harvest, the Company contracted for approximately 31,000 tons of grapes at an estimated cost of approximately $80.1 million, subject to the final determination of yield quantities and our quality acceptance provisions being met, which will be recognized into inventory during the fiscal year ended July 31, 2024. For the 2022 harvest, the Company purchased 29,000 tons of grapes at a cost of approximately $71.0 million, which was recognized in inventory during Fiscal 2023. For the 2021 harvest, the Company purchased 34,000 tons of grapes at a cost of approximately $68.1 million, which was recognized in inventory during Fiscal 2022. The Company also increases the scope of its grape contracts when necessitated by supply needs to meet production levels in future periods. Purchase commitments The Company enters into commitments to purchase barrels for each harvest, a significant portion of which are settled in Euros. As of July 31, 2022, the Company had $8.8 million in barrel purchase commitments. During Fiscal 2023, the Company paid the remaining commitments and liabilities associated with the barrel purchases for the 2022 harvest. As of July 31, 2023, the Company has ongoing commitments to purchase approximately 9,000 barrels for a total of $10.6 million, of which approximately $8.4 million will be paid in Euros in the next 12 months. In order to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate, the Company enters into foreign currency forward contracts, generally aligning settlement dates with expected barrel deliveries and the anticipated timing of payments to various coopers. The Company does not enter into these contracts for speculative purposes. Gains and losses on these contracts are recorded in other income, net on the Consolidated Statements of Operations. See Note 11 (Derivative instruments) for the total notional value and impact on the current period consolidated financial statements due to foreign currency forward contracts. The Company enters into various contracts with third-parties for custom crush, storage and bottling services. The costs related to these contracts are recorded in the period the service is provided. The contracts for custom crush services typically have minimums that the Company is required to pay if certain grape volume thresholds are not delivered. The Company does not record these minimums related to service contracts as contingent liabilities on the Consolidated Statements of Financial Position given the harvest yield size, resulting volumes and qualities of grape deliveries are not known or estimable until harvest, when all related contingencies would be resolved. COVID-19 In March 2020, the World Health Organization declared a global pandemic due to the spread of COVID-19, the disease caused by a strain of virus. The Company incurred incremental costs during periods of capacity restrictions or mandatory closure totaling $0.7 million for Fiscal 2021. These costs include tasting room expenses and other immaterial costs. No costs were incurred for Fiscal 2023 or 2022. Contingent liabilities The Company evaluates pending or threatened litigation, operational events which could result in regulatory or civil penalties, environmental risks and other sources of potential contingent liabilities during the year. In accordance with applicable accounting guidance, the Company establishes an accrued liability when those matters present loss contingencies which are both probable and reasonably estimable. As of July 31, 2023 and 2022, there were no material contingent obligations requiring accrual or disclosure. |
Equity-based compensation
Equity-based compensation | 12 Months Ended |
Jul. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-based compensation | Equity-based compensation 2016 Equity Incentive Plan The Board of Managers of Mallard Holdco, LLC, the entity which wholly-owned The Duckhorn Portfolio, Inc. before the Company’s IPO, approved the issuance of profit interest units (“Class M Common Units”, “awards” or “units”) to certain employees of the Company. The units, issued in accordance with the 2016 Plan, were considered equity awards for purposes of calculating compensation expense, and equity-classified in the Consolidated Statements of Financial Position. The units awarded in the first grant were subject to a service condition, vest ratably by 20% on each anniversary of the vesting date, and subject to continued service through each vesting date. The units awarded in the second grant were subject to both a service and a performance condition specific to the investors having achieved specified levels of return on investment. Upon consummation of the IPO, several events occurred with respect to the previously awarded 2016 Plan units. The vesting conditions were considered probable at the time of the IPO and the acceleration clause in the awards was triggered, resulting in an acceleration of the requisite service period from five years to four years. One tranche of awards under the plan was accelerated by the Company’s Board of Directors to align the vesting periods of all 2016 Plan awards. Lastly, the Class M Common Units were exchanged, on a value for value basis, for common shares of the Company post-IPO and further by unrestricted or restricted shares, depending on the satisfaction of the respective service period vesting. The changes to these awards were deemed to be Type I modification events under ASC Topic 718, Compensation-Stock Compensation . Accordingly, the Company recognized catch-up equity-based compensation expense in Fiscal 2021, including incremental fair value resulting from the modification, as applicable to each award grant, amounting to a cumulative catch-up expense of $8.5 million presented in selling, general and administrative expenses. In connection with the adoption of the Company’s 2021 Equity Plan, as discussed below, the Company will no longer grant additional awards under the 2016 Plan. However, the terms and conditions of the 2016 Plan will continue to govern the previously granted awards, to the extent applicable. Restricted shares As discussed above, the unvested Class M Units were exchanged for restricted shares of the Company in Fiscal 2021. The following table represents restricted shares activity: Restricted share awards Weighted-average grant-date fair value (per share) Unvested as of July 31, 2022 266,158 $ 14.23 Granted — — Vested (266,158) 14.23 Forfeited — — Unvested as of July 31, 2023 — $ — The total intrinsic value of restricted shares that vested during Fiscal 2023, 2022 and 2021, was $4.9 million, $3.0 million and $4.6 million, respectively. The remaining unvested awards vested on August 1, 2022. Accordingly, for Fiscal 2023, there was no recognized compensation expense related to the 2016 Plan. 2021 Equity Incentive Plan The Board of Directors approved the 2021 Plan, which allows Management to grant various stock and stock-based awards. A maximum of 14,003,560 shares of the Company’s common stock were authorized for issuance under the 2021 Plan. Restricted stock units and stock options are granted to certain employees of the Company, advisors and directors (collectively “grants”). The grants are considered equity awards for purposes of calculating compensation expense and are equity-classified in the Consolidated Statements of Financial Position. The grants awarded vest ratably by 25% on each anniversary of the vesting date, subject to continued service through each vesting date. Consistent with the Company’s policy related to the 2016 Plan, forfeitures will be recorded as they occur. Stock options granted under the 2021 Plan expire ten years from the date of the grant. Stock options The following table represents the stock option activity: Number of options outstanding Weighted-average exercise price (per share) Weighted-average remaining contractual life (in years) Aggregate intrinsic value (in thousands) Balance as of July 31, 2022 1,555,610 $ 17.15 8.7 $ 3,847 Options granted 1,092,684 14.41 — — Options exercised (2,586) 15.00 — — Forfeited (284,002) 16.23 — — Expired (40,473) 17.25 — — Balance as of July 31, 2023 2,321,233 $ 15.98 8.0 $ — Exercisable as of July 31, 2023 713,802 $ 17.08 6.5 $ — The total unrecognized compensation expense related to the 2021 Plan stock options was $7.1 million as of July 31, 2023, which is expected to be recognized over a weighted-average period of 2.7 years. The weighted-average grant-date fair value of options granted for 2023 was $5.94 per share. The following assumptions were applied in the Black-Scholes option pricing model to estimate the grant-date fair value of the stock options granted: Fiscal years ended July 31, 2023 2022 2021 Expected term (in years) (a) 6.23 6.25 6.25 Expected dividend yield (b) — % — % — % Risk-free interest rate (c) 3.77% - 3.96% 2.54 % 1.06% - 1.09% Expected volatility (d) 33.9 % 47.0 % 25.0 % _________________________________________________________ (a) Calculated as the midpoint between the weighted-average time to vest and the time to expiration. (b) The Company has not historically paid and does not expect to pay dividends in the foreseeable future. (c) The risk-free rate was estimated from the U.S. Treasury Constant Maturity Rates for a period consistent with the expected term in effect at the grant date. (d) The expected volatility was estimated based on analysis of the historical and implied volatility of a group of guideline public companies deemed to be comparable public peers within the Company’s industry. Restricted stock units The following table represents the RSU grant activity under the 2021 Plan: Number of units Weighted-average grant-date fair value (per share) Unvested as of July 31, 2022 414,609 $ 17.32 Granted 391,220 14.54 Vested (148,296) 17.50 Forfeited (94,672) 16.23 Unvested as of July 31, 2023 562,861 $ 15.52 The total intrinsic value of restricted stock that vested during Fiscal 2023 and 2022 was $2.3 million and $3.0 million, respectively. The total unrecognized compensation expense related to the 2021 Plan RSUs was $6.9 million as of July 31, 2023, which is expected to be recognized over a weighted-average period of 2.5 years. 2021 Employee Stock Purchase Plan In connection with the IPO, the Company adopted the 2021 Employee Stock Purchase Plan, through which eligible employees may purchase shares of the Company’s common stock at a discount through accumulated payroll deductions. Unless otherwise determined by the Board of Directors, in their sole discretion, the purchase of common stock under the ESPP will be 85% of the lower of the fair market value per share on the first trading day of the applicable offering period or the fair market value per share on the exercise date of the applicable purchase period. Each offering period and each purchase period is approximately five months in duration. The fair value of ESPP shares is estimated at the date of grant using the Black-Scholes option pricing model. A maximum of 1,250,509 shares of the Company’s common stock were authorized for issuance and sale to eligible employees under the ESPP. The Company issued 28,222 shares and 16,042 shares under the ESPP during Fiscal 2023 and 2022, respectively. Compensation expense During Fiscal 2023, 2022 and 2021, the Company recognized total equity-based compensation expense due to units vesting over their requisite service periods for all plans of $6.3 million, $5.6 million and $2.3 million, respectively, excluding the $8.5 million cumulative catch-up expense recognized for the 2016 Equity Plan in |
Related party transactions
Related party transactions | 12 Months Ended |
Jul. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions |
Casualty loss, net
Casualty loss, net | 12 Months Ended |
Jul. 31, 2023 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Casualty loss, net | Casualty loss, net Wildfires Several wildfires occurred in northern California during the first quarter of Fiscal 2021. Other than smoke exposure to unharvested grapes, the Company’s owned vineyards did not sustain damage during the fires. Fire and smoke exposure related expenses offset by crop insurance proceeds received totaling $1.3 million are reflected as casualty loss (gain), net in the Consolidated Statements of Operations for Fiscal 2021. Smoke and fire damage to vineyards in the primary markets where the Company sources fruit rendered some of the available grapes unacceptable for the Company’s production needs. In Fiscal 2022, fire and smoke exposure related expenses was $0.1 million and is reflected as casualty loss (gain), net in the Consolidated Statement of Operations. Flood In Fiscal 2020, the Company entered into an agreement with its insurer to resolve an open Fiscal 2019 flood insurance claim. The Company received $8.1 million in Fiscal 2021, fully resolving the flood insurance claim. The Company incurred incremental charges in Fiscal 2021, offset by insurance proceeds received, which were reflected as casualty loss (gain), net in the Consolidated Statements of Operations. |
Earnings per share
Earnings per share | 12 Months Ended |
Jul. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per share | Earnings per share Basic earnings per share is calculated by dividing the net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflects the dilution that would occur if any potentially dilutive instruments were exercised or converted into shares of common stock. The following is a reconciliation of the Company’s basic and diluted earnings per share calculation: Fiscal years ended July 31, (in thousands, except share and per share amounts) 2023 2022 2021 Numerator: Net income attributable to The Duckhorn Portfolio, Inc. $ 69,298 $ 60,190 $ 55,976 Denominator: Weighted average number of shares outstanding for basic per share calculation 115,233,324 115,096,152 106,681,496 Effect of dilutive potential shares (a) : Stock options 1,687 112,471 202,798 Restricted stock units 172,613 154,955 50,559 Adjusted weighted average shares outstanding for diluted per share calculation 115,407,624 115,363,578 106,934,853 Earnings per share attributable to The Duckhorn Portfolio, Inc. Basic $ 0.60 $ 0.52 $ 0.52 Diluted $ 0.60 $ 0.52 $ 0.52 _________________________________________________________ (a) Calculated using the treasury stock method. For Fiscal 2023, 2022 and 2021, there were 0.6 million, 0.2 million and 0.1 million incremental common shares issuable upon the exercise of certain stock options, respectively, that were not included in the calculation of diluted EPS because the effect of their inclusion would have been antidilutive under the treasury stock method. Refer to Note 16 (Equity-based compensation) for the terms of the awards. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net income attributable to The Duckhorn Portfolio, Inc. | $ 69,298 | $ 60,190 | $ 55,976 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 12 Months Ended |
Jul. 31, 2023 shares | Jul. 31, 2023 shares | |
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | During the three months ended July 31, 2023, Alex Ryan, Lori Beaudoin, Pete Przybylinski, Sean Sullivan and Zachary Rasmuson, each an officer for purposes of Section 16 of the Exchange Act, had equity trading plans enacted in accordance with Rule 10b5-1(c)(1) under the Exchange Act. An equity trading plan is a written document that preestablishes the amounts, prices and dates (or formula for determining the amounts, prices and dates) of future purchases or sales of the Company’s stock, including sales of shares acquired under the Company’s employee and director equity plans. Name Position Trading Agreement Adoption Date Duration of Trading Agreement Aggregate Number of Securities to be Sold under the Trading Agreement Alex Ryan President, Chief Executive Officer April 13, 2023 July 5th, 2023 - December 31st, 2023 106,000 Lori Beaudoin Former Chief Financial Officer April 12, 2023 July 12th, 2023 - December 31st, 2023 50,000 Pete Przybylinski Executive Vice President, Chief Sales Officer April 4, 2023 July 5th, 2023 - December 31st, 2023 100,000 Sean Sullivan Executive Vice President, Chief Strategy and Legal Officer April 12, 2023 July 12th, 2023 - December 31st, 2023 35,000 Zachary Rasmuson Executive Vice President, Chief Operating Officer April 4, 2023 July 5th, 2023 - December 31st, 2023 48,000 | |
Rule 10b5-1 Arrangement Adopted | true | |
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Alex Ryan [Member] | ||
Trading Arrangements, by Individual | ||
Name | Alex Ryan | |
Title | President, Chief Executive Officer | |
Adoption Date | April 13, 2023 | |
Arrangement Duration | 179 days | |
Aggregate Available | 106,000 | 106,000 |
Lori Beaudoin [Member] | ||
Trading Arrangements, by Individual | ||
Name | Lori Beaudoin | |
Title | Former Chief Financial Officer | |
Adoption Date | April 12, 2023 | |
Arrangement Duration | 172 days | |
Aggregate Available | 50,000 | 50,000 |
Pete Przybylinski [Member] | ||
Trading Arrangements, by Individual | ||
Name | Pete Przybylinski | |
Title | Executive Vice President, Chief Sales Officer | |
Adoption Date | April 4, 2023 | |
Arrangement Duration | 179 days | |
Aggregate Available | 100,000 | 100,000 |
Sean Sullivan [Member] | ||
Trading Arrangements, by Individual | ||
Name | Sean Sullivan | |
Title | Executive Vice President, Chief Strategy and Legal Officer | |
Adoption Date | April 12, 2023 | |
Arrangement Duration | 172 days | |
Aggregate Available | 35,000 | 35,000 |
Zachary Rasmuson [Member] | ||
Trading Arrangements, by Individual | ||
Name | Zachary Rasmuson | |
Title | Executive Vice President, Chief Operating Officer | |
Adoption Date | April 4, 2023 | |
Arrangement Duration | 179 days | |
Aggregate Available | 48,000 | 48,000 |
Basis of presentation and sig_2
Basis of presentation and significant accounting policies (Policies) | 12 Months Ended |
Jul. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The Company’s consolidated financial statements are prepared in accordance with U.S. GAAP and the regulations of the SEC. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of The Duckhorn Portfolio, Inc. and its subsidiaries, including a consolidated VIE of which the Company has determined it is the primary beneficiary. All intercompany balances and transactions are eliminated in consolidation. Certain reclassifications to previously reported financial information have been made to conform to the current period presentation. |
Functional currency | Functional currency The Company and all subsidiary legal entities are domiciled in the U.S. The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar. |
Accounting estimates | Accounting estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Operating segment | Operating segment The Company has one operating segment and one reportable segment. The Company’s Chief Operating Decision Maker reviews operating performance and makes decisions to allocate resources at the consolidated company level. |
Revenue recognition | Revenue recognition The Company’s net sales reflect the sale of wine domestically in the U.S. to wholesale distributors, direct to trade accounts in California and DTC, as well as sales of wine to export distributors that sell internationally. The Company recognizes revenue when the performance obligation is fulfilled and control of the promised good is transferred to the customer in an amount that reflects the consideration for which the Company is expected to be entitled to receive in exchange for those products. Each contract includes a single performance obligation to transfer control of the product to the customer. Control is transferred when the product is either shipped or delivered, depending on the shipping terms, at which point the Company recognizes the transaction price for the product as revenue. The Company has elected to account for shipping and handling costs that are billed to customers as a fulfillment activity rather than as separate performance obligations. Shipping and handling costs are included in net sales in the Consolidated Statements of Operations. The Company has elected to record excise taxes as a reduction to net sales, which are recognized in the Consolidated Statements of Operations when the related product sale is recognized. When the Company receives payment from a customer prior to transferring the product under the terms of a contract, the Company records deferred revenue, which represents a contract liability. The Company’s deferred revenue is primarily comprised of cash collected from DTC members for purchases ahead of the wine shipment date. The Company does not recognize revenue until control of the wine is transferred and the performance obligation is met. See Note 3 for additional information regarding the contract liability. The transaction price includes reductions attributable to consideration given to customers through various incentive programs, including depletion-based incentives paid to distributors, volume discounts and pricing discounts on single transactions. This variable consideration is estimated and recognized as a reduction of the transaction price based on the expected amounts at the time of revenue recognition for the related sale. The determination of the reduction of the transaction price for variable consideration requires certain estimates and judgements that affect the amounts of revenue recognized and if a change to an estimate occurs in a future period, it is recorded as identified. The Company estimates this variable consideration using the expected value method by taking into account factors such as the nature of the incentive program, historical information, current consumer product trends and availability of actual results. The Company pays depletion-based incentives to its distributors for meeting specific depletion targets and reviews the allowances using a portfolio approach, grouping contracts with similar attributes. The allowances are reassessed at each reporting date to reflect changes in facts and circumstances that could impact allowance estimates. Volume pricing discounts are given for meeting volume levels on an individual contract basis. Each incentive is treated as a reduction to the transaction price at the time of revenue recognition. Due to the nature of the arrangements, certain estimates may be constrained if it is probable that a significant reversal of revenue will occur when the uncertainty is resolved. Consideration given to customers totaled $57.5 million, $66.3 million and $63.8 million for Fiscal 2023, 2022 and 2021, respectively, which is recognized as a reduction to net sales in the Consolidated Statements of Operations. There were no material constraints on estimates for the periods then ended. Products are sold for cash or on credit terms. Credit terms are established in accordance with local and industry practices, and typically require payment within 30-90 days of delivery or shipment, as dictated by the terms of each agreement. The Company does not account for significant financing components as its payment terms are less than one year, and the Company determines the terms at contract inception. The Company’s sales terms do not allow for the right of return except for matters related to manufacturing defects, which are not material. |
Cost of sales | Cost of salesCost of sales includes all bulk wine production costs, winemaking, bottling, packaging, warehousing and shipping and handling costs. Costs associated with the Company’s leased vineyards or owned estate properties include annual farming costs and amortization of vineyard development expenditures. Costs incurred for wines that age longer than one year prior to sale, including winemaking and processing costs, continue to be capitalized into inventory until the wine is bottled and available for sale. |
Advertising costs | Advertising costs Advertising costs, including direct and promotional marketing costs, are expensed as incurred and were $6.5 million, $6.6 million and $6.0 million for Fiscal 2023, 2022 and 2021, respectively. Advertising costs are recognized in selling, general and administrative expenses in the Consolidated Statements of Operations. |
Cash and cash equivalents | Cash and cash equivalentsCash and cash equivalents include cash on hand and on deposit. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Accounts receivable trade, net | Accounts receivable trade, net Accounts receivable trade, net consists of amounts owed to the Company for sales of the Company’s products on credit and are reported at net realizable value. Interest is accrued on past-due amounts when required by trade laws in a given jurisdiction. The Company maintains an allowance for credit losses for estimated losses resulting from the inability of its customers to make required payments. The Company determines this allowance based on historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions and reasonable forecasts. Accounts receivable are written off when determined to be uncollectible. Recoveries of accounts receivable previously written off are recognized in income when received. |
Inventories | Inventories Inventory primarily includes bulk and bottled wine and is carried at the lower of cost (calculated using the first-in-first-out method) or net realizable value. The cost basis for inventory includes the costs related to winemaking. Inventory also includes deferred crop costs, which consist of vineyard and related farming costs incurred each harvest season. Such costs begin aggregating when one harvest is completed and end at the completion of the next harvest, spanning a period that can range from November to October of the subsequent calendar year, but may vary due to the variable nature of agriculture, including weather and other events. Consistent with industry practices, the Company classifies inventory as a current asset, although a substantial portion of inventory may be aged for periods longer than one year prior to being sold due to the specific aging requirements for a given wine variety and vintage. On an ongoing basis, the Company evaluates the cost estimate and assumptions. As required, the Company records valuation adjustments to the carrying value of its inventories based on periodic reviews of slow-moving, obsolete and excess inventory to determine the need for reserves by comparing inventory carrying values with their net realizable values upon ultimate sale or disposal. Aging inventory, prior to bottling, is classified as work in process. The Company reduces the carrying value of inventories that are obsolete or for which market conditions indicate cost will not be recovered to estimated net realizable value. The Company’s estimates of net realizable value are based on analysis and assumptions including, but not limited to, historical experience, as well as Management’s judgement with respect to future demand and market conditions. Reductions to the carrying value of inventories are recorded in cost of sales in the Consolidated Statements of Operations, in the period Management determines the conditions first arise which indicate the cost may not be recoverable. |
Property and equipment, net | Property and equipment, net Property and equipment, net are reported at cost and are depreciated using the straight-line method using the following useful lives: Category of Property and Equipment Useful Lives (years) Buildings and improvements 4-42 Machinery and equipment 3-20 Vineyards and improvements 5-20 Barrels 1-2 Leasehold improvements are depreciated over the shorter of the useful life of the asset or the remaining term of the lease using the straight-line method. Expenditures for major repairs and maintenance which extend the useful lives of property and equipment are capitalized. All other maintenance expenditures, including planned major maintenance activities, are expensed as incurred. Gains or losses from property and equipment disposals are recognized in other income, net in the Consolidated Statements of Operations. |
Goodwill and intangible assets | Goodwill and intangible assets Goodwill arising from business combinations is determined as the excess of the fair value of consideration transferred, plus the fair value of any non-controlling interests in an acquiree, over the fair value of the identifiable net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets determined to have an indefinite useful life are not amortized but are tested for impairment at least annually or if events and circumstances indicate that the carrying value may not be recoverable. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. Management may elect not to perform the qualitative assessment and perform only a quantitative impairment test as of the measurement date. The Company selected June 30th of each fiscal year as the date to perform annual impairment testing. Indefinite-lived intangible assets include trade names and lane rights. The Company’s trade names provide value from the utility of the winery brands for the foreseeable future. Lane rights represent the Company’s rights to storage capacity at the Wine Service Cooperative for the life of the facility at guaranteed pricing. Customer relationships are amortized on a straight-line basis over their estimated useful lives and that amortization is recognized in selling, general and administrative expenses. The Company did not record any impairment charges related to goodwill or intangible assets for Fiscal 2023, 2022 or 2021. |
Long-lived asset impairment | Long-lived asset impairment Long-lived assets deemed to have definite lives, which principally consist of property and equipment, customer relationships, and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company performs impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The assessment of impairment is based on the estimated undiscounted future cash flows from operating activities compared with the carrying value of the asset. If the undiscounted future cash flows of an asset are less than the carrying value, a write-down will be recorded, |
Accounting for asset acquisitions | Accounting for asset acquisitions The Company follows the guidance in ASC Topic 805, Business Combinations , for determining whether an acquisition meets the definition of a business combination or asset acquisition. For acquisitions that are accounted for as acquisitions of assets, the Company records the acquired tangible and intangible assets and assumed liabilities, if any, based on each asset’s and liability’s relative fair value at the acquisition date to the total purchase price plus capitalized acquisition costs. The method for determining relative fair value varies depending on the type of asset. See Note 4 (Acquisition) for additional information. |
Debt issuance costs | Debt issuance costs The Company incurred debt issuance costs associated with the debt facilities, including the revolving line of credit, as further described in Note 10 (Debt). Term loan debt issuance costs are presented as a reduction from the corresponding liability, long-term debt, net of current maturities and debt issuance costs, in the Consolidated Statements of Financial Position. Revolving credit debt issuance costs are classified as an other asset in the Consolidated Statements of Financial Position, regardless of whether or not there are any outstanding borrowings under the revolving credit facility. Debt issuance costs are amortized to interest expense over the life of the loan to maturity using the straight-line method, which is not materially different from the effective interest method. |
Derivative instruments | Derivative instruments The Company recognizes derivative instruments as assets or liabilities on the Consolidated Statements of Financial Position and measures these instruments at fair value. The Company enters into derivative instruments to manage exposure to changes in interest rates and foreign currency fluctuations. The Company has certain derivative instruments subject to master netting agreements that provide for net-settlement of amounts payable or receivable related to multiple derivative transactions with the same counterparty. The Company presents all derivatives on a gross basis in the Consolidated Statements of Financial Position. Collateral is generally not required of the Company or of the counterparties to the master netting agreements, and no cash collateral was received or pledged under such agreements as of July 31, 2023 and 2022. Management has neither designated these instruments as cash-flow hedges nor elected hedge accounting. Changes in the consolidated fair value of these financial instruments are recognized in other income, net, in the Consolidated Statements of Operations, see Note 11 (Derivative instruments) and Note 12 (Fair value measurements) for additional information. The Company does not enter into derivative agreements for trading or speculative purposes. |
Fair value measurements | Fair value measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial instruments are measured in the financial statements in accordance with an established fair value hierarchy, which emphasizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. See Note 12 (Fair value measurements) for the valuation methodologies used for instruments measured at fair value. The Company applies a fair value hierarchy pursuant to ASC Topic 820, Fair Value Measurement , which consists of three levels of inputs used to measure fair value: Level 1 - Inputs to fair value are quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs to fair value are based on observable data other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data such as interest rates or yield curves for substantially the full term of the instrument; and Level 3 - Inputs to fair value are based on unobservable data for the instrument and are supported by little or no market activity. |
Income taxes | Income taxes Income taxes are recognized using enacted tax rates and are accounted for based on the asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the consolidated financial statement and tax bases of assets and liabilities at the applicable statutory tax rates. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company evaluates the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization include the Company’s forecast of future taxable income and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company’s effective tax rate on future earnings. Tax benefits from uncertain tax positions are recognized if it is more likely than not the tax positions will be sustained on examination by the applicable taxing authorities based on the technical merits of the position. The tax benefit is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company’s income tax provision includes the net impact of changes in the liability for unrecognized tax benefits. Interest related to income tax matters is recognized in interest expense and penalties are reflected in operating expenses. See Note 13 (Income taxes) for additional information. |
Leases | Leases Effective August 1, 2021, the Company adopted ASU No. 2016-02, Leases (Topic 842) . Service arrangements are evaluated to determine whether they contain a lease at inception. Leases are classified as either finance leases or operating leases based on criteria in Topic 842. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s secured incremental borrowing rate. The Company’s incremental borrowing rate for a lease is the rate of interest it would pay to borrow on a collateralized basis over a similar term to the lease in a similar economic environment. The Company applied incremental borrowing rates on a lease-by-lease basis. Right-of-use assets also include any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term operating leases that have a term of one year or less. The Company recognizes expenses for short-term operating leases on a straight-line basis over the lease term. Permitted under the guidance, financial statements for reporting periods beginning after August 1, 2021 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported and disclosed in accordance with historical accounting guidance. Certain of the Company’s operating leases have variable rental payments based on changes in a consumer price index or a production index that trigger rental increases. Additionally, certain of the Company’s operating leases include variable payments for items such as property taxes, insurance, maintenance and other operating expenses associated with leased assets. Certain grower purchase agreements under which the Company contracts for grapes to meet production needs contain variable payments based on tonnage yield, grape quality and grape prices. Variable lease payments are excluded from the calculations of the right-of-use assets and are recognized in the financial statements in the period in which the obligation is incurred and payment variability removed. Any variable payments related to grapes purchased for inventory production would generally be recognized during harvest as yield size and quality can be determined, and the Company accepts the grapes at a production facility. The cost of grapes purchased to produce wine is recognized in inventory until the wine is sold, and amounted to $71.0 million and $68.1 million in July 31, 2023 and 2022, respectively. The Company monitors for triggering events or conditions that require a reassessment of its leases. When the reassessment requires a re-measurement of the lease liability, a corresponding adjustment is made to the carrying amount of the right-of-use asset. Additionally, the Company reviews relevant impairment indicators of its right-of-use assets in accordance with ASC Topic 360, Impairment or Disposal of Long-Lived Assets |
Preferred stock | Preferred stockThe Company has 100,000,000 shares of $0.01 par value preferred stock authorized, none of which are issued and outstanding. |
Earnings per share | Earnings per share In accordance with ASC Topic 260, Earnings Per Share , earnings per share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period, excluding forfeitures. Diluted earnings per common share is computed using the weighted-average number of common shares outstanding and dilutive common shares, such as those issuable upon exercise of stock options and upon the vesting of restricted stock. See Note 19 (Earnings per share) for additional information. |
Variable interest entities | Variable interest entities The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with ASC Topic 810, Consolidations . These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements. Bootlegger’s Hill, which was acquired as part of the Kosta Browne acquisition, is a VIE and the Company is the primary beneficiary of that VIE. This conclusion considers the Company’s ownership percentage, which entitles the Company to receive most of the benefits and absorb most of the risk, as well as the ability to exercise significant influence over the operating and financial decisions of the VIE. The Company consolidates 100% of the operational results of Bootlegger’s Hill, while also reflecting on the Consolidated Statements of Operations and Financial Position the 23.8% non-controlling interest, which is held by outside investors at both Fiscal 2023 and 2022. At July 31, 2023 and 2022, the Company’s ownership percentage of the sole identified VIE was 76.2%. The total net assets of the VIE included on the Consolidated Statements of Financial Position were $2.3 million and $2.4 million at July 31, 2023 and 2022, respectively. The fair value measurement is based on significant inputs that are not observable in the market and thus represents a Level 3 measurement as defined in ASC Topic 820, Fair Value Measurement . The assets and liabilities, which may only be used to settle its own obligations, are primarily related to property, equipment and working capital accounts, which generally represent the amounts owed by or to the Company for grape sales under current contracts and farming costs. |
Significant customers and concentrations of credit risk | Significant customers and concentrations of credit risk The Company’s five largest customers, which are each wholesale customers, represented in total approximately 51%, 46% and 48% of net sales for Fiscal 2023, 2022 and 2021, respectively. There were no significant concentrations of revenue or credit risk related to DTC sales. Of the largest five customers, three wholesale customers each represented 10% or more of the Company’s net sales. The percentages for each of these significant customers for the periods presented are as follows: Fiscal years ended July 31, 2023 2022 2021 Customer A 18 % 16 % 15 % Customer B 16 % 14 % 16 % Customer C 10 % 9 % 10 % |
Equity-based compensation | Equity-based compensation Equity awards issued in exchange for services rendered by the Company’s employees, officers or directors are accounted for pursuant to ASC Topic 718, Compensation-Stock Compensation. The Company measures equity awards at fair value at their grant date. Compensation cost is recognized in selling, general and administrative expenses or is capitalized into inventory over the requisite service period (generally the vesting period), net of actual forfeitures as incurred. For awards with performance-based conditions impacting the timing or number of awards vesting, compensation cost is recognized when a performance condition is probable of being met. If a performance condition is not met, no compensation cost is recognized and any previously recognized compensation cost is reversed. The Company estimates the fair value of certain awards using a Black-Scholes option pricing model. The Company values shares purchased under the ESPP using a Black-Scholes option valuation model. See Note 16 (Equity-based compensation) for additional information. |
Accounting pronouncements and Recently adopted accounting pronouncements | Accounting pronouncements As an “emerging growth company” as established by the Jumpstart Our Business Startups Act of 2015, the Company was permitted to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. Prior to Fiscal 2022, the Company had elected to use the adoption dates available to private companies. As a result, our financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Recently adopted accounting pronouncements In March 2020, the Financial Accounting Standards Board issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), and further issued subsequent amendments to the initial guidance. The Company adopted the standard effective August 1, 2022, the first day of Fiscal 2023. The adoption of the standard did not have a material impact on the Consolidated Financial Statements or the related disclosures. As previously disclosed in the Annual Report on Form 10-K for the year ended July 31, 2022, the Company adopted ASU No. 2016-02, Leases (Topic 842) using the modified retrospective transition method as of the first day of Fiscal 2022. The impact of the adoption of ASC 842 on previously reported interim financial statements during the year ended July 31, 2022, included the recognition of right-of-use ("ROU") assets and lease liabilities for operating leases. The adoption of ASC 842 also resulted in reclassifying certain lines within operating activities in the Consolidated Statement of Cash Flows due to changes in operating assets and liabilities for the related accounts. These changes to previously disclosed amounts conform to the current period presentation. No other new accounting pronouncements issued or effective as of July 31, 2023 have had, or are expected to have, a material impact on the Consolidated Financial Statements or the related disclosures. |
Basis of presentation and sig_3
Basis of presentation and significant accounting policies (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net are reported at cost and are depreciated using the straight-line method using the following useful lives: Category of Property and Equipment Useful Lives (years) Buildings and improvements 4-42 Machinery and equipment 3-20 Vineyards and improvements 5-20 Barrels 1-2 Property and equipment, net was comprised of the following: July 31, (in thousands) 2023 2022 Land $ 141,888 $ 136,328 Buildings and improvements 92,960 70,813 Machinery and equipment 81,984 52,619 Vineyards and improvements 44,896 44,759 Barrels 34,944 30,067 Construction in progress 11,866 5,664 Property and equipment, gross 408,538 340,250 Less: accumulated depreciation and amortization (85,008) (70,591) Property and equipment, net $ 323,530 $ 269,659 |
Schedule of Concentration of Risk, by Risk Factor | Of the largest five customers, three wholesale customers each represented 10% or more of the Company’s net sales. The percentages for each of these significant customers for the periods presented are as follows: Fiscal years ended July 31, 2023 2022 2021 Customer A 18 % 16 % 15 % Customer B 16 % 14 % 16 % Customer C 10 % 9 % 10 % July 31, 2023 2022 Customer A 24 % 22 % Customer B 16 % 14 % Customer C 15 % 8 % |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents the percentages of consolidated net sales disaggregated by sales channels: Fiscal years ended July 31, 2023 2022 2021 Wholesale - Distributors 67.9 % 66.3 % 65.3 % Wholesale - California direct to trade (a) 17.1 17.9 16.9 DTC (b) 15.0 15.8 17.8 Net sales 100.0 % 100.0 % 100.0 % _________________________________________________________ (a) Includes bulk and grape sales of $0.7 million, $3.1 million and $0.8 million for Fiscal 2023, 2022 and 2021, respectively. (b) Includes shipping and handling revenue of $2.7 million, $2.3 million and $2.6 million for Fiscal 2023, 2022 and 2021, respectively. The following table presents the percentages of consolidated net sales disaggregated by brand: Fiscal years ended July 31, 2023 2022 2021 Duckhorn Vineyards & Decoy 79.2 % 78.5 % 76.3 % Other winery brands 20.8 21.5 23.7 Net sales 100.0 % 100.0 % 100.0 % Net sales disaggregated by geographic area comprised of the following: Fiscal years ended July 31, (in thousands) 2023 2022 2021 United States $ 379,255 $ 348,910 $ 318,389 Canada 7,327 7,769 5,355 Other international 16,414 15,831 12,869 Net sales $ 402,996 $ 372,510 $ 336,613 |
Schedule of Changes in Contract Liabilities | Changes in the contract liability balance during the periods presented comprised of the following: Fiscal years ended July 31, (in thousands) 2023 2022 2021 Outstanding at beginning of period $ 272 $ 3,102 $ 4,148 Increase (decrease) attributable to: Upfront payments 32,952 30,018 33,257 Revenue recognized (32,855) (32,179) (34,069) Refund (303) (669) (234) Outstanding at end of period $ 66 $ 272 $ 3,102 |
Acquisition (Tables)
Acquisition (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Allocation of the Purchase Consideration to the Assets Acquired and Liabilities Assumed | The allocation of the purchase consideration to the assets acquired and liabilities assumed, on the acquisition date, as part of the transaction is as follows: (in thousands) Amount Purchase consideration $ 54,261 Add: Third-party transaction costs 327 Total purchase consideration $ 54,588 Assets acquired and liabilities assumed Machinery and equipment $ 28,600 Buildings and improvements 20,823 Land 5,561 Vineyards and improvements 367 Liabilities (763) Total assets acquired and liabilities assumed $ 54,588 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories were comprised of the following: July 31, (in thousands) 2023 2022 Finished goods $ 145,355 $ 108,989 Work in progress 161,795 162,337 Raw materials 15,077 14,104 Inventories $ 322,227 $ 285,430 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net are reported at cost and are depreciated using the straight-line method using the following useful lives: Category of Property and Equipment Useful Lives (years) Buildings and improvements 4-42 Machinery and equipment 3-20 Vineyards and improvements 5-20 Barrels 1-2 Property and equipment, net was comprised of the following: July 31, (in thousands) 2023 2022 Land $ 141,888 $ 136,328 Buildings and improvements 92,960 70,813 Machinery and equipment 81,984 52,619 Vineyards and improvements 44,896 44,759 Barrels 34,944 30,067 Construction in progress 11,866 5,664 Property and equipment, gross 408,538 340,250 Less: accumulated depreciation and amortization (85,008) (70,591) Property and equipment, net $ 323,530 $ 269,659 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Leases [Abstract] | |
Schedule of Amounts in Consolidated Statement of Financial Position for Leases | The amounts and classification of the Company’s leases in the Consolidated Statements of Financial Position are as follows: July 31, (in thousands) Balance Sheet Classification 2023 2022 Assets: Operating lease right-of-use assets Operating lease right-of-use assets $ 20,376 $ 23,375 Liabilities: Operating lease liabilities Current operating lease liabilities 3,787 3,498 Operating lease liabilities Operating lease liabilities 16,534 19,732 Total lease liabilities $ 20,321 $ 23,230 |
Schedule of Lease Costs, Lease Term and Discount Rate and Supplemental Cash Flow Information | The components of lease cost reported in the Consolidated Financial Statements were as follows: July 31, (in thousands) 2023 2022 Operating lease costs: Lease cost $ 4,361 $ 4,239 Variable lease cost (a) 1,363 1,137 Short-term lease cost 66 96 Less: Sublease income (132) (20) Total lease costs $ 5,658 $ 5,452 _________________________________________________________ (a) Variable lease cost includes payments for property taxes, insurance, maintenance and grower purchase agreements. Variable lease cost is recorded in the period in which variability is removed. See Note 15 (Commitments and contingencies) for estimated variable cost of grower purchase agreements to be recognized in fiscal 2024 related to the 2023 harvest, subject to grape yield sizes and the Company accepting grapes under its quality control provisions. July 31, 2023 2022 Operating leases: Weighted average remaining lease term (in years) 7.08 7.75 Weighted average discount rate 3.65 % 3.53 % Supplemental and other information related to leases comprised of the following: July 31, (in thousands) 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 4,273 $ 3,534 Right-of-use assets obtained in exchange for new lease liabilities: Operating leases $ 636 $ 232 |
Schedule of Future Minimum Payments | A summary of the remaining lease payments of operating lease liabilities (leases with terms in excess of one year) for the next five fiscal years and thereafter as of July 31, 2023 were as follows: (in thousands) Operating lease liabilities 2024 $ 4,386 2025 4,255 2026 2,909 2027 2,822 2028 2,428 Thereafter 6,278 Total lease payments 23,078 Less: interest (2,757) Total lease liabilities $ 20,321 |
Goodwill and other intangible_2
Goodwill and other intangible assets (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Intangible assets were comprised of the following: July 31, 2023 (in thousands) Gross carrying amount Accumulated amortization Net Definite-lived intangible assets: Customer relationships $ 92,720 $ (49,393) $ 43,327 Total definite-lived intangible assets 92,720 (49,393) 43,327 Indefinite-lived intangible assets: Trade names 139,600 — 139,600 Lane rights 1,300 — 1,300 Total indefinite-lived intangible assets 140,900 — 140,900 Total other intangible assets $ 233,620 $ (49,393) $ 184,227 July 31, 2022 (in thousands) Gross carrying amount Accumulated amortization Net Definite-lived intangible assets: Customer relationships $ 92,720 $ (41,834) $ 50,886 Total definite-lived intangible assets 92,720 (41,834) 50,886 Indefinite-lived intangible assets: Trade names 139,600 — 139,600 Lane rights 1,300 — 1,300 Total indefinite-lived intangible assets 140,900 — 140,900 Total other intangible assets $ 233,620 $ (41,834) $ 191,786 |
Schedule of Indefinite-Lived Intangible Assets | Intangible assets were comprised of the following: July 31, 2023 (in thousands) Gross carrying amount Accumulated amortization Net Definite-lived intangible assets: Customer relationships $ 92,720 $ (49,393) $ 43,327 Total definite-lived intangible assets 92,720 (49,393) 43,327 Indefinite-lived intangible assets: Trade names 139,600 — 139,600 Lane rights 1,300 — 1,300 Total indefinite-lived intangible assets 140,900 — 140,900 Total other intangible assets $ 233,620 $ (49,393) $ 184,227 July 31, 2022 (in thousands) Gross carrying amount Accumulated amortization Net Definite-lived intangible assets: Customer relationships $ 92,720 $ (41,834) $ 50,886 Total definite-lived intangible assets 92,720 (41,834) 50,886 Indefinite-lived intangible assets: Trade names 139,600 — 139,600 Lane rights 1,300 — 1,300 Total indefinite-lived intangible assets 140,900 — 140,900 Total other intangible assets $ 233,620 $ (41,834) $ 191,786 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization expense for each of the following five fiscal years and thereafter is as follows: (in thousands) Amount 2024 $ 7,560 2025 7,560 2026 7,560 2027 7,560 2028 7,560 Thereafter 5,527 Total $ 43,327 |
Accrued expenses (Tables)
Accrued expenses (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses were comprised of the following: July 31, (in thousands) 2023 2022 Trade spend (a) $ 12,721 $ 15,319 Income taxes payable (b) 11,019 — Deferred compensation liability (c) 3,261 2,142 Barrel purchase 2,589 988 Accrued professional fees 599 3,191 Accrued invoices and other accrued expenses 8,057 7,835 Accrued expenses $ 38,246 $ 29,475 _________________________________________________________ (a) Trade spend refers to estimated amounts the Company owes to distributors for depletion-based incentives. See further discussion in Note 2 (Basis of presentation and significant accounting policies). (b) Effective March 2023, the IRS postponed certain tax filings and payment deadlines, until October 2023, in areas designated with eligible Federal Emergency Management Agency declarations. During Fiscal 2023, the Company deferred federal and state tax payments and expects to pay the deferred amount in the first quarter of fiscal 2024. (c) See discussion in Note 14 (Employee benefit plans) regarding the Company’s deferred compensation plan and related cash surrender value life insurance policies the Company intends to use in settling the plan liability. The cash surrender value of the life insurance policies were $2.7 million and $1.8 million at July 31, 2023 and 2022, respectively. |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt, net was comprised of the following: July 31, (in thousands) 2023 2022 Revolving line of credit $ 13,000 $ 110,000 Term loan, first lien 220,832 110,117 Capital expenditure loan (a) — 5,049 Total debt 233,832 225,166 Less: Current maturities of long-term debt (9,721) (9,810) Total long-term debt 224,111 215,356 Debt issuance costs (b) (492) (1,608) Total long-term debt, net of current maturities and debt issuance costs $ 223,619 $ 213,748 _________________________________________________________ (a) The capital expenditure loan under the Original Credit Agreement was replaced as part of the refinancing and execution of the New Credit Agreement. As of July 31, 2023, the Company has not drawn on the delayed draw term loan under the New Credit Agreement. (b) At July 31, 2023, debt issuance costs are the costs associated with the term loan facility. Debt issuance costs of $2.8 million associated with the revolving credit and delayed draw term loan facilities are recorded in other assets on the Consolidated Statements of Financial Position. Under the Original Credit Facility, the revolving credit facility debt issuance costs were treated consistently with those of the term debt facilities as the Company did not intend to repay the revolving credit facility in full prior to its maturity. At July 31, 2022, $1.3 million of the debt issuance costs are associated with the revolving credit facility. |
Schedule of Maturities of Long-term Debt | As of July 31, 2023, the required revolving line of credit and long-term debt repayments for each of the following five fiscal years and thereafter are as follows: (in thousands) Amount 2024 $ 9,721 2025 9,721 2026 9,721 2027 9,721 2028 194,947 Thereafter — Total $ 233,832 |
Derivative instruments (Tables)
Derivative instruments (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | As of July 31, 2023, the Company held the following interest rate swap agreement, which fixed the interest rate on the applicable notional amount of outstanding variable rate debt: Notional amount (in thousands) Interest rate Effective date Expiration date $100,000 3.735% January 4, 2023 November 4, 2027 |
Schedule of Derivative Instruments | The total notional amounts of the Company’s derivative instruments outstanding are as follows: July 31, (in thousands) 2023 2022 Interest rate swap contracts $ 100,000 $ 100,000 Foreign currency forward contracts 5,610 2,793 Total derivative instruments not designated as hedging instruments $ 105,610 $ 102,793 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The estimated fair value and classification of derivative instruments on the Consolidated Statements of Financial Position at July 31, 2023 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contracts Other assets $ 1,117 Other liabilities $ — Foreign currency forward contracts Prepaid expenses and other current assets 69 Other current liabilities — Total derivatives not designated as hedging instruments $ 1,186 $ — The estimated fair value and classification of derivative instruments on the Consolidated Statements of Financial Position at July 31, 2022 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contracts Prepaid expenses and other current assets $ 1,443 Other liabilities $ — Foreign currency forward contracts Prepaid expenses and other current assets — Other current liabilities 223 Total derivatives not designated as hedging instruments $ 1,443 $ 223 |
Schedule of Derivative Instruments, Gain (Loss) | The amounts and classification of the gains and losses in the Consolidated Statements of Operations related to derivative instruments not designated as hedging instruments are as follows: Fiscal years ended July 31, (in thousands) Classification 2023 2022 2021 Interest rate swap contracts Other income, net $ 326 $ (1,923) $ (5,961) Foreign currency forward contracts Other income, net (292) 228 113 Total loss (gain) $ 34 $ (1,695) $ (5,848) |
Fair value measurements (Tables
Fair value measurements (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at July 31, 2023, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Interest rate swap contracts $ — $ 1,117 $ — Foreign currency forward contracts $ — $ 69 $ — Deferred compensation plan asset $ — $ 2,670 $ — Liabilities: Deferred compensation liability $ — $ 3,261 $ — The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at July 31, 2022, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Interest rate swap contracts $ — $ 1,443 $ — Deferred compensation plan asset $ — $ 1,753 $ — Liabilities: Foreign currency forward contracts $ — $ 223 $ — Deferred compensation liability $ — $ 2,142 $ — |
Income taxes (Tables)
Income taxes (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The Company’s income tax provision represents U.S. federal and state income taxes. The provision for income taxes was as follows: Fiscal years ended July 31, (in thousands) 2023 2022 2021 Current: Federal $ 19,184 $ 13,844 $ 14,431 State 6,266 4,864 4,549 Total current income taxes 25,450 18,708 18,980 Deferred: Federal (262) 2,080 2,809 State (5) 1,736 (781) Total deferred income taxes (267) 3,816 2,028 Income tax expense $ 25,183 $ 22,524 $ 21,008 |
Schedule of Deferred Tax Assets and Liabilities | The significant components of deferred tax assets (liabilities) were comprised of the following: July 31, (in thousands) 2023 2022 Deferred tax assets: Inventory $ 2,385 $ — Operating lease liabilities 5,201 5,935 Accrued liabilities 1,579 1,118 State taxes 1,411 1,136 Equity-based compensation 1,041 550 Other 158 523 Total deferred tax assets 11,775 9,262 Deferred tax liabilities: Inventory — (1,116) Property and equipment (48,448) (41,658) Intangible assets (45,607) (46,018) Operating lease asset (5,216) (5,972) Interest rate swap (286) (368) Prepaid expenses (2,434) (2,156) Casualty gain (Note 18) — (2,457) Total deferred tax liabilities (101,991) (99,745) Net deferred tax liabilities $ (90,216) $ (90,483) |
Schedule of Effective Income Tax Rate Reconciliation | The following table reconciles the Company’s actual income tax provision to the expected statutory tax rate: Fiscal years ended July 31, 2023 2022 2021 Federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes 5.3 6.4 3.9 Equity-based compensation — 0.1 2.6 Other 0.4 (0.3) (0.2) Effective tax rate 26.7 % 27.2 % 27.3 % |
Schedule of Unrecognized Tax Benefits | The aggregate change in the balance of gross unrecognized tax benefits is as follows: July 31, (in millions) 2023 2022 Beginning balance $ 0.4 $ — Gross increase related to prior year tax positions 0.1 0.4 Ending balance $ 0.5 $ 0.4 |
Equity-based compensation (Tabl
Equity-based compensation (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Nonvested Restricted Stock Shares Activity | As discussed above, the unvested Class M Units were exchanged for restricted shares of the Company in Fiscal 2021. The following table represents restricted shares activity: Restricted share awards Weighted-average grant-date fair value (per share) Unvested as of July 31, 2022 266,158 $ 14.23 Granted — — Vested (266,158) 14.23 Forfeited — — Unvested as of July 31, 2023 — $ — |
Schedule of Share-based Payment Arrangement, Option, Activity | The following table represents the stock option activity: Number of options outstanding Weighted-average exercise price (per share) Weighted-average remaining contractual life (in years) Aggregate intrinsic value (in thousands) Balance as of July 31, 2022 1,555,610 $ 17.15 8.7 $ 3,847 Options granted 1,092,684 14.41 — — Options exercised (2,586) 15.00 — — Forfeited (284,002) 16.23 — — Expired (40,473) 17.25 — — Balance as of July 31, 2023 2,321,233 $ 15.98 8.0 $ — Exercisable as of July 31, 2023 713,802 $ 17.08 6.5 $ — |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following assumptions were applied in the Black-Scholes option pricing model to estimate the grant-date fair value of the stock options granted: Fiscal years ended July 31, 2023 2022 2021 Expected term (in years) (a) 6.23 6.25 6.25 Expected dividend yield (b) — % — % — % Risk-free interest rate (c) 3.77% - 3.96% 2.54 % 1.06% - 1.09% Expected volatility (d) 33.9 % 47.0 % 25.0 % _________________________________________________________ (a) Calculated as the midpoint between the weighted-average time to vest and the time to expiration. (b) The Company has not historically paid and does not expect to pay dividends in the foreseeable future. (c) The risk-free rate was estimated from the U.S. Treasury Constant Maturity Rates for a period consistent with the expected term in effect at the grant date. (d) The expected volatility was estimated based on analysis of the historical and implied volatility of a group of guideline public companies deemed to be comparable public peers within the Company’s industry. |
Schedule of Share-based Payment Arrangement, Restricted Stock Unit, Activity | The following table represents the RSU grant activity under the 2021 Plan: Number of units Weighted-average grant-date fair value (per share) Unvested as of July 31, 2022 414,609 $ 17.32 Granted 391,220 14.54 Vested (148,296) 17.50 Forfeited (94,672) 16.23 Unvested as of July 31, 2023 562,861 $ 15.52 |
Earnings per share (Tables)
Earnings per share (Tables) | 12 Months Ended |
Jul. 31, 2023 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Earnings Per Share | The following is a reconciliation of the Company’s basic and diluted earnings per share calculation: Fiscal years ended July 31, (in thousands, except share and per share amounts) 2023 2022 2021 Numerator: Net income attributable to The Duckhorn Portfolio, Inc. $ 69,298 $ 60,190 $ 55,976 Denominator: Weighted average number of shares outstanding for basic per share calculation 115,233,324 115,096,152 106,681,496 Effect of dilutive potential shares (a) : Stock options 1,687 112,471 202,798 Restricted stock units 172,613 154,955 50,559 Adjusted weighted average shares outstanding for diluted per share calculation 115,407,624 115,363,578 106,934,853 Earnings per share attributable to The Duckhorn Portfolio, Inc. Basic $ 0.60 $ 0.52 $ 0.52 Diluted $ 0.60 $ 0.52 $ 0.52 _________________________________________________________ (a) Calculated using the treasury stock method. |
Description of business (Detail
Description of business (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Mar. 17, 2021 | Apr. 30, 2023 | Nov. 30, 2021 | Mar. 31, 2021 | Jul. 31, 2022 | Oct. 31, 2021 | Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Offering costs | $ 0 | $ 270 | $ 6,658 | ||||||
2016 Equity Incentive Plan | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Non-option equity instruments, outstanding, number (shares) | 42,579,137 | ||||||||
IPO | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Sale of stock, number of shares issued in transaction | 13,300,000 | ||||||||
Sale of stock, price per share (in dollars per share) | $ 15 | ||||||||
Sale of stock, consideration received on transaction | $ 180,800 | ||||||||
Underwriting discounts and commissions | 12,500 | ||||||||
Deferred offering costs | $ 6,700 | ||||||||
Secondary Offering | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Sale of stock, number of shares issued in transaction | 6,000,000 | ||||||||
Sale of stock, price per share (in dollars per share) | $ 15.35 | ||||||||
Offering costs | $ 400 | ||||||||
First Secondary Offering | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Sale of stock, number of shares issued in transaction | 626,467 | 12,000,000 | |||||||
Sale of stock, price per share (in dollars per share) | $ 20.50 | ||||||||
Offering costs | $ 600 | $ 400 | |||||||
Second Secondary Offering | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Sale of stock, number of shares issued in transaction | 5,000,000 | ||||||||
Sale of stock, price per share (in dollars per share) | $ 19.25 | $ 19.25 | |||||||
Offering costs | $ 200 |
Basis of presentation and sig_4
Basis of presentation and significant accounting policies - Narrative (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
Mar. 09, 2021 | Jul. 31, 2023 USD ($) segment $ / shares shares | Jul. 31, 2022 USD ($) | Jul. 31, 2021 USD ($) | |
Accounting Policies [Line Items] | ||||
Number of operating segments | segment | 1 | |||
Number of reportable segments | segment | 1 | |||
Contract with customer, liability, consideration given to customers | $ 57,500 | $ 66,300 | $ 63,800 | |
Advertising expense | 6,500 | 6,600 | 6,000 | |
Charges related to credit loss on accounts receivable | 0 | 400 | 500 | |
Recoveries and reductions in allowance for credit loss | 0 | 400 | 0 | |
Accounts receivable, allowance for doubtful accounts | 500 | 400 | ||
Goodwill impairment loss | 0 | 0 | $ 0 | |
Inventory cost | $ 71,000 | 68,100 | ||
Stock split, conversion ratio | 1,017,134.6 | |||
Preferred stock, shares authorized (shares) | shares | 100,000,000 | |||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.01 | |||
Preferred stock, shares issued (shares) | shares | 0 | |||
Preferred stock, shares outstanding (shares) | shares | 0 | |||
Assets | $ 1,347,682 | $ 1,251,513 | ||
Revenue Benchmark | Customer Concentration Risk | Five Largest Customers | ||||
Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 51% | 46% | 48% | |
Variable Interest Entity, Primary Beneficiary | ||||
Accounting Policies [Line Items] | ||||
Variable interest entity, ownership percentage | 76.20% | 76.20% | ||
Assets | $ 2,300 | $ 2,400 | ||
Outside Investors | Bootlegger's | ||||
Accounting Policies [Line Items] | ||||
Noncontrolling interest, ownership percentage by noncontrolling owners | 23.80% | 23.80% | ||
Trade names | ||||
Accounting Policies [Line Items] | ||||
Indefinite lived assets, impairment loss | $ 0 | $ 0 | $ 0 |
Basis of presentation and sig_5
Basis of presentation and significant accounting policies- Schedule of Property and Equipment Straight-line Method (Details) | Jul. 31, 2023 |
Minimum | Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 4 years |
Minimum | Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 3 years |
Minimum | Vineyards and improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 5 years |
Minimum | Barrels | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 1 year |
Maximum | Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 42 years |
Maximum | Machinery and equipment | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 20 years |
Maximum | Vineyards and improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 20 years |
Maximum | Barrels | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful lives | 2 years |
Basis of presentation and sig_6
Basis of presentation and significant accounting policies - Schedule of Concentration Risk by Customer (Details) - Customer Concentration Risk | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Customer A | Revenue Benchmark | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 18% | 16% | 15% |
Customer A | Accounts Receivable Trade Benchmark | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 24% | 22% | |
Customer B | Revenue Benchmark | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 16% | 14% | 16% |
Customer B | Accounts Receivable Trade Benchmark | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 16% | 14% | |
Customer C | Revenue Benchmark | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 10% | 9% | 10% |
Customer C | Accounts Receivable Trade Benchmark | |||
Accounting Policies [Line Items] | |||
Concentration risk, percentage | 15% | 8% |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 USD ($) | Jul. 31, 2022 USD ($) | Jul. 31, 2021 USD ($) | |
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer, percent | 1 | 1 | 1 |
Revenue | $ 402,996 | $ 372,510 | $ 336,613 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 379,255 | 348,910 | 318,389 |
Canada | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 7,327 | 7,769 | 5,355 |
Other international | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 16,414 | 15,831 | 12,869 |
Bulk and Grape Sales | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 700 | 3,100 | 800 |
Shipping and Handling | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 2,700 | $ 2,300 | $ 2,600 |
Duckhorn Vineyards & Decoy | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer, percent | 0.792 | 0.785 | 0.763 |
Other winery brands | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer, percent | 0.208 | 0.215 | 0.237 |
Wholesale - Distributors | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer, percent | 0.679 | 0.663 | 0.653 |
Wholesale - California direct to trade | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer, percent | 0.171 | 0.179 | 0.169 |
DTC | |||
Disaggregation of Revenue [Line Items] | |||
Revenue from contract with customer, percent | 0.150 | 0.158 | 0.178 |
Revenue - Schedule of Change in
Revenue - Schedule of Change in Contract Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Change in Contract with Customer, Liability [Abstract] | |||
Outstanding at beginning of period | $ 272 | $ 3,102 | $ 4,148 |
Upfront payments | 32,952 | 30,018 | 33,257 |
Revenue recognized | (32,855) | (32,179) | (34,069) |
Refund | (303) | (669) | (234) |
Outstanding at end of period | $ 66 | $ 272 | $ 3,102 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) $ in Millions | 12 Months Ended |
Jul. 31, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Revenue recognized included in opening contract liability balance | $ 0.3 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) $ in Thousands | 12 Months Ended | |
Jun. 22, 2023 USD ($) a | Jul. 31, 2022 USD ($) | |
Asset Acquisition [Line Items] | ||
Purchase consideration | $ 32,700 | |
Geyserville Winery | ||
Asset Acquisition [Line Items] | ||
Area of property acquired (in acres) | a | 7 | |
Purchase consideration | $ 54,588 | |
Long term line of credit | 15,000 | |
Third-party transaction costs | $ 327 |
Acquisition - Schedule of Alloc
Acquisition - Schedule of Allocation of the Purchase Consideration to the Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 22, 2023 | Jul. 31, 2022 | |
Assets Acquired and Liabilities Assumed [Abstract] | ||
Total purchase consideration | $ 32,700 | |
Geyserville Winery | ||
Assets Acquired and Liabilities Assumed [Abstract] | ||
Purchase consideration | $ 54,261 | |
Add: Third-party transaction costs | 327 | |
Total purchase consideration | 54,588 | |
Liabilities | (763) | |
Total assets acquired and liabilities assumed | 54,588 | |
Geyserville Winery | Machinery and equipment | ||
Assets Acquired and Liabilities Assumed [Abstract] | ||
Assets acquired | 28,600 | |
Geyserville Winery | Buildings and improvements | ||
Assets Acquired and Liabilities Assumed [Abstract] | ||
Assets acquired | 20,823 | |
Geyserville Winery | Land | ||
Assets Acquired and Liabilities Assumed [Abstract] | ||
Assets acquired | 5,561 | |
Geyserville Winery | Vineyards and improvements | ||
Assets Acquired and Liabilities Assumed [Abstract] | ||
Assets acquired | $ 367 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 145,355 | $ 108,989 |
Work in progress | 161,795 | 162,337 |
Raw materials | 15,077 | 14,104 |
Inventories | $ 322,227 | $ 285,430 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
Inventory [Line Items] | ||
Excess and obsolete inventory reserve | $ 0.9 | $ 5.1 |
Capitalized depreciation costs | 18.3 | 14.2 |
Capitalized leases costs used in production of inventory | 4.6 | 4.2 |
Equity based compensation, capitalized | $ 1.2 | 0.8 |
Seltzer Products | ||
Inventory [Line Items] | ||
Excess inventory reserved | $ 4.3 |
Property and equipment, net - S
Property and equipment, net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 408,538 | $ 340,250 |
Less: accumulated depreciation and amortization | (85,008) | (70,591) |
Property and equipment, net | 323,530 | 269,659 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 141,888 | 136,328 |
Buildings and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 92,960 | 70,813 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 81,984 | 52,619 |
Vineyards and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 44,896 | 44,759 |
Barrels | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 34,944 | 30,067 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 11,866 | $ 5,664 |
Property and equipment, net - N
Property and equipment, net - Narrative (Details) $ in Thousands | 12 Months Ended | |||
Jun. 22, 2023 USD ($) a | Jul. 31, 2023 USD ($) | Jul. 31, 2022 USD ($) a vineyard | Jul. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 1,900 | $ 1,700 | $ 1,200 | |
Purchase consideration | $ 32,700 | |||
Number of vineyards purchased | vineyard | 4 | |||
Area of vineyards purchased (in acres) | a | 340 | |||
Geyserville Winery | ||||
Property, Plant and Equipment [Line Items] | ||||
Area of property acquired (in acres) | a | 7 | |||
Purchase consideration | $ 54,588 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2021 | |
Lessee, Lease, Description [Line Items] | ||
Lease income | $ 0.4 | |
Future lease payments in fiscal 2024 | $ 1.9 | |
Rental expense, excluding related variable costs | $ 4 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease contract (in years) | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Term of lease contract (in years) | 30 years |
Leases - Amounts in Consolidate
Leases - Amounts in Consolidated Statements of Financial Position for Leases (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Assets: | ||
Operating lease right-of-use assets | $ 20,376 | $ 23,375 |
Liabilities: | ||
Current operating lease liabilities | 3,787 | 3,498 |
Operating lease liabilities | 16,534 | 19,732 |
Total lease liabilities | $ 20,321 | $ 23,230 |
Leases - Lease Costs, Lease Ter
Leases - Lease Costs, Lease Term and Discount Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
Operating lease costs: | ||
Lease cost | $ 4,361 | $ 4,239 |
Variable lease cost | 1,363 | 1,137 |
Short-term lease cost | 66 | 96 |
Less: Sublease income | (132) | (20) |
Total lease costs | $ 5,658 | $ 5,452 |
Weighted average remaining lease term (in years) | 7 years 29 days | 7 years 9 months |
Weighted average discount rate | 3.65% | 3.53% |
Leases - Maturity of Operating
Leases - Maturity of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Leases [Abstract] | ||
2024 | $ 4,386 | |
2025 | 4,255 | |
2026 | 2,909 | |
2027 | 2,822 | |
2028 | 2,428 | |
Thereafter | 6,278 | |
Total lease payments | 23,078 | |
Less: interest | (2,757) | |
Total lease liabilities | $ 20,321 | $ 23,230 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 4,273 | $ 3,534 |
Right-of-use assets obtained in exchange for new lease liabilities: | ||
Operating leases | $ 636 | $ 232 |
Goodwill and other intangible_3
Goodwill and other intangible assets - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Indefinite-lived Intangible Assets [Line Items] | |||
Goodwill | $ 425,209 | $ 425,209 | |
Goodwill impairment loss | 0 | 0 | $ 0 |
Amortization of intangible assets | 7,600 | 7,600 | 7,700 |
Trade names | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Indefinite lived assets, impairment loss | $ 0 | $ 0 | $ 0 |
Goodwill and other intangible_4
Goodwill and other intangible assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | $ 92,720 | $ 92,720 |
Accumulated amortization | (49,393) | (41,834) |
Net | 43,327 | 50,886 |
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 140,900 | 140,900 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Gross carrying amount | 233,620 | 233,620 |
Accumulated amortization | (49,393) | (41,834) |
Net | 184,227 | 191,786 |
Trade names | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 139,600 | 139,600 |
Lane rights | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 1,300 | 1,300 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross carrying amount | 92,720 | 92,720 |
Accumulated amortization | (49,393) | (41,834) |
Net | 43,327 | 50,886 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Accumulated amortization | $ (49,393) | $ (41,834) |
Goodwill and other intangible_5
Goodwill and other intangible assets - Schedule of Future Amortization Expense (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2024 | $ 7,560 | |
2025 | 7,560 | |
2026 | 7,560 | |
2027 | 7,560 | |
2028 | 7,560 | |
Thereafter | 5,527 | |
Net | $ 43,327 | $ 50,886 |
Accrued expenses - Schedule of
Accrued expenses - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Payables and Accruals [Abstract] | ||
Trade spend | $ 12,721 | $ 15,319 |
Income taxes payable | 11,019 | 0 |
Deferred compensation liability | 3,261 | 2,142 |
Barrel purchase | 2,589 | 988 |
Accrued professional fees | 599 | 3,191 |
Accrued invoices and other accrued expenses | 8,057 | 7,835 |
Accrued expenses | $ 38,246 | $ 29,475 |
Accrued expenses - Narrative (D
Accrued expenses - Narrative (Details) - USD ($) $ in Millions | Jul. 31, 2023 | Jul. 31, 2022 |
Payables and Accruals [Abstract] | ||
Cash surrender value of life insurance | $ 2.7 | $ 1.8 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | $ 233,832 | $ 225,166 |
Less: Current maturities of long-term debt | (9,721) | (9,810) |
Total long-term debt | 224,111 | 215,356 |
Debt issuance costs | (492) | (1,608) |
Total long-term debt, net of current maturities and debt issuance costs | 223,619 | 213,748 |
Revolving Credit Facility and Delayed Draw Term Loan | ||
Line of Credit Facility [Line Items] | ||
Debt issuance costs, gross | 2,800 | |
Line of Credit | Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | 13,000 | 110,000 |
Debt issuance costs, gross | 1,300 | |
Secured Debt | Term Loan Facility | ||
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | 220,832 | 110,117 |
Capital Expenditure Loan | ||
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | $ 0 | $ 5,049 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 12 Months Ended | |||
Nov. 04, 2022 | Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 492,000 | $ 1,608,000 | ||
Amortization of debt issuance costs | $ 975,000 | $ 1,608,000 | $ 1,623,000 | |
Greater Than 33% And Less Than Or Equal To 66% Of Average Availability | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, loan margin rate | 1.25% | |||
First Lien Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 675,800,000 | |||
First Lien Senior Secured Credit Facilities | Maximum | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, covenant compliance, debt to capitalization ratio | 0.55 | |||
First Lien Senior Secured Credit Facilities | Minimum | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, covenant compliance, debt to capitalization ratio | 1.15 | |||
First Lien Senior Secured Credit Facilities | SOFR | Less Than Or Equal To 33% Of Average Availability | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, loan margin rate | 1.50% | |||
First Lien Senior Secured Credit Facilities | SOFR | Greater Than 66% Of Average Availability | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, loan margin rate | 1% | |||
Secured Debt | Term Loan Tranche One Facility | ||||
Debt Instrument [Line Items] | ||||
Secured debt | $ 135,000,000 | |||
Secured Debt | Term Loan Tranche Two Facility | ||||
Debt Instrument [Line Items] | ||||
Secured debt | 25,000,000 | |||
Secured Debt | Capital Expenditure Loan | ||||
Debt Instrument [Line Items] | ||||
Secured debt | 25,000,000 | |||
Secured Debt | First Lien Loan Agreement | ||||
Debt Instrument [Line Items] | ||||
Weighted average interest rate | 6.30% | |||
Senior Secured Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, additional incremental facility | 400,000,000 | |||
Debt issuance costs, gross | $ 3,300,000 | |||
Debt issuance costs | 2,400,000 | |||
Debt related commitment fees and debt issuance costs | 900,000 | |||
Revolving Credit Facility | First Lien Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 425,000,000 | |||
Revolving Credit Facility | First Lien Loan Agreement | ||||
Debt Instrument [Line Items] | ||||
Remaining borrowing capacity | 412,000,000 | |||
Additional borrowing capacity | $ 30,000,000 | |||
Weighted average interest rate | 6.30% | |||
Term Loan Facility | First Lien Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | 225,800,000 | |||
Delayed Draw Term Loan Facility | First Lien Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 25,000,000 | |||
Term Loan And Delayed Draw Term Loan Facilities | First Lien Senior Secured Credit Facilities | SOFR | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, loan margin rate | 1.625% | |||
Term Loan And Delayed Draw Term Loan Facilities | First Lien Senior Secured Credit Facilities | SOFR | Variable Rate Component One | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (percent) | 1,000% | |||
Term Loan And Delayed Draw Term Loan Facilities | First Lien Senior Secured Credit Facilities | SOFR | Variable Rate Component Two | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate (percent) | 1,500% |
Debt - Schedule of Long Term _2
Debt - Schedule of Long Term Debt Repayment (Details) - Secured Debt and Lines of Credit $ in Thousands | Jul. 31, 2023 USD ($) |
Debt Instrument [Line Items] | |
2024 | $ 9,721 |
2025 | 9,721 |
2026 | 9,721 |
2027 | 9,721 |
2028 | 194,947 |
Thereafter | 0 |
Total | $ 233,832 |
Derivative instruments - Narrat
Derivative instruments - Narrative (Details) - USD ($) | Jul. 31, 2023 | Jul. 31, 2022 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Cash collateral received | $ 0 | $ 0 |
Cash collateral pledged | $ 0 | $ 0 |
Derivative instruments - Intere
Derivative instruments - Interest Rate Swaps (Details) - Interest Rate Swap Expiring November 2027 $ in Thousands | Jul. 31, 2023 USD ($) |
Derivative [Line Items] | |
Notional amount | $ 100,000 |
Interest rate | 3.735% |
Derivative instruments - Total
Derivative instruments - Total Notional Amount (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Derivative [Line Items] | ||
Notional amount | $ 105,610 | $ 102,793 |
Interest rate swap contracts | ||
Derivative [Line Items] | ||
Notional amount | 100,000 | 100,000 |
Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Notional amount | $ 5,610 | $ 2,793 |
Derivative instruments - Estima
Derivative instruments - Estimated Fair Value and Classification of Derivative Instruments on the Condensed Consolidated Statements of Financial Position (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 1,186 | $ 1,443 |
Derivative liability | 0 | 223 |
Interest rate swap contracts | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 1,117 | |
Interest rate swap contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 1,443 | |
Interest rate swap contracts | Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 0 | 0 |
Foreign currency forward contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 69 | 0 |
Foreign currency forward contracts | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 0 | $ 223 |
Derivative instruments - Amount
Derivative instruments - Amounts and Classification of the Gains and Losses in the Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Derivative [Line Items] | |||
Total loss (gain) | $ 34 | $ (1,695) | $ (5,848) |
Not Designated as Hedging Instrument | |||
Derivative [Line Items] | |||
Total loss (gain) | 34 | (1,695) | (5,848) |
Not Designated as Hedging Instrument | Interest rate swap contracts | |||
Derivative [Line Items] | |||
Total loss (gain) | 326 | (1,923) | (5,961) |
Not Designated as Hedging Instrument | Foreign currency forward contracts | |||
Derivative [Line Items] | |||
Total loss (gain) | $ (292) | $ 228 | $ 113 |
Fair value measurements - Asset
Fair value measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Quoted prices in active markets (Level 1) | ||
Assets: | ||
Deferred compensation plan asset | $ 0 | $ 0 |
Liabilities: | ||
Deferred compensation liability | 0 | 0 |
Quoted prices in active markets (Level 1) | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 0 | 0 |
Quoted prices in active markets (Level 1) | Foreign currency forward contracts | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Derivative liability | 0 | |
Significant other observable inputs (Level 2) | ||
Assets: | ||
Deferred compensation plan asset | 2,670 | 1,753 |
Liabilities: | ||
Deferred compensation liability | 3,261 | 2,142 |
Significant other observable inputs (Level 2) | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 1,117 | 1,443 |
Significant other observable inputs (Level 2) | Foreign currency forward contracts | ||
Assets: | ||
Derivative asset | 69 | |
Liabilities: | ||
Derivative liability | 223 | |
Significant unobservable inputs (Level 3) | ||
Assets: | ||
Deferred compensation plan asset | 0 | 0 |
Liabilities: | ||
Deferred compensation liability | 0 | 0 |
Significant unobservable inputs (Level 3) | Interest rate swap contracts | ||
Assets: | ||
Derivative asset | 0 | 0 |
Significant unobservable inputs (Level 3) | Foreign currency forward contracts | ||
Assets: | ||
Derivative asset | $ 0 | |
Liabilities: | ||
Derivative liability | $ 0 |
Income taxes - Provision (Benef
Income taxes - Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Current: | |||
Federal | $ 19,184 | $ 13,844 | $ 14,431 |
State | 6,266 | 4,864 | 4,549 |
Total current income taxes | 25,450 | 18,708 | 18,980 |
Deferred: | |||
Federal | (262) | 2,080 | 2,809 |
State | (5) | 1,736 | (781) |
Total deferred income taxes | (267) | 3,816 | 2,028 |
Income tax expense | $ 25,183 | $ 22,524 | $ 21,008 |
Income taxes - Schedule of Defe
Income taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Jul. 31, 2023 | Jul. 31, 2022 |
Deferred tax assets: | ||
Inventory | $ 2,385 | $ 0 |
Operating lease liabilities | 5,201 | 5,935 |
Accrued liabilities | 1,579 | 1,118 |
State taxes | 1,411 | 1,136 |
Equity-based compensation | 1,041 | 550 |
Other | 158 | 523 |
Gross deferred tax asset | 11,775 | 9,262 |
Deferred tax liabilities: | ||
Inventory | 0 | (1,116) |
Property and equipment | (48,448) | (41,658) |
Intangible assets | (45,607) | (46,018) |
Operating lease asset | (5,216) | (5,972) |
Interest rate swap | (286) | (368) |
Prepaid expenses | (2,434) | (2,156) |
Casualty gain (Note 18) | 0 | (2,457) |
Gross deferred tax liability | (101,991) | (99,745) |
Net deferred tax liabilities | $ (90,216) | $ (90,483) |
Income taxes - Effective Income
Income taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Federal statutory income tax rate | 21% | 21% | 21% |
State income taxes | 5.30% | 6.40% | 3.90% |
Equity-based compensation | 0% | 0.10% | 2.60% |
Other | 0.40% | (0.30%) | (0.20%) |
Effective tax rate | 26.70% | 27.20% | 27.30% |
Income taxes - Narrative (Detai
Income taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||
Interest and penalties | $ 0 | $ 0 | $ 0 |
Uncertain tax liability | $ 0.5 | $ 0.4 | $ 0 |
Income taxes - Schedule of Unre
Income taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 0.4 | $ 0 |
Gross increase related to prior year tax positions | 0.1 | 0.4 |
Ending balance | $ 0.5 | $ 0.4 |
Employee benefit plans (Details
Employee benefit plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Retirement Benefits [Abstract] | |||
Defined contribution plan, employer matching and discretionary contribution, percent | 10% | ||
Defined contribution plan, cost | $ 5,200 | $ 4,600 | $ 3,800 |
Deferred compensation plan, vesting period | 3 years | ||
Deferred compensation arrangement with individual, contributions by employer | $ 300 | 400 | $ 1,100 |
Deferred compensation liability | 3,300 | 2,100 | |
Cash surrender value of life insurance | $ 2,700 | $ 1,800 |
Commitment and contingencies (D
Commitment and contingencies (Details) T in Thousands, $ in Millions | 12 Months Ended | ||
Jul. 31, 2023 USD ($) barrel T | Jul. 31, 2022 USD ($) T | Jul. 31, 2021 USD ($) T | |
Commitments and Contingencies [Line Items] | |||
Long-term purchase contract, amount purchased, mass | T | 31 | 29 | 34 |
Purchase commitment, remaining amount committed | $ 10.6 | $ 8.8 | |
Purchase commitment, quantity | barrel | 9,000 | ||
COVID-19, incremental costs | $ 0 | 0 | $ 0.7 |
Euro Member Countries, Euro | |||
Commitments and Contingencies [Line Items] | |||
Purchase commitment, remaining amount committed | 8.4 | ||
Inventory | |||
Commitments and Contingencies [Line Items] | |||
Long-term purchase commitment, amount purchased, cost | $ 80.1 | $ 71 | $ 68.1 |
Minimum | |||
Commitments and Contingencies [Line Items] | |||
Long-term purchase contract, period | 1 year | ||
Maximum | |||
Commitments and Contingencies [Line Items] | |||
Long-term purchase contract, period | 16 years |
Equity-based compensation - Nar
Equity-based compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||||||
Mar. 17, 2016 | Mar. 16, 2016 | Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | Jul. 31, 2016 | Mar. 17, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based payment arrangement, expense | $ 5.1 | $ 4.8 | $ 2.1 | ||||
Issuance of employee stock purchase plan (in shares) | 28,222 | 16,042 | |||||
Total equity-based compensation expense | $ 6.3 | $ 5.6 | 2.3 | ||||
Income tax expense | 1.6 | 1.3 | 0.4 | ||||
2016 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting rights, percentage | 20% | ||||||
Award requisite service period | 4 years | 5 years | |||||
Plan modification, incremental cost | 8.5 | ||||||
2016 Equity Incentive Plan | Restricted share awards | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, vested, intrinsic value | 4.9 | 3 | $ 4.6 | ||||
Share-based payment arrangement, expense | $ 0 | ||||||
2021 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Award vesting rights, percentage | 25% | ||||||
Shares available for future grants (shares) | 14,003,560 | ||||||
Expiration period | 10 years | ||||||
Unrecognized compensation expense | $ 7.1 | ||||||
Weighted average grant date fair value of options granted (in dollars per share) | $ 5.94 | ||||||
2021 Plan | Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unrecognized compensation expense, period for recognition | 2 years 8 months 12 days | ||||||
2021 Plan | Restricted stock units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, vested, intrinsic value | $ 2.3 | $ 3 | |||||
Unrecognized compensation expense, period for recognition | 2 years 6 months | ||||||
Unrecognized compensation expense | $ 6.9 | ||||||
Employee Stock Purchase Plan | Employee stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares available for future grants (shares) | 1,250,509 | ||||||
Purchase price of common stock, percent | 85% | ||||||
Offering period (in months) | 5 months |
Equity-based compensation - Act
Equity-based compensation - Activity for Awards (Details) | 12 Months Ended |
Jul. 31, 2023 $ / shares shares | |
Restricted share awards | 2016 Equity Incentive Plan | |
Number of Shares | |
Unvested as of beginning of period (in shares) | shares | 266,158 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | (266,158) |
Forfeited (in shares) | shares | 0 |
Unvested as of ending of period (in shares) | shares | 0 |
Weighted-average grant-date fair value (per share) | |
Unvested as of beginning of period (in dollars per share) | $ / shares | $ 14.23 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 14.23 |
Forfeited (in dollars per share) | $ / shares | 0 |
Unvested as of ending of period (in dollars per share) | $ / shares | $ 0 |
Restricted stock units | 2021 Plan | |
Number of Shares | |
Unvested as of beginning of period (in shares) | shares | 414,609 |
Granted (in shares) | shares | 391,220 |
Vested (in shares) | shares | (148,296) |
Forfeited (in shares) | shares | (94,672) |
Unvested as of ending of period (in shares) | shares | 562,861 |
Weighted-average grant-date fair value (per share) | |
Unvested as of beginning of period (in dollars per share) | $ / shares | $ 17.32 |
Granted (in dollars per share) | $ / shares | 14.54 |
Vested (in dollars per share) | $ / shares | 17.50 |
Forfeited (in dollars per share) | $ / shares | 16.23 |
Unvested as of ending of period (in dollars per share) | $ / shares | $ 15.52 |
Equity-based compensation - Sto
Equity-based compensation - Stock Option Activity (Details) - 2021 Plan - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jul. 31, 2023 | Jul. 31, 2022 | |
Number of options outstanding | ||
Balance as of beginning of period (shares) | 1,555,610 | |
Options granted (shares) | 1,092,684 | |
Options exercised (Shares) | (2,586) | |
Forfeited (shares) | (284,002) | |
Expired (in shares) | (40,473) | |
Balance as of end of period (shares) | 2,321,233 | 1,555,610 |
Exercisable (shares) | 713,802 | |
Weighted-average exercise price (per share) | ||
Balance as of beginning of period (in dollars per share) | $ 17.15 | |
Options granted (in dollars per share) | 14.41 | |
Options exercised (in dollars per share) | 15 | |
Forfeited (in dollars per share) | 16.23 | |
Expired (in dollars per share) | 17.25 | |
Balance as of end of period (in dollars per share) | 15.98 | $ 17.15 |
Exercisable (in dollars per share) | $ 17.08 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted-Average remaining contractual life (in years) | 8 years | 8 years 8 months 12 days |
Exercisable, weighted-average remaining contractual life (in years) | 6 years 6 months | |
Aggregate intrinsic value | $ 0 | $ 3,847 |
Exercisable, aggregate intrinsic value | $ 0 |
Equity-based compensation - Val
Equity-based compensation - Valuation Assumptions (Details) - 2021 Plan | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term (in years) | 6 years 2 months 23 days | 6 years 3 months | 6 years 3 months |
Expected dividend yield (as a percent) | 0% | 0% | 0% |
Risk-free interest rate, minimum (as a percent) | 377% | 1.06% | |
Risk-free interest rate, maximum (as a percent) | 3.96% | 1.09% | |
Risk-free interest rate (as a percent) | 2.54% | ||
Expected volatility (as a percent) | 33.90% | 47% | 25% |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended |
Feb. 28, 2021 | Jul. 31, 2021 | |
Related Party Transactions [Abstract] | ||
Cash dividend | $ 100,000 | |
Related Party Transaction [Line Items] | ||
Cash dividend | $ 100,000 | |
Parent | ||
Related Party Transactions [Abstract] | ||
Cash dividend | $ 100,000 | |
Related Party Transaction [Line Items] | ||
Cash dividend | $ 100,000 |
Casualty loss, net (Details)
Casualty loss, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Unusual or Infrequent Item, or Both [Line Items] | |||
Casualty loss | $ 0 | $ 123 | $ (6,559) |
Fire | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Casualty loss | $ 100 | 1,300 | |
Flood | |||
Unusual or Infrequent Item, or Both [Line Items] | |||
Insurance proceeds | $ 8,100 |
Earnings per share - Reconcilia
Earnings per share - Reconciliation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net income attributable to The Duckhorn Portfolio, Inc. | $ 69,298 | $ 60,190 | $ 55,976 |
Denominator: | |||
Weighted average number of shares outstanding for basic per share calculation (shares) | 115,233,324 | 115,096,152 | 106,681,496 |
Adjusted weighted average shares outstanding for diluted per share calculation (shares) | 115,407,624 | 115,363,578 | 106,934,853 |
Earnings per share attributable to The Duckhorn Portfolio, Inc. | |||
Basic (in dollars per share) | $ 0.60 | $ 0.52 | $ 0.52 |
Diluted (in dollars per share) | $ 0.60 | $ 0.52 | $ 0.52 |
Stock options | |||
Denominator: | |||
Effect of dilutive potential shares (shares) | 1,687 | 112,471 | 202,798 |
Restricted stock units | |||
Denominator: | |||
Effect of dilutive potential shares (shares) | 172,613 | 154,955 | 50,559 |
Earnings per share - Narrative
Earnings per share - Narrative (Details) - shares shares in Millions | 12 Months Ended | ||
Jul. 31, 2023 | Jul. 31, 2022 | Jul. 31, 2021 | |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (shares) | 0.6 | 0.2 | 0.1 |