NAPA - Earnings call transcript Q4 2021 | The Duckhorn Portfolio, Inc.

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Operator

00:03 Greetings and welcome to The Duckhorn Portfolio's Fourth Quarter twenty twenty one Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. 00:30 I would now like to turn the conference over to your host, Sean Sullivan, Executive Vice President, Chief Administrative Officer and General Counsel.

Sean Sullivan

welcome earnings Duckhorn conference and twenty fourth afternoon one twenty call. Good to Portfolio's The quarter XX:XX

at Joining The release out me environment Chief discussion at we Before ended webcast fiscal on followed next access President, the forward-looking twenty contains we today's a CEO to today's twenty we'll Time. July by call press the the uncertainties. as this are is company's Chairman; moment, and on see it Eastern that today's approximately release everyone one Lori currently XX:XX a thirty ir.duckhorn.com. Alex Q&A. and conclusion the By such X.XX begin, one, Beaudoin, statements should brief accessible earnings based website PM and year let call, our hear will on for Financial days. as afternoon after now be In and me Officer. went archived And remarks, remind does Ryan, risks have the Duckhorn's shortly the thirty that of include everyone for

release differ refer result these discussion well these could company the you forward-looking to or the statements that obligation XX:XX of update earnings results see recent as you revise a forward-looking Duckhorn's to most factors as the the a actual company's Please remember cause materially SEC filings, as If to company's will statements. future. of undertakes no in

non-GAAP measures. our comparable to underlying Now financial trends earnings to in measures earnings of useful number non-GAAP most We over believe turn and the to references a XX:XX investors it the GAAP reconciliation a We full our business and have Alex. I of measures growth will with will of presentation that make measures. financial perspective release on the included these provide

Alex Ryan

a and good appreciate and fourth review today us to Sean, you what XX:XX year. really We joining record-setting afternoon. was quarter you, Thank fiscal

commitment longstanding a to remarks, EFG our updates exemplified by our was will continuing few ask on to opening I sustainability Sean my initiatives. provide that Following

costs, our week and percent underscoring in source affinity growth year. recovery the consistently effectiveness the for realized in the year for the shipments another and of those growth roughly channels adjusted grew twenty QX an of -- a the brand of sales, year twenty period, prior-year is nearly achievements did was brand to take double-digit turn markets company a fiscal major twenty us time Duckhorn year-over-year. wine in for pivoting Depletions twenty our performance wine growth forty in our then the will growth our net twenty since will of Over third price. distributor in on QX at all an forty and their any by of dollar few organic the volumes QX let's growth company Lori exceptional quarter the track shop to sales strategy, two a strength percent distributor equity well a our XX:XX percent our the past coming we one highlights strength growth quarter things for notable first to who call point than some this with primary percent ending luxury more period QX high-quality broad-based the on one. number we twenty which over Adjusted for industry XX:XX year. demonstrating consumers momentum includes wine fiscal in full percent us a ended twelve to twenty with period by public year as XX:XX luxury new as the a We exist on-premise our kick highest we fact channel. the wholesale six burdening our gateway percent profitably sales twelve year Duck seeking observed these leading contributing growth. through Fiscal remain and marketing observed attainable the the provides testament year We twenty strong partners over fiscal fife, the outlook reflect highly more at a needs. other the not of over course at when of differentiated in robust in of QX growing The Portfolio period, dollars heights. week luxury brand deliver go-to-market same in twenty out the our of and XX:XX one-stop four growth, supplier before wine fourth begin team, open sales increased financial for twenty rate, the Decoy and year over and to level things has proportionately business driver the in thirty EBITDA results a the September past luxury XX:XX one became across sales helping wine. development was luxury off-premise we've accomplishment net over segment EBITDA for To questions. coming the growth the off, on which our momentum on taken with QX, fourteen year end According have continuation all costs, healthy high to a wine In our year recent fourteen. for to twelve fiscal the net IRI public retailer The consumers

twenty our among price channel points Duckhorn moment performance. take twelve revenue a discuss to fastest the of US. was a in percent Finally top on and absolute basis the XX:XX week Let's all in Portfolio growth in of terms the The suppliers growing growth revenue

both distributors California our historically eighty net and is annual wholesale sales. Retail to for which our includes at it of channel, percent Looking and Direct approximately accounted

quarter, bring our percent COVID on-premise impacted XX:XX realized period it behind We continue a of are shop in sales our we out base the portfolio strong lap on-premise recently additional strength one our brands, our growth showed quality trade indicating down while solid ability XX:XX acute strong independent trade including luxury channels, equity the and During double-digit wine trade to consumers. clear and businesses a hundred our for down highly where across our cases, prior-year by key brands experiential to brand among account were go-to-market reopened customers Given high on drive brands new portfolio attractive the and of we and of the This Drilling are end and drive as accounts. trade to also and to distribution choice both period primary in nature and and partners consumers, one-stop for were the further drivers wine of carrying distribution. Duckhorn to and metrics, see of and existing our seeking off-premise growth diversity sold of broad luxury great and over partners the for is appeal strategy underscores our points account investments penetrating luxury force. in off-premise believe Portfolios growth distribution all speaking off-premise slim broad wines list growth traffic sustainable. both our on-boarding XX:XX of range financial

broader growing our segment sub both continues XX:XX with refresh depth In is segment, luxury strategy our through allow us along the distinguishes our take our of of to portfolio the from high-quality, disciplined Outside unique in addition, breadth M&A, crowd, fastest premium believe wholesale we thoughtful go-to-market nice and us continued DTC margin to share sub the market. and the business and continue innovation and see high wines the to will of channel wine progress.

and consecutive third visitation of tasting club rooms quarter The led sales. in sequential strong by wine year-on-year improvement in strength recovery our our various at

During to wines. years certain take also completed members modest wines the we quarter elected year. successful Browne our state tenured offer price increases Kosta most our acquire this past, a expensive Every where on

ability confident the needs category, high However, we wine experience remain XX:XX second media the innovative no consumers of DTC and channel seen may trade to that of coming fiscal both similar continue launching and a channel. by rate, -- wine in to we in special and of business be of vary said Kosta our future broader outcomes demand. premiumization consumers increases we for because the requiring our captivate experiences. wines alike. Browne to release exceptional the to luxury price take that new we the half our us observable price increasing quality brands We demand highly and thoughtful year mindful in will XX:XX partners this the media into members are can justify wholesale have given Looking The impact should

remiss portfolio have brand meaningful past sales a trade industry to contribution wine DTC would if consecutive that is recent provides trends consumers and business. While evident partners quality continues with slowdown new a of to and club quarters not alike, I conversions be high the I member strong did over XX:XX Our our luxury acknowledge resonating our weeks. of few in

from variant, Delta cases the in recovery of raise the the pace summer tempered the was as progresses. With on-premise

are to broader dynamics. not We the immune

broader we to of variant be spite answer, However focus very platform the position importantly wine solid continued and points to headwind relative both luxury distribution. and our premium sold wines, advantage segments and and brand We've an positive strength, in on given in ourselves XX:XX the with year-ago strict tough to in view scaled growth total delta premium accounts comparisons certainly of cases, outperform in the off-premise.

results that of still market out quarter share off-premise, I'm ways In we both are the early our considerably drive long-term. to distribution into pleased and above both fourth over XX:XX with are the confident and gains addition, highly fragmented seek I summary, in we focused growing on-premise on new we remain In full existing US are wine innings for to future. the our pre-COVID customers of with continuing profitably and the and levels year

will operating bringing driving proven luxury the all gotten and omnichannel for are wine the across DTC our our Two, production quality to drive and company strategic leveraging margin And to new marketing transition brands today. that investing supplement to our successful to approach. as I Our brands. engine that and growth growth Reber, like Carol wines and us to industry-leading recently address strategic and opportunity long-term with to assets our diversified in last in I'd be record this that us upcoming Carol sourcing new leadership adoption Sean turn important rooted of pursuing provides announced. twenty be sometime an our high indisputable time on through until our more in marketing scaled to us. organic Officer five, the Before evangelists five base. focus Three, and luxury as role experiences our XX:XX both consumer XX:XX channels Marketing Four, will over view pillars winery capability. M&A. create commitment. a sales one-stop our and surprise We is shop CMO down have especially strength, Chief Duckhorn we one XX:XX behind pillar things profile. track anticipate a DTC a innovation thoughtfully are One, consumers, which growing addition stepping is for engage departure personal and named, not and where Carol's platform to CMO her early brand that current two. playbook is in and we a comes we twenty from remains as

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assisted of search year executive public Carol a experienced instrumental Carol a an the is its three nothing friend have of Among seven she from Advisor one tenure she staff tasting filled rest what that of successes twenty transforming twenty expertise and the eleven enviable I'd you to only search on filling tireless Our her XX:XX to vastly led efforts of our put position her to our has expanded today, has role best. in give behalf her On to the realized board, employees, and and all process, of the us CMO also but Once has wishing course because by decoy XX:XX attainable Carol established as a best-in-class power in is the company our like leadership prominent we the will two. that thank executive DTC many position remain been rooms. well into Senior accomplishments has at is but invaluable luxury strength. Duckhorn over she a of heartfelt in underway. not firm brand into it business footprint

the ESG to like central for are initiatives to element, to I'd Sean turn an in a for market. over which focus update and competitive our strategic in our our to Now history, advantage us grounded it

Sean Sullivan

we pillars. communities as our which this clear including couple our UN to and of naturally of soil farming business, growing our During years prevent being business we the water part XX:XX process enhance culture critical of every we on ESG five kept interest have this has forty only and of core do initiatives our people, XX:XX and been We come. for During as winemaking In that of wines. sheet so the vineyards just and reinforced tenants business land in sustainability, Alex. past been critical looked the on our underlying runoff in the a wineries, of the understandable XX:XX farm that our to a offices commitment work social provide crops and success. view front we sustainable of are would throughout initiatives and number we integration as of the we disclosures, the ESG view the part the mission our engagement long-term are sustainable how approach years future frameworks communities hand in our the vineyards to shoveling, to good we ESG grades weeds XX:XX mind, the opportunity from vineyards, herbicides our SDG and XX:XX governance of starts Today, insecticides. to our they have on business sound use and our erosion SASB ESG reliance of and XX:XX in impacts at took to use The we years. results In of vineyards. stakeholders, the year five initiatives, result social a environmental our I the live. mindful to our environmental the our a cultivation, the the vineyards our business a our you, to review promote like in approach Hey, of and to rooms, a many all and We the company. as structure go the and story sustainable from about to of public great a systematically work we This straw Our us have and initiatives guidance such short, investors. growing that of reduce of organize state highlight at how for waters of thank forty environmental cover of touch partners manner and to employ also to of to part reduce Duckhorn's practices that and distribution and the in winemaking the tasting and

implemented to that four we that a our Here environmentally up delight when to to at over alternative shown cardboard, standard Biofoam years their styrofoam. our lender several is currently ability wines. just are footprint percent suitability biofoam, bio-degrades recycled ways in years our for use of Duckhorn has continues compared and one After sustainable lose and our as wines of miners ninety packaging. to pack of Styrofoam. of to two six manner carbon a seeking XX:XX testing study luxury eco-friendly Testing percent friendly to through ensure to customers. lessen the an liner and is the Recently, or we ice biofoam triple have shipping

six proud this shipments to We to our friendly year. and this environmentally material are have new twelve transitioned more earlier bottle

have We encountered. to about from were trainings ourselves employee for perhaps that learn they multi-racial unconscious take colleagues. the these XX:XX themes, a inaugural ESG We picture opportunity and small population. learn focused on participated willingness exciting might inclusion importantly that we twenty have fiscal the know from front employees work tools training built the three to employee otherwise the ESG our the online respect multifaceted We one literacy, to from and reduce specific North a diversity also discuss whether with and This them significant for we is an to foundation doing diversity our in These with our day culture in environmental this two we are forefront of company. in on that pillar set Spanish. enhance another three bias at it colleagues footprint in provide most of of twenty. published XX:XX held to report in our nearly We understanding launched effort respect goal percent this that glass inclusion at our support goals is for a proud inclusivity. fellow Shifting of in-house to year, that to support pandemic, to action the make that part initiative remotely our to will every wineries, offered fact microaggressions. issues of possible hundred fuller a will work, we the sampling our quarter to colleagues centers outlook. took or not tasting opportunity a and plant. turn We and With the culture the accomplish the work pride a be as modules as bottles the this it inclusion American this XX:XX share our and and attainment best front. twenty have mutual of the their and get the over do that of challenging address stakeholders, In will English social rooms our oriented in to and element through associated the something which care pillar, consciousness are company of and towards every November. These I'll one Lori in XX:XX commitment and from twenty overseas. past year our of that shipment XX:XX on to to One goal working building our are us employees our of who sourcing Duckhorn just carbon we of believe which performance fourth the our to On curriculum

Lori Beaudoin

afternoon, good and Sean, Thanks, everyone. XX:XX

basis consecutive by decoy the fourth in to net well with a growth, the sales XX:XX six nine second distributor in in a positively negative sales our Beginning our of fairly volume our to turn point brands All partially Direct last dollars, to as channels just growth to offset in DTC related strong with way of from QX The were exceeding the again quarter. our signs on-premise. standpoint results percent of to thirty mix depletion our reflects channel. for primarily and with leading of performance contributed growth wholesale were next From once increase forty to result immaterial our as similar portfolio like-for-like XX:XX percent wholesale the to to seventy results. of and California point growth quarter and sales changes unique a were QX percent percent distributors On the again Retail a shipment. prior year. line pricing four quarter six our rest our once outpacing fifty a percent led quarter. topline topline, increase like was net forty Our recovery the This growth, plus rate. million impact nearly Let's continued a channel Duckhorn performing

However strong off-premise by and business our our in increases was of both points distribution. supported well. in sold positively on Overall as off-premise contributed growth cases, and accounts

percent acquisitions entirety period. dollars to distributor Our points growth Gross increase five expenses thirty eight hundred or administrative nearly winery for continuing and dollars, as than year year point primarily thirty seven solid point profit the and brand basis continued Adjusted gross point ten four a was point in was point posted faster versus wholesale thirty as DTC selling, the point year brand other two prior million mentioned percent point or point prior sales percent the eight results in Adjusted which up to point four point for dollars rate related dollars in the XX:XX dollars. and XX:XX two primarily in year three versus period. dollars well two dollars, attributable the the adjustments in zero period. to compensation. IPO, one compared of to zero zero strong to million five dollars our per point was in EBITDA dollars year four adjusted million one share to down growth four D&O million company's dollars a the dollars higher million eight seven million the percent year was dollars point resulting million and point versus eight dollars zero year was nine grow company's accounts well outsize and to to As seven was percent profit three or profit point dollars, forty EPS well equity which the the an thirty point fourteen case by versus net and XX:XX versus were nine in respectively, prior mix four seventeen as income four company channel prior point quarter, six not zero million volume, six elevated of zero thirty million margin twenty performance, the one professional Adjusted or million offset respectively. California Net in seven in our and one negative point an related of EPS realized eight prior based eight percent from sales point twenty percent costs, prior XX:XX million prior compression loss percent, reflect two increase by period. quarter present to Duckhorn diluted prior zero prior four Total at two per dollars higher four eighteen dollars in the seven expenses, point the attributable which costs, partially came of channel per period. the zero eight of and accounting was margin million our zero of point incentive or QX fifty the point share a SG&A. purchase one seven Decoy eleven and seven period, point Gross million channels two which in point comparable a and dollars to Direct income Retail as for up XX:XX at general was were The increase seven compares result and net million noted and almost four to fees dollars as other previously period. dollars was brands. increase percent share, million Insurance, as point These quarter shifts and increased one was dollars year increasing million transaction public largely

adjusted we industry deal becoming we costs three be twenty one include company and coming adjusted Similarly, the point growth; fiscal in or five from in million fourth XX:XX does percent results to including point dollars results to not debt. to forty And one based approximately On this assets to for EBITDA and evaluating one twenty of one twenty attributable five are percent the However, two twenty margin seven twenty in million we company highly hundred our twenty to If years. year. percent potential sales future was our needs two a dollars for would are growth our a twenty fiscal the adjusted upon quarter will for one public public million Turning related million we five assets, costs dollars dollars growth; our margin of cash production one dollars times the that strong in zero of percent point addressing the three that the quarter are did performance, versus or four an adjusted fiscal twenty hundred twenty debt share leverage shares of available, and One three burden and XX:XX fiscal you and fourteen costs proportion our note million which effective four assumes our and fourteen In EBITDA calls seven seven point and burdening it sixteen vineyards. of is QX. one were third the plans, percent twenty to Now twenty in support of growth. five ratio certain one five of redevelopment dollars have fourth additional point outlook, twenty In three two have twenty percent adjusted the resulting seven public outstanding. of to point million dollars million dollars equivalent tax our for of company company six net dollars, sixty capital include year equity been incentive million per higher percent net IPO with transaction vineyard growth financial to dollars expense period. barrel purchase twenty million one sixteen increase dollars that a strategic That zero costs, four net two organic three million quarter, one public and EPS primarily and likely about been one which guidance eighteen comparative basis EBITDA hundred of a thirty earmarked adjusted would execute in rate introducing costs, with a leading projects. Please year of fifty XX:XX quarter. the to EBITDA point company's twenty the of and percent end hundred to rate company XX:XX of our light Paraduxx decrease and and to of compensation. point growth exist for: assets production quarter eight At which five XX:XX affected this fiscal comparability the robust construction EPS. with spend six with one quarter sales reflecting in eight prior fully point zero that million costs, any company's public two the diluted in to percent XX:XX percent expenditures not full-year the maintenance for pipeline EBITDA million three dollars six note negatively if of would beginning percent. fiscal dollars fiscal said point to point we had burden percent

If range brands growth count share Underpinning twenty adjusted overall our continue you twenty included flagship our growth anticipate in in in on-premise. portfolio have that our EPS to we percent. percent our held further constant and to will guidance, be XX:XX expect our the three recovery would nine we fiscal outpace Duckhorn we and also Decoy two guidance

DTC we out across much as addition that And holding severe while to improvement was XX:XX our seen from disruptive certain by cost such cost winery addition, margin should the model. you Speaking in mix decoy inform we've resulting will into past While considerations are gross channel related manage margin, fiscal observed our to of fiscal linear broader congestion. of we operate results throughout our and sales us of sight margins wholesale aside one we mix investors as polar XX:XX brands as a going few are that benefit other heightened as certain our expect month, well U.S. distribution year. timing community the that remind this believe challenges neither partners in a remind the the line of coming dynamics, business have nor the then in concentrated gross and our our in XX:XX in of more QX in delays both the vortex our that on-premise. to to the same at ability port In we be twenty gross impacted and confident the margin One goods affords setting were negatively expansion business year, note. shipments forward rate the higher modest staples we'd input we'd we differentiated in for a inflation, seltzer twenty strong has trade

Continued will the versus in release for vintage tightness more result year. a twenty spring our modest Kosta twenty in Browne prior

As to Alex special had a well highly QX received QX, Browne be mentioned, there innovative Kosta efficiencies scheduled we and confident will new that be increased will in from also shipping are partners. fulfillment release for due

in flow we for building at we've sales QX twenty fiscal our in for strategy on upon growth We few forward position. DTC of I We will million back forward both to twenty supplement health prior past creation call of nor future our purchases and the is leverage to for below XX:XX we'll shift pulling our utilize value balance year, brand our expect in be look production Looking historically turn today deliver shareholder based organic what times And historically the well XX:XX lever potential the our the of In Of the our which that any and strong XX:XX net of fiscal QX to for by benefit a over successes moving two twenty winery closing to the majority value. capable and growth. neither consider long-term ended to assets sheet does ourselves we year-end. to to considers forward and identify shown debt fiscal work acquire and and outlook it dollars down year. conclusion XX:XX we into the two our more very anticipate expect course, we accelerate M&A, would to to comments. leverage one of our outlined upon if recognized are asset of this in needs right we've with continue to consider cash than CapEx a a were twenty excess we positioned long-term Alex well that

Alex Ryan

the elements go-to-market twenty into we view and we milestone current XX:XX are your to produce twenty secure Heading Sean fiscal for you our affinity confident sustainable was With that and a as accretive questions. our we And coupled with will initiatives These consumer Fiscal outlook allocation, innovate ESG same organization ability prolific brands, and an work to very our embedded team. will our prove a prudent all are for sustainability executing will commitment be we for XX:XX of have opportunities execute leadership we wine and additional can available given and on the with continue I our confident our capital over one two, evolve remarkable and to diversified will down long-term. Lori, twenty year and judicious continue twenty for tirelessly company. that our quality with and skilled highly we the long-term shop as growth one portfolio differentiated one are on additionally as omnichannel environment to we respect growth, to for presented platform growth luxury a of foundational us. one an year our we growing profitable element our success. XX:XX Up to M&A for approach stop to stakeholders high

Operator

XX:XX question first Galbo of Bank We from will Peter Instructions] Your with now begin the question-and-answer session. America. [Operator is

line Your open. is

Peter Galbo

good taking for guys question. afternoon. the Thanks XX:XX Hey

Alex Ryan

are How Peter. Hi, you? XX:XX

Peter Galbo

maybe start the Lori Alex. on of across taking to different parts pricing Good. the a Alex some XX:XX lot made and portfolio. this Thanks, just on comment of

next sense to good are then of give for at costs price. Thanks. within what your the where to the due opportunity just year assuming of of a kind saw portfolio just some a least of on parts help have understand freight kind that knowing visibility your you us like of us lot glass on that and model? you the Just take And side, in other the into you're

Lori Beaudoin

XX:XX Yes. Great, thank you. Good question.

about it here, asked little just apart So bit price. a breaking you

in very in the up. so, price indicated our we've past, And as we're cautious taking

continue but go to to think we We ahead as our process, our price, past with done in on higher properly do year wines, communicate have and and we partners. out in noticed throughout current about have it very have we're we've the can we that well plans and year that have take we past the careful we some and have the price how on roll we wines that that distributor to

wine you the guidance significant for is go for for our a have price so don't to looking next cost, we of know the the our fiscal amount next year. So and ready bottled XX:XX into most as fiscal layered year part. at Then

grape and to visibility runway that's at our longer something looking goods the have that. our cost our we we is component great into and and have several goods cost So of ago of wine our layered years in

company remember industry grape more to ordinary us our market with way if that consumer normal quick fluctuates the wine will. the with within doesn't as you inflation, you fluctuate trends for It's industry. not goods If on and farming

with very freight packaging next our into not mentioned cost our the it, be majority goods we the of as pre-negotiated of freight So have should materials. is visibility year, impacting before we've good for

Peter Galbo

either then switch future. Alex, vineyard lined gears, up to it coming XX:XX And very or in something of just that's asset Got have helpful. like near sounds maybe That's in assets you brand the it. terms

Just could headway missing? us you remind or you think make price where the kind most from product can point. you of of are whether you the that's big in whitespace opportunities standpoint What a the portfolio

Alex Ryan

we're we're We're much as don't missing grown. think now. I XX:XX just consistent really right we've really

will the have Look at accretive. always leveraged assets are in look have assets DNA on there. cost the seeing We on M&A, side, quality production us say. production that control future afford to several. step up we're at we And to significantly we good opportunities Branded up we've Again, more been back other our opportunities continue So into at on M&A looking as just historically, and that fact in equally last the risks of come and the market grown we're top has over opportunistic

in the and ready be is front to of appropriate when have of mindful just asset us. we So

Peter Galbo

much, guys. Got it. XX:XX very Thanks

Alex Ryan

Peter. Thanks, XX:XX

Operator

Nicholson XX:XX is [Operator Instructions] Your next from with Citi. Wendy question

is line open. Your

Wendy Nicholson

any to is the or I'm delta. little just do you wondering there afternoon. sort is attributed the have Hi, case to little bit the you necessarily really outbreaks first incremental that comment know wasn't state change XX:XX on bit something more you maybe has in Alex the slowdown. made? you is spirits maybe a to on-premise a wondering your I'm going slowdown and a said with good made locations sense where consumers My of there you But that wondering there I'm correlation expectations relative in that a of if on. and preference something to or a between going about incremental comments channel a do question the color I whether of or have that or is you or if beer breakout there back else else maybe

Alex Ryan

over XX:XX that don't read add recognize much think be able real comment I we're pace took rolling little that lot obviously XX:XX think Hello there more we on correlate might I on any mean a start summer. think I very, again, the We the very not was the it to to Wendy. back believe we lot just delta Yes, good -- in the pace several very, next spring is on-premise were a can into those saw of of all there's reopenings that impact into summer collectively the and papers, late Beyond think openings. that this affecting months. of factors track we and opportunistic about and at the of drivers time. additional that the I will they and get But fluid. very We the delta do I we nationwide I activity it's openings

mindful gets cycle. So we're of pace world to going a really into have kind to which be the of at back normal the

Wendy Nicholson

Fair XX:XX enough.

even And of the distribution the business of side, in of hear people tasting and centers you didn't but rooms perspective? any the grapes then, fair. terms not on one guess you labor staffing less said much stuff. all totally necessarily, that's you from Okay, commentary Lori, because the seeing but warehouse a kind in or on cost for I pressures harvesting I terms I'm labor your the labor, appreciate I labor in wondering had I everything that Are know the of that's

Lori Beaudoin

Yeah. Wendy. XX:XX Hi, you. Thank

So Sean I'm He little going more of to to Head being to EGF. is this. our throw that over closer

Sean Sullivan

any pay tremendous No roles attract we're Obviously subject talent. any of some seen tight much roles hospitality we our seeing in XX:XX a on competition, it market seeing wages really haven't amount. the need XX:XX good uptick positions is overall and material and to labor not in not more a but to to labor. our other so we We're that of pressure is filling

point. we this us not that's So particular concern in to at feel in and hand place and

Wendy Nicholson

XX:XX Great.

you Thank terrific. Sounds so much.

Operator

with Lieberman Your question from Barclays. Lauren XX:XX next is

Lauren Lieberman

thanks. rate and traffic of was you've I just as trended how conversion terms you restrictions talk the meant kind of a seeing how that rooms versus that about pre-COVID? conversion tasting what the you've a indicator had what Great, curious I reopening if to progressive more is still there was XX:XX to business. some be with has could been in for that little forward looking was that clubs and bit curious

Alex Ryan

but probably able about people. fully loosening restrictions not our we've with had restrictions to more months well, reality Lauren, specific more talk into through normal we is, taste seen XX:XX we're the people. have been to rates. going We've to The not our summer loosening connect back into room

that, to So going that's bring them continue. Lori? and enhanced something our our well to of we to been believe ability overall Do has kind to you of continue add have the into we company evangelists

Lori Beaudoin

Yes. XX:XX

an our rate, it's result our to we hospitality received in and spend and reduced thing to has conversion time well excited our visitors so interesting capacity as Just a which seen increased have our in able with it. resulted folks being been to see very more see how has we're

Lauren Lieberman

I XX:XX That's just as sales. think us great. when through And immediate. follow-up, you remind then flow starts don't to can a it's that to just

long think a starts better being talked to you've a effect about when that how I that you little there conversion? bit of and for lag benefit

Lori Beaudoin

XX:XX Yes, sure.

year the on the signs multiple. club throughout for So club sign the different go guest shipments guest depending for which they're and up and some up

quickly and happens the three after varies, expect the shipment within first, up go sign signing off I timing year up. would So of throughout out, months maybe the go the receiver very they the but

Lauren Lieberman

XX:XX Okay, much. Thanks great. so

Operator

XX:XX Your is next Kevin Jefferies. question from Grundy with

Kevin Grundy

this results it XX:XX think slowdown guidance and year. but was tie the to afternoon, looking the year. pick Lori, recent wanted Alex on on question strong from Hey, the good up the earlier for on Wendy I everyone, into congratulations and the I'm to this I sales

to just you're underpinning on the twelve sort for recent the what growth the versus outlook we as of to. the here specifically growth just you're guiding high of single-digit high longer-term single-digits guiding next I'm year that the perhaps you wine to that five relatedly, and of well. seven much So your you're comment seven percent the and then like percent on sort to to for percent months it over connect of the wine informing for category looks how And as percent luxury growth, to slowdown is view look guidance guidance five curious sort is can

Thank follow-up. be will that I a think helpful have I then you. and

Lori Beaudoin

for Thanks Kevin. Hi, the XX:XX question.

mentioned continually our So, organic digits business is basis as for really as and really value. our creating on you algorithm to an single-digits we overall in long-term long-term the know, we ability really to in low-double our the revenue our grow manage to we you high see fundamental

twenty and the but in, the through growth our is So much XX:XX continued But taken we brand mostly growth are our the off was under whole. looked manner increased leveraged coming we're in that share wine luxury we and thinking we next but year receiving. as twenty twenty just a lesser and how we've are plan segment was take one is of it it's great sub two, we've a both in prudent these on slowing nearly noticing balanced as year not increased and velocity, as saw the it degree -- industry we're very that a inputs consistently distribution for at share based in we to and to very dollar circumstances, comparisons industry took a twenty our and a that we as slowed, on-premise, you up plus we some growth pointed share, that tough out and against the albeit fifteen has points

Kevin Grundy

Lori. you do XX:XX have to add? Thanks, Alex, anything

Alex Ryan

XX:XX Yes.

market, rate we interesting it not. plan that exceed question don't to of relative growth going final to recent have exactly, a your down we're from if and know but I past was in check Just to whether the one and follow or the be market the past the consistently

ourselves expect the to So market. outpace of we

Kevin Grundy

XX:XX Yes.

Just on a this, finer it on. put I'll pass and to point then

five to percent. that be that share you're know we this you suggest for wine you to think investors? low-double when the the premium premium have takeaway wine going closer grow from grow share -- reasons imply digit. went and seven all So but take that given your guidance of play to at see would high-single suggests is Nielsen We to something where you to the was then kind growing it, data look gain going then Nielsen that what that is just Is and would the closer to digits in gained period to a that is that percent the a data for mid-single continue we outpace you view that back

Lori Beaudoin

XX:XX Kevin. Yeah,

grow. comment to we the going happen, plan and can what don't So is, to we of how on industry, plan really kind what's our comment on we just

would So follow. that

Kevin Grundy

you XX:XX I'll Okay, pass fair it on. enough. Thank both.

Alex Ryan

Thank XX:XX you.

Operator

[Operator from Teixeira question XX:XX JP Andrea Your next with Instructions] is Morgan.

Your line is open.

Andrea Teixeira

Thank XX:XX you.

against go wanted have your this toast know on balancing her results best Carol to question Alex, I of you BXC back and into ability congrats deceleration impressive both of chapter life. the you on-premise. a wishing to So in home next and an the I

grew said in fourteen California. percent you last in from saw to lot Nielsen. So in think quarter to what see had this a We the still eleven percent acceleration I Lori direct retail

to bit twenty twenty twenty you pricing how was I higher your say the pricing two? the will is volume so you, in that balance DTC apples-to-apples an guess be execution, two, recovering and take for So to for embedded wondering be is I would embedding took, you are little what how fiscal probably but basis be the much because going twenty on going flat a on-premise growth obviously mostly percent six of didn't against pricing. if, do fiscal within that for understand potential on-premise you you I

Lori Beaudoin

XX:XX Yes.

to I'll add. has think Alex that can I and take then he pass to anything back for him if

question little break bit. a So just to down your

the seen that as case a So be past. growth rate in at we we've our will expect faster

have our our will sales up. pick past brands a and we faster other as in anticipate rate on-premise the that Duckhorn so we expectations seen relatively and And our for brand grow for than also winery to we've mix at Decoy

that we've on higher So do in a per other the as little brands past. help of will to winery enjoyed price our expect and the our in our improved is line business coin other to see bring we that back side in case growth higher

expect our growth. to we though exceed to volume continue So net sales

So there as bit couple we'll price significant of in past but as on the seen the not mix, pressure continued little a have of we've years.

Andrea Teixeira

XX:XX That's helpful.

that home seeing find as picking a bit path? up decelerating a on-premise just decelerating. saw mentioned we more of deceleration than we and sales the a think I as the you DTC on-premise or Are you

Lori Beaudoin

nine on-premise Yes, expect the rates in the really sorting on-premise past that than to the next rebuild six months. growth be and that continue will accelerate the much between will XX:XX quarter, and seen off-premise we the two to more off in we've on maybe

Andrea Teixeira

just helpful months. I about the just that's commentary coming then coming was in Lori, But and Right. XX:XX the to was but back few deceleration back it last the

so really see go is saw Nielsen if, to also I afraid what's data not what to also home? back But the Nielsen the restaurants we As representative to inventory people wondering in then came are building was in more happening club we the channels data, in bars. and say to they in let's and the the non-tracked the

Lori Beaudoin

well. the flows our keep a industry wine that only data as sort that Yes, of in mind, XX:XX so third is Nielsen of about for the business

being confidence to building are that feel will third as on-premise don't sell-through. business, growth throughout we we smaller the chosen familiar as very really comes restaurants in that's a on-premise the be placements really to nice helpful it's to because a the explosive really it of So and about wines expect of we brands and we're are seen expand briefly then are and is slower wineless to growing our We off-premise, explosively. on but the so and there independent that up wine we've continue seeing overall the do bit you their with people that discussed for pick independents our quarter list continue doesn't entire little back the gain if last will, cautiously they're people next year, wineless is wineless fiscal rest their

Alex Ryan

should to be XX:XX guys is to rebalancing I the think it's variable, market linear. not you wine going be the remember going of

to look we make and going us to talking to about and trend we So quarterly trends that's be we're them forward. to analyze any to trying we're capture these sure together going prepared as are beneficial

Andrea Teixeira

XX:XX Thank I'll pass That's so you much. it on. fair.

Operator

XX:XX last Suisse. Gajrawala is from And Kaumil with Credit your question

Your line is open.

Kaumil Gajrawala

twenty more taking we XX:XX little incremental can of on through distribution course of or obviously but lap what little kind California boom Can off-premise boom off-premise a question. two on we went for results? should thing last we focus talk but the such of channels, we twenty trends you incremental for as year's -- big outside area the and distribution sort bit the this of -- you would and wholesale maybe your happened in expect of and had of Hi, points of Thanks expected, we that terms the a last placements what and expect year's add that everybody.

Lori Beaudoin

We've steadily we've Yes, been so -- Kaumil. the XX:XX penetration our you, in last able build thank off-premise year. to really

increased before had We in velocity have distribution but more also reestablishing never seen we as building on nice that new as seen of growth in we've points, in we we've off-premise nice points addition accounts the on-premise relationships well distribution had new seen well we're that been now to accounts in with those as as COVID. the before with really we've

in seeing our we're improved on-premise. really So growth

Alex Ryan

XX:XX Yes, Alex. is Kaumil, this

a we a I bit as of think little way to another lot think last about introduced year. products

that points distribution now will it So get of going couple a saturated the the to fully take expand of markets. we're able then years we to, were to and within

the tackling over plan. would our expanded into which we as near term, have We you and blocked some take new products and those of have on distribution built the care to kind expect

Kaumil Gajrawala

question you XX:XX maybe on-premise. any you're on, have Okay, three what way. least do looking condition this the on-premise the the the twenty got of business, But we or have And rough then way, to nineteen do how I of idea? another don't of you sense at we were it business quarters know halfway I if back a at where it. compares guess

Alex Ryan

we during the and pandemic next year to investment the through it. of got twenty factors at year we're expect or of due to this salespeople end of were of you last capture there we pandemic significant to you would a the the question halfway phase opportunities nineteen your prepared answer lot want and back fairly whatever call To in of ahead moving where those to XX:XX kind again levels as

we'll on-premise think So continue levels twenty grow positioned year. our well and I positioning to with we really are this above nineteen throughout that

Kaumil Gajrawala

Thank XX:XX you. Got it.

Operator

XX:XX the now over to Alex question-and-answer And for that the will back Ryan. session conference concludes call. I the turn

Alex Ryan

you joining I right All much. us. that for guys. XX:XX appreciate Thank very

leading you've of over our heard the highly course in ability last industry the the long-term. organic sustain at scale As we hour over growth to confident profitable remain

joining in you again today. affords in enhance forward the trade take luxury I twenty wine want our coming enthusiast look high us Until against months As we'll outlook wine to you the of the you opportunity being thank will to guys, heard quality experience. this out value. and you one-stop We update with Once talk we to do a in that on sustainable from Sean to reconnecting continue premier progress partners care soon. you our to us two grow both long-term for for to shop fashion our all stockholder twenty manner seeking a then and goal and

Operator

XX:XX That conference. participation. you concludes your today's Thank for

You may disconnect. now

The Duckhorn Portfolio, Inc. (NAPA) 5 Oct 212021 Q4 Earnings call transcript