NAPA - Earnings call transcript Q1 2022 | The Duckhorn Portfolio, Inc.

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Operator

Greetings and welcome to The Duckhorn Portfolio’s First Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session.

As a reminder, this conference is being recorded. 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

to conference Portfolio’s call. welcome fiscal quarter and earnings XXXX afternoon, The first Duckhorn of Good

Time. our quarter In of ir.duckhorn.com. approximately Joining year fiscal the year Ryan, press remarks, went have and Beaudoin, access on this Duckhorn’s accessible at on followed ended Eastern the President, Financial me And today’s now, conclusion at earnings CEO October first Chairman; XXXX, X.XX call by Q&A. of a to and out XX, everyone give the moment, fiscal we’ll the pm a for are archived today’s XX the be the The after By Alex website days. is Chief release brief call, XXXX, Company’s will Officer. should next webcast Lori for release shortly

let Before remind currently does forward-looking uncertainties. today’s statements as discussion it on that include and contains everyone we the as such environment and see we based begin, risks me

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

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

Alex Ryan

We afternoon. us you joining you, today. and Thank appreciate Sean, really good

adjusted are quarterly our excited net highest sales We in discuss to EBITDA that and history. the are

We our for our first who proud before upon us am I call net financial we open are and continued will Following profitably highlight extremely in adjusted We sales things Duckhorn’s high the my our to growth growth team’s XXXX I year both, This quarter all-time line. remarks, luxury of turn through results There reflects questions. in take first to and excellence. to greater outlook fiscal well I bottom our Lori quarter over specifically Reflecting results, operational in will opening double-digit realized would on strong and sales momentum delivered the EBITDA. first. excess of highs top points drive detail market. quarterly few wine like the

realized daunting prior volume the price growth mix at quarter we growth sales. Winery On the accretive mix. same in comp, margin Other of Brands year the realized in versus by quarter year high look our said, That This driver off-premise the proved our we comparison X.X% a in compared contribution broad portfolio. year. outpacing period and double sales excellent Last quarter all greater our quarter both, successfully portfolio results a growth. for as shipments on-premise, against when first power Despite reflect to the go-to-market grew prior we channel we prior again organic over of sound XX% same of nearly testament digits strategy. top line, shipments wines quality the with first the we of net XX.X% Accordingly, luxury once modestly served had from across of remains robust differentiated Consumer performance luxury on-premise the the year. elements the when and against is fiscal profiles. These tough as well, demand primary our This strength of the in impressive our execution a wine our the of depletions to quarter. XXXX

net overall other first year. the include sales DTC all of direct-to-retail channel, By our away growing Decoy. California of our Winery than As Other Duckhorn our higher excess the with prior to of margin and XX% compared Brands as a both winery and quarter reminder, brands, business in Vineyards, lead

demonstrated consistent period, on-premise time, from state from same wholesale-to-distributor the wine DTC At saw our the activity. While benefit solid growth recovery our observed for business the home of an of improvement points. outsized member contribution for club as performance helped our for in our both mix expand by us These sales nearly margin favorable at rooms. brand well XXX as continued shifts, and tasting channel, gross basis California

we results. deliver these to ‘XX, knew fiscal year to and gross the business our had in model great realized be help quality fiscal We the year full a over wines same deliver to comparisons our trends expansion At ‘XX. prior formidable the also facing growth. modest would superior foreseeable continued we luxury confidence successes we result of year future we in the year growth expect Heading the time, our for margin year-over-year of as and persist into upon

It society we the the Although and the is early how conclude of too see show travel variant COVID on-premise dining signs COVID encouraged of influence latest to out. on quarter. may recovery during remains present, far Omnicron were to influence further first trade

distribution drive However, existing whatever the at continue well-positioned as impact, we accounts see over and on-premise new the to ourselves to long-term.

to previously, benefit closer revert decision growth spite offering considerable at believe the to proportions sales narrowed net fruit wine As days. that the invest accounts these off-premise margin restaurants our darkest made on during force we our we to today. a toward lists investments accompanying have In historic norms. year, days, and last in We are from and strategic these as talked bear on-premise’s are of continue to we down seeing on-premise many we about

our we’re to more rules in is relaxed partially pandemic than year quarter. also due of growth observing are the California, which prior relative to We seeing more margin because channel, expansion, in California director-to-retail the XX%

building discovering lasting on considerable between created strong, The continues national consumers. high-quality customers and is at-home Portfolio growth mind looking for that Duckhorn wines consumers wine all accounts experience. for and new distribution, this during for nice top luxury the has of off-premise consumption of made showing during height We our Our metrics, the points view and impression considerable a balance of a confirmation the to on uplift business pandemic and pandemic sold in be the gains further independent cases, accounts. key as good

As continues our we continue distribution awareness one-stop our off-premise for wine the go-to resets. our brands evidence in more grow, saw should in shop spring’s presence approach of the to us this resets. expand. to during position coming this to channel shelf Ultimately, expect gains of strong shelf our well We normalized fall’s luxury market

diversified supply relies success highly a Our and chain. on flexible

flexibility demand for meet growing fine to Our us reliably enables the wine.

based offerings trade Our knowing sell will on strength. and velocities take partners our brand that strong comfort

ample reliably, growth times market of reliable wine and gains. them them The ability has will keep that We with chain we continued retail in shelves and especially our supplier community to Importantly, confidence providing share product they ship wines to our can also a trust that lists stock. our and be our believe on serious reliability is a consistent disruption. to out distribution during supply key to wholesale enabler

a to we lies habit it power to view highlight speak While we level as that winery the the ahead. to it performance, won’t long of important brand brand Decoy runway make and our

compelling as a entry in doors one collection, of accessible of opens a points to is growth. Decoy with brand conversations, for our discussed the distribution for price our exceptional an Decoy winery broad highly we’ve pairs Accordingly, up quality swath serving consumers. of offering our continued entire the primary for to this As broadest prior point ambassador portfolio. provide brand

was this and the points last ability and varietals strength. own. category into platform its price winery decade, blue-label expand launched new adjacencies. broad has shoulders a into the brand over Decoy Limited, three year a powerhouse classic brand of prestigious Over a transformed little ago, a across is to of Decoy our example which winery a offering, has This Decoy and

even our this consumers our in well-received ACV the distribution established of in willing opportunities roughly this are considerable. market up, varietal of And beginning are introduced story the of the calendar Decoy fact, Limited winery far white to we the very remains the trade label, half expectations, fourth conditions. of has counterpart. Chardonnay. brand, brand at power label still early with initial to exceeded Decoy because we year, who In challenging limited Limited is a demonstrating

white continuing industry to well our continues the building average. is Importantly, Decoy label white Decoy of Decoy upon at excess in rate Limited the a label. grow success of

Decoy In Decoy and other ACV. and introduce availability label, blue to the is growth words, growth per not we As overall our we driver be of Limited Decoy proving to incremental are expand the brand. winery dollars Limited seeing in good an cannibalistic

white higher bottle our per label’s because its for versus win counterpart, rings trade of and both Additionally, it’s label the P&L. a to $X $XX blue

DTC Let’s wine good club take to channel. momentum in discuss DTC Strong a sales continued drive to high-margin our our channel. moment in growth

of more result when sales exclude would spend out increased a I increase Additionally, sustainability at our in driven take experience we a of benefiting notable to room also in point in last we situation desire the travel ‘XX, average consumer tasting luxury up that newly report first from online importantly, rooms a the year a inaugural responsibility to by growing published and you Migration are visitation tasting sales enjoy from and tasting our the tasting even our opened improved our rooms. versus fiscal rooms moment guests. room, Perhaps per quarter week. the like tasting high-quality as person in are to

work and our corporate in our wine how to to exemplifies we and live long-term make value aspire for we our sustainably shape how and we holistically impact creation of to continues the stockholders. highlights through tradition of support this This we to wineries excellence our create grow continues to which vineyards, grapes ESG the It report the commitment a communities Our first make and sustainable from also employees work. culture our commitment every communities. and facet in business our

all We experience the quarter companies. him also with year company wealth of public a for full Board the knowledge who backdrop keen with Adriel ability are growing public execute best we a of strong year. I’m very the is experience our with interest Stepping as excited of to how and our pleased start to a results. opportunities gotten We’ve outlook. He remain Even Omnicron the in to first to welcome Lares variant, and to Duckhorn. warmly fiscal Adriel Directors. our also present brings off back, familiar unpredictable to a confident industry, experience, wine I the our with newly in approach CFO to has and welcome

first We are because shop of broader strength in market, differentiated our to that’s hold the highly our on wine outpace of our from it competitors. to luxury share and performance go-to-market nimble well wine fiscal luxury one-stop the With continue the segment brands, sub continue to us scaled take Lori I to over strategy. allow chain, on-premise premiumization discuss continue now high-growth to yet the luxury effect consistently that, should and quarter our turn across to taking supply and This to positioned mix will recovery the and outlook. capitalize year our and

Lori Beaudoin

good Thank you, and afternoon, Alex, everyone.

describing an off Let sales X.X% year prior we the our prior $XXX.X by details XX% increase volume fiscal quarter for year. organic me of Net reflects which Beginning year the top experienced in the nearly The the laps quarter. to performance line. the start growth with net of strong were sales in quarter our the versus open million, increase growth XX.X%. volume

the to we our our positive channels direct-to-retail with outpacing higher-margin X.X% of price/mix volume channel. our growth addition wholesale-to-distributor and In contribution a saw growth, DTC California

result our was efforts. growth, our a of our of Other Brands. This to distribution improves the contribution also price/mix Our growth of performance rate differentiated brands on-premise the and ability drive strength go-to-market with winery consistent of luxury Winery which by is aided

in our Our basis, sales quarter were like-for-like a changes encouraged digits We And by up by results. distribution. which supported were price increases in strong prior points cases, quarter. sold the fiscal outpaced and were modestly shipments same and of growth to on was double in versus year the immaterial depletions accounts the

did we experience issues, much broader not shipment consumer noted, and inventory wine product material which of or have Alex As sectors. affected the

wines. trust partners needs retail for that we will Our our luxury their reliably meet

visitations entertaining continuing direct-to-retail, predominant to was quarter channels levels wine All outside the both of as allows and XXXX. us that and reputation of category. net in California California driver DTC leading and market positively direct-to-retail more the shipment are channel recovery from fiscal for excess top growth in it take in luxury sales in share and a sales, space rooms. DTC rate to pre-pandemic patrons home. challenging proud tasting on-premise increased shelf Growth our up benefited contributed with This of the our growth to growth, to timing, and exceed return our versus at XX% environment. a were shift over is healthy first to the favorable member the club with dining line club In reliability, channels the We as

in all channel wholesale-to-distributor, distribution. the cases, of points performed accounts sold For well metrics, and

the especially comparison. the are We Adjusted an of of quarter, an million, the versus Gross gross $X.X increase our million, light increase profit of was of Winery XX.X% XX.X% year luxury was was XX.X%, channel quarter saw year in proud on-premise profit $X.X Other growth or the quarter. up profit favorable prior for growth quarter. million XXX in during $XX.X or tough versus million driving of points year-over-year $XX.X prior the recovery ultra this the brand activity driven basis quarter. our approximately margin expansion better-than-expected was Gross year margin prior we and by The versus mix as Brands. majority of

the in the $X.X and our plans, and higher attributable Total restrictions both, were in The to larger or were public expenses in selling as operating expenses compensation which line modest in costs, costs when quarter first we period the incremental not a in in prior transaction $XX.X growth and were insurance, $X.X We a also $X.X primarily follow-on overall year were professional expenses eased. channels equity-based California comparable million was travel expectations, administrative partially increase company. million in driven coming our direct-to-retail compensation support in the plus other and private up XX.X% offering saw increases from of DTC million fees D&O workforce activities with by general million. to uptick direct company to remaining The costs, million and quarter. the $X.X equity selling, significant growth our namely

year in of for adjusted year million, net $XX.X to year quarter. of the the growth of That prior the XX% of first per favorable approximately prior income versus of was Adjusted and and in a the by from of of debt share, of we company. net tax $XX.X were XX.X% $X.XX $X.XX quarter. public first year which $X.X XX% price/mix, net income and of in quarter million share, basis leverage in the increased did for XX.X% times reflect first was quarter. the year’s rate offset on remember that contribution Our sales public of EPS the we would our EBITDA income was the adjusted quarter of results include in per important million to adjusted prior same apples-to-apples imply income prior ratio and is effective end which costs, $X.X this against results in would $XXX.X quarter. when in million results margin company represents million costs, comparative compares $XX.X a XXXX XXXX. XXXX effective points $X.XX XXXX quarter’s the quarter XXXX prior net year quarter increase the including similar quarter, was company costs adjusted higher line compares quarter XX positive for quarter XX.X%, a which against selling, year an we sales. EPS first share against volume represents been per versus said, basis, fiscal adjusted X.X debt. of with diluted and Adjusted and diluted of the compared not burdening and with had million, basis-point in sales. the administrative improvement the These general If current EBITDA have that rate EPS prior level partially a this have XX.X% the look fully share million it’s million quarter the quarter was was $X.XX last which EPS company exist EPS which which cash fiscal EBITDA $XX.X net our At a public company of costs per year. with Net This and in On burden per This margin at EBITDA private prior $XX.X which and EPS been tax first would adjusted adjusted results comparative comparison count, fiscal $XX.X basis net was when and of share, with million public fiscal $X.XX costs fiscal XXX share indicates net adjusted lower.

our to outlook. Turning

pleased the reaffirming to about community million, full with we in organic $XXX of shares This think year EPS year, are $XXX.X as and we a diluted how leads $XXX reflecting of performance share, quarter us calls first global of principled adjusted the and evolution to X% strong X% our the growth; EBITDA of rate; a million $XXX $X.XX We effective the this $XXX thoughtful in outstanding. it XX% net to lens, fiscal the to fiscal are guidance. assumes of million million of XXXX sales because X% impacts per Through bring which economy. pandemic to appropriately $XXX.X to remainder approach to especially unpredictable or which guidance, and adjusted tax X% for: growth; $X.XX to million million the

for outlook assets modestly our figure purchases expenditures. addition, coming $XX higher at In any called production initial of We potential that million not that does include see this vineyards. now in million. or in Please $XX capital note

production on executing for in to assets strategic available consideration are they vineyards purchase. become and/or as We

for to in on vineyard million expect purchases the approximately the the $XX.X three of we fiscal fact, Valley current close In parcels in AVA Napa quarter.

vineyards opportunity the will and the our about bring Consistent into these state outpace excited to Decoy our anticipate our continue past we winery with are Duckhorn full portfolio. brands outstanding of holdings. to We years, growth

have a we we on-premise. historically and debt sheet decline end of our should any margins over believe the higher expect the the signs winery than And As also growth will sales not resulting by as luxury sold in future we our the fiscal the wine rest ultra well a sales the increased the recover our perspective, purchases course in year. the increased to of our which It times reopening, assets in of leverage on-premise below account leverage With ratio overall This make does wine observe mentioned. production other From acquisitions volumes luxury gross influence Alex vineyards to businesses larger include balance continue net of our anticipate I year is outpacing wines brands, we positively of margin. doesn’t the industry. for other noted, ultra continue fiscal continue future. of to in may the portfolio, of to segment X

I to encouraged start our As look I’m very strong forward, by fiscal the year.

Our consistent channels, hard across gains and work. are margin expansion all share results continued of our growth the continued

through are navigate of our uncertain We proud stronger. times successfully out to and come these ability

turn We an remaining luxury are are to on his With I position further stockholders. advantaged wine will closing we call creating in committed and position value high-growth back that, this we within build to for Alex our comments. that the industry, while will over the confident for long-term

Alex Ryan

Thank our past you, Consistent we unpredictable environment. this thrive Lori. the in have with continued decade, performance to over

and presented to have the on become agile themselves. and opportunities stronger that have the pandemic, capitalizing the We challenges more during adapting

meaningful expansion sales Our in well level of of pre-COVID allowed excess market a have us distribution net and gains levels. achieve consistent share in to

luxury having have so wine this are delivering significantly are questions. margins. proud available for while the Lori your We and I to segment and achieved industry-leading Sean, while doing that, also With high-growth outpaced

Operator

with of from the [Operator line ISI. first Evercore comes Rob question Instructions] Ottenstein Your

Rob Ottenstein

One, of your progressing. versus couple to Great. get on the questions. distribution. sense a members you mentioned have you you also you all? had very number trying that points just quantify maybe of wine of that a of at And much. performance. is A club increased Thank you how footprint XXXX, strong about Can talk And that congratulations

Lori Beaudoin

And thanks the for Hi afternoon. Good Yes. question. Robert.

regard your question So, distribution. with first to

saw most as and Duckhorn in in in we But the we also, really distribution, So, increase nice across regard with significantly we have a mentioned past, to nice increases Decoy distribution on-premise. brands. our saw

visitor. see regard see nice revenue we’re saw happy we that our DTC business a the our to this DTC and spend per to quarter. performance With really really we’re increased have business, visitations, growth and So, encouraged our to happy across we and

Rob Ottenstein

able number, club or percent members? percent you the in quantify increase Are way distribution any like points of to increase in the in

Lori Beaudoin

Yes. not that. the appreciate No, we we But that’s to. that speak don’t something really question. generally I guide toward

Rob Ottenstein

least glass us please? done past, Okay. numbers? on I us But and or bit lot today right, believe you to are the not of terrific seeing job, you seeing talking relatively the the bottles. a cost talk of give explaining you on in a what different Just have Brown-Forman little to update in pressures And any then how give about update being hard immune that some sorts visibility Can are side, realize, it’s of cost in of you’ve you’re higher pressures pressures to them. was at of areas. of whether and maybe you kind able a get CapEx of those those pressures, reflected an aren’t

Lori Beaudoin

Yes. Sure.

of year, the recall, and our of fiscal two, you’ll for biggest of our in which three if So, grapes year, layered those a ago. the wine, current cost bulk were our years goods, our piece goods is cost

regard don’t with the of we goods. specifically the talked to packaging of piece some have our you costs In about pressures biggest having glass. our we’ve wanted there, past, potentially materials there and So, know about cost to

great relationships. glass a have So, manufacturer we’ve we had that great

that with in of contract we But when that that increase see backlog up have have did a September. have we them. We renewal committed. was bottles we have in-house We and in layered for

majority So, year. cost of the current the be increase our goods won’t we of incurring for that price in fiscal

Rob Ottenstein

Terrific. Thank much. you very

Lori Beaudoin

I’m sorry.

to wanted know You about CapEx?

Rob Ottenstein

Yes.

inflationary or projects? Just new was related that pressures whether to is there

Lori Beaudoin

Sure, yes.

that equipment some around increases we’re that equipment, So, seen we was some of acquiring. brand-new have mostly

a it’s so it. small piece And of

Operator

Your the Jefferies. Kevin comes next of question from Grundy with line

Kevin Grundy

to to the guidance, we the up could. on sales I if start pick Hey. the Good year. congratulations And on afternoon. strong wanted

the mid-teens. really start to obviously, So, strong year, up

X% growth. implies still obviously guidance to sales year-over-year Your X%

that then, mid-single-digit the using there’s that degree year then, the expect some level low of outlook? you’re balance in and So a a a walk healthy are to little implication bit. Thanks. conservatism Maybe growth. what for us the What through key follow-up. to I And your of you is have of the assumptions that type just

Lori Beaudoin

Yes.

you. So you about Kevin. chat with -- Thank to Happy hey Sure. that.

So, pleased a the year, generally quarter bigger seems with we’re make but doesn’t the us rest. the than quarter really for the And seasonally speaking, of to a start be very year. one QX

we in. in ability we’re luxury deliver profitably segment. Also, So, and like coming new the confident we ongoing comes view really But really and to year. our would our to to the to see that high-growth how and with against quarter want we out, wine the how plan just pandemic really outperform variant remain principled in full

we it’s this think that appropriate at So, time to our guidance. really reaffirm

Kevin Grundy

see. I

you first in you’re Lori, perspective recovering it seems nothing margins. and specifically a and seeing that opposite So, great, like and improvement was DXC quite Alex, as the well, on-premise, from where particularly the businesses the I concerning? mean you’re in seeing that’s quarter that some business

back, there’s level of we So, then alarming. just of new just bit what playing we given Is kind sort of the little just And There’s a don’t there nothing a you really quarters that variant. overly sort go to of know, characterization? of Lori, three know fair a said. healthy conservatism, don’t

Alex Ryan

Kevin. That’s spot on. Yes,

Kevin Grundy

normalize probably And Lori, and year. good. me, how for year, respect there’s one understand you’re then see sort for quarter, the flattish I’ll quick the the mistaken, if With mistaken, to that, Very company costs. of and the in if not that cost I’m company sort of public it the EBITDA public expecting Okay. not caused some balance you with real balance that just then, for follow-up of that that, I comparability. a playing would I’m out of growth, be on. even But normalized pass you and if profitability, a

I expecting that kind XQ case? down of see, just it a, XQ, and Lori, is; So flattish sort bit a of drill very to why that to the little clearly, believe b, which EBITDA. I you’re correct, wanted that is And so is

Lori Beaudoin

Yes.

the will than forecast So, this little some did with did we larger the a our some and opening a extent of saw shipments we But had bit expansion, little nice expansion we we of up QX to on-premise to regard quarter. some quarter, margin into into a that things and one faster expected. next QX, see DTC had that bring and normalize margin we and

shouldn’t we margin So, continue. see that expansion

year. extent we So, expect prior margin see expansion we full drops public to down, as didn’t the for To that do mentioned, we the incur the you that in year. that do company modest have, costs the

In that, fees, company as well have we this we of those outsized to D&O, and types to year. costs things some professional and that addition need public bear

So, our we continue had the prudent guide in we it’s on to to guidance. think original EBITDA as

Operator

next the with line Nik Capital RBC Modi Markets. Your from comes question of

Filippo Falorni

Falorni for Filippo Nik. is on This

check spirits? speaking, the can First there. update question, seeing if other I and you’re wanted as little you the in to performing a recovery is give wine And the on-premise broadly such on-premise business bit business more on category more how to relative beverages, alcoholic

Lori Beaudoin

Thank Yes. you.

really business having a up California little benefit bit had in quicker of is as a So ago. quarter picking And nicely. tougher comp last soft year, that shutdown terms pretty California saw our picking we yes, up and experienced a on-premise same year

Brands, well on-premise our growth gross us California, quite as terms picking profit well for which picking a well. as in does Winery for did on-premise which So our Other of margin in margin have in us up as higher up us, helped

So, those on-premise’s two things with regard to health.

in relationships. seeing Now, their back know days will getting our during are our have wine there sell that lists their team helping we’re wines them. And about as and retain and that smaller restaurants well, consumers also list. coming They’re building paying out a with wines keeping are the our of on-premise Those there. now. on and paying little we are we sales that line, be familiar their They are they wine flows, the doing smaller and that on attention some on-premise cash bit talked COVID, will contacts, we’ve to of as folks quite that’s they past, dividends did us tougher

Filippo Falorni

then, Got overall, other of category it. beverages. seeing in And terms of with are category competition alcoholic what in the on-premise, you the terms wine

basis. there? recovery You’ve on a seen relative a Any thoughts strong

Lori Beaudoin

Yes.

on-premise up doing we about So, competitors, we that our don’t quite are ones are seeing wine well. picking seeing we but are is really talk that

they the on and selling them getting through. are We’re list,

I So, list. we -- as wine are mentioned, a shorter it’s

the bigger So, that a are we in they of is mind and doing have restaurants when the piece consumers’ nicely. the wine

Operator

Your Morgan. next with Teixeira Andrea question of the from comes line JP

Unidentified Analyst

[ph] Alex, This to taking go is I for said our questions. to Andrea. you on something Levine last everyone. back for Thanks Hey, wanted quarter. Drew

October, maybe around of early and industry it more noted conservatism some slowdown. kind the Just in sounded overall a on-premise like

playing if it November, does, directionally So, changed I if that? then guess, anything you in I think October, kind could comment is into I’m how that on curious, of

Alex Ryan

the Yes. I overall. I that that a Since our business on-premise step comment, really positive and Delta and need reactionary comment. of And with back. seen think you we’ve virus a remember bit little time, results was to

we’re about impacts. delta the pandemic -- cautious So, the

However, -- our the is we taking competitors, see largest the of competitors evidenced in taking seen, IRI that, data share, you’ve XX which are significantly share beyond most sure. for over

our a to I the dealing of past moving think variant in a of an Omnicron back we than keep on So, ago. mind. I and lot, with this at are that we’re off to well that all that there’s as positioned our want with society, to with just just to think but both we’ve continue X don’t the pandemic on have we’re momentum. we and comment, better forward the we, in to now, unknown months that that And I’m been grow that X kind overstress lives

about guidance why we the mode And of way did. optimistic we’re that’s in we’re kind reiterated where we’ve heading. So,

Unidentified Analyst

your if maybe and long-term good the increases price that’s curious with of sounds they’ve just for those -- chain share? related anything supply seeing obviously, comment allowing like more advantage I’m if competitive to strategies then suppliers if could relationships have changes really and leading more environment, to and pressure you promotional take maybe and sort with any and on some you nice take of it have you visibility, some been and that competitors cost at or kind in competitors have you And to retail contracts with. guys

Alex Ryan

we’re category question. been be luxury a not may That’s on competitive. our to what industry And has always in. The or comment That’s multipronged the going very affecting not may wine competitors. I’m

the we’re luxury to sure I’m we’re strategy. that acquisition cost of that into our stay I’d competitive the a that I all chain, competitors, top competitive pressures. plays think to going within not on think continue are the remain have I to sales pricing the to to management, set from basis our like same all wine levels feel enough So, so. space. long-term Well, competitive at looked up of a lot overall feeling to proper positioned we make comment on planning, customer to proper to all at perfectly forward -- we

Operator

line next the Bank comes America. Your with Peter from of question Galbo of

Peter Galbo

you XX%? to just helping I us it’s it’s that investment are Is in others it were I you and think us paying how least to outpace frame sales Is other the worth feel sense, it’s commentary, a how only or just it lists But, of our mind the and don’t lost investment want why now? to a it at there of so that you on of way times. get and for quantify Alex, there like the come dividends force, you’re keeping made on any XX% was couple before in in much a just I is know kind competitors? you way give on do on-premise wine

Alex Ryan

pandemic. Peter, investment people invested people that’s support the was they core the us. right? for business, and of in perfectly of And do at what I in our during the

on-premise, there’s on So, -- I can’t data on-premise. points, data independent there’s no good no collection with especially and

you, pandemic. can it’s kept We the did relationships. But feel the relationship that. ahead of the that masks allowed across the meaningful I the has a wanted, it’s on-premise with of business, kept stay do can’t days significant because We very way person-to-person us We met I on to add And been So, competition. our whatever during retain a building, facings customers darkest the nationwide. connections. on we tell amount met either of restaurants table, a to or

meaningful to take positioning and numbers, in of out So, you to pull share. you know our say continue me, customers delight it’s only I’d tell can not but but to the pandemic be reluctant I

Peter Galbo

wine that helpful. have M&A the of that closing But are in more give you you of the bit as a assets feel kind again, of hot space, of closer? you’re detail up I markets just the least in know from Okay. been Just be the the your you the lay market like hands on. maybe, Do the heats or little there’s going at No, And guys, private curious, And perspective. in towards. that kind love any a fuller is pipeline right get they’d vineyards in us trading land now? around that just brands space. that’s private Alex, I’d number to are what

Sean Sullivan

This Peter. hope is well. Sure, I you’re Sean.

to QX. those. your that, should with are So, parcels land, I Valley planted a Vineyards Duckhorn Sauvignon on varietals Migration. about Napa to AVA during other toward Chardonnay come nicely excited question including first all that are our the and be They earmarked brands, we’re of in three Blanc, so think close probably a of answer will and ultra-luxury they properties, and number really This wine

XXXX the closely to and we looking entitlements is the focused for but to with to exciting strong we’re ahead things growth do thicker, at on their and well. didn’t M&A so to very year, us, In one the XXXX disciplined that combined future have of we be to and for is are we horizon, have winery a and if that front. sort potentially to perspective, are of be plans active growth that’s the and them sustainable. to and remiss that we But be pipeline those current very both a also those use, So, and remind broader adjacent the of in getting see we that very property on disciplined organic our eagerly something are to entitlements, as M&A because look branded attractive continuation I active our the be do I on. you would flexibility agricultural

Operator

comes line Lieberman Barclays. the Lauren with of question from next Your

Lauren Lieberman

bit and industry Great. already could are ahead you’re I we about in knowing the a was guys comfortably that traffic curious outpacing you talk little foot on-premise, Thanks. California if levels. of XXXX

was you I would front things the can as yet in traffic. of where are channel sense if us go anything of on-premise in terms on versus a fits you unfold of give that think curious -- you So, And And calendar to return that still front we I offer room think XXXX. of into kind even of tourism, ‘XX. could tasting overall

Alex Ryan

it’s and still it’s really create I’m normalized would to sure. think the to but increase it’s off don’t are evidence us opportunity, a it increase and be, a not if kind it indicate expect know person. allowed ‘XX, seeing and ‘XX ultimate think the going Similarly, we’re our to it in balance, forced of -- think, between go and traditional sales new I I improve. more continue it’s to to a foot that on, will back restrictions, balance, what don’t to I stabilize going will but we but I normal, -- to to COVID traffic continues and us on levels, I split remaining back patterns. new that’s tasting and traffic redefining off There new think some on-premise to is going rooms, continue that per on the

translating normal higher capitalize attention per visitor than able been to increased into on slightly and near we’ve with accounts increased customer. and So, lower normal rings normal really

job in really, a good doing and once that’s doing that future us only a great for in it’s evangelists So tasting customers -- leave. creating but not job room, the they

and think resonating wine seem to country trends improving. quantity lines -- are both quality with our want travels to People the are that brands they’re So, and and good. I our

so, encouraged likely continue. that, will by most And we’re

Lauren Lieberman

improvement then, a business also question the That’s of just of great. I outside had California further distribution. the on And and the in steady development

on types to drivers making regions that. particular of states, country any the you’re the I spoke was offer you But perspective account kind if You or of of could lot a where curious hard of kind substantive track of it’s able way, just just you’re you’re us in hotspots, to offer. perspective really channel making to headway would so states, progress be type for any the if since interesting key

Alex Ryan

both basis, On say -- questions, to proud think, that a answer we’re tell I I’m heard. excited pretty you and to Lauren, I’m regional even. I it’s happy, I’ll I’m

and bodes well think general of and I the the for the just brands label. acceptance that wineries the

if imbalance, any wouldn’t there’s So, say I on disproportionate will. a you --

that us as think the I approach our is the So, brands more data Company’s our becoming balance point and the accepted throughout are across for region. more -- country being excellent

So, that’s good.

that separate have accounts of very works terms national In we team team that with very as well-positioned a accounts works with whole national independents. a well and aggressive -- as

at our customers broad footprint manage all we’re We a So base. kind angles. of all in distribution very attacking potential

us. where but them, make been very partners to to extremely -- been we’ve our to continue they’ve necessary, We distributor good been good adjustments and have

expectations. partnerships the how they’re is the our -- they plan hit distributors goals met and how understanding and goals demonstrating how So, of to our and support us, at our and the goals, and being can they can to at hit we

So, we and goals the comfortable ability with to our continue feel our distribution long very haul. confident very to manage over

Operator

time. questions turn to further the this like Alex. call are over to no There I’d back at

Alex Ryan

quarter strength: disciplined as I performance. luxury our factors I driving five of chain; an I relative levels place Our high-growth in unrivaled portfolio; the to go-to-market today want supply for first all on to our Duckhorn the us thank relative right. our of have quality, review brand focus strategy; close noting see to All again our and would you we joining like advantaged by talent wine; scaled differentiated strength broader market. These our our the and at diversified the position organization. to

the will that holiday we with XXXX results. second confident in forward March for speaking again year you I’d to season quarter safe and continue are our to come. fiscal wine years when to proven allow We look a to wish like report our happy to playbook market you and us lead luxury all

Operator

you concludes conference This participating. everyone. for you, Thank call. Thank today’s

You may now disconnect.

The Duckhorn Portfolio, Inc. (NAPA) 9 Dec 212022 Q1 Earnings call transcript