NAPA - Earnings call transcript Q2 2024 | The Duckhorn Portfolio, Inc.

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Operator

Good evening, ladies and gentlemen. Thank you for joining today's Duckhorn Portfolio Q2 2024 Earnings Conference Call. My name is Cole, and I'll be the moderator for today's call. [Operator Instructions]I'd now like to turn the call over to our host, Ben Avenia-Tapper, Vice President, Investor Relations. Please proceed.

Ben Avenia-Tapper

to Portfolio's welcome Earnings Quarter and Call. Conference afternoon, The Second Duckhorn XXXX Good

The will p.m. went the should ended second today's Deirdre accessible archived And Chief be access press give call website you call, release January based shortly by it, and the Chief on we and forward-looking Eastern me Joining discussion out ir.duckhorn.com. are the remind we a In will to risks XX, an and webcast everyone Sean that Chief remarks such, today's moment, on for Jennifer accompanying Legal environment and Officer. the Executive Mahlan, Chairperson; see currently now, followed begin, Fall uncertainties. that Officer; today's Jung, statements presentation Financial at of at I quarter a on X:XX and we are Sullivan, as Strategy approximately Officer; and as next after XX President, conclusion the earnings Time. brief XXXX, company's includes Q&A.By have contains like release for Interim the would days.Before to

refer U.S. measures. consumption will to with and period underlying that you track today's from measures.In growth a the earnings financial filings, financial forward-looking the investors company's prior SEC XX-week future.We January versus in on comparable non-GAAP the to statements for believe measures the will in measures dollar Circana full will most of of to period on you the obligation that year in noted.With statements. these scanner Please number call business of company reconciliation GAAP growth have I'll call to otherwise forward-looking revise no note unit a the a of that, or ended perspective undertakes and references these same is according release, update company's the Duckhorn's the to recent to release presentation and please If earnings that factors useful the retail make trends to provide cited refer We actual the turn could to the materially cause discussion results see included all earnings differ the Deirdre. our data remember channels, or most and in unless XX, XXXX, over addition, non-GAAP these

Deirdre Mahlan

Thanks, Ben, to quarter you today XXXX joining discuss performance. and afternoon, good everyone. Thank our second us financial for

and market Following expectations. our guidance.Amid remarks, net results of will updated walk short financial our fell opening my year conditions, us challenging Jennifer XXXX through quarterly our fiscal sales

broader by wine wines and Duckhorn consistently as luxury the $XX market above reported outperformed However, Circana.

While we the believe past industry is guidance growth what expect will we for been softness updated to X%, has XX to to across expect we XXXX. fiscal rate share continue, wine in and industry the take outpace assume over the coming the quarters. market, in to which weeks luxury flat continue our persist we the The and for luxury that

focused well are take growth.Despite headwinds, industry in our quarter and second profitability control. positioned we believe We as delivered our $XX second brand continues incremental segment of in tier the broader of plus the to Portfolio The in market, continue we to these strong broader share outperform With market equity the we within price those to the the exceed $XX the largest that half. strength to volume Duckhorn factors and on initiatives

strength more gross strong as operator, margins wine cost million data. XX% adjusted than which market, and and Importantly, quarter, luxury XX.X%, to basis margin Duckhorn our our grew ability by broader the Not to to wine only Circana robust period, a we prior adjusted of improvement a demand multiple XXX-basis-point EBITDA to does wind points points by across the basis operating year it XXX the driven $XX.X highlight environments.To effectively of EBITDA evidence business we outpace The according XXX to by manage over and profitably nearly management. approximately the also is market this our ability is over speak Portfolio outperformed luxury and by total

reflects distributor continue outlook However, line we our cautious year midpoint outlook retail Duckhorn's which conditions, to our inventory tiers luxury wine remains implied low both we evidence we range, the industry, our year top to to market ability our full softer second market. and assertively mid-single-digit while results take proven such half in Incorporating and quarter adjustments impact are the the second half managing growth near-term the more taking growth for cautious. that second fiscal the share, guidance, market of the saw outperform by a as is inventory.The challenging revising did a of rate view of of results industry offset and for the

longer contributing for retail by-the-glass programs, third, second and which with distributors Merlot; discuss outlook conviction continue to Decoy normalized Chardonnay among basis the growth In as encompasses strong improved Decoy product Sauvignon wines, half most continuation inalcohol our revised I'll full baseline of and upside which including half, second new return a net expectations.As within an This Our additional presentation, outlook the including comes range. market impact encourage been our our second growth channel, assumes confidence these Despite in period, but These results decline consumer net to grow multiple underpins reintroducing as second in supported for wholesale includes opportunities. $XXX you million.I'll sales. to our as some that Duckhorn Circana plus to to conditions. blocks approximately from channel building luxury popular detailing lower- other and slide Decoy lower-incalorie, half terms The of below magnitude, introduction in new our to as exceed Appalachian-specific we ability over the our rate the past with the a reduce Robles at saw million steady-state is alignment forecasts side, in data. look our our of here, Paso factors, our innovation, X the our our proven additional from earnings add to to of the visitation signs, the in We softness.On recent and second, brands has industry retailer which of availability items of are previously rooms consistent wine the near-term view market top to positive $XXX order industry half described, X also as in demand the Duckhorn and On in the refer XXX well these XX-week expected highs. baseline to Limited end now from we I the offerings; dollar XXX resulting Limited the flat the growth forward-looking Decoy Sauvignon, to distinct club distributor between are: depletions year the in trailing that for our see initiatives has perform half. it inventories challenges as term partners, pandemic by as they incremental remains which the first, programming Featherweight, continues to between we quarter. the more and turn points to showing on upside In Limited X% softer Blanc of shipments account Cabernet membership second but of growth, sales initiatives. direct-to-consumer and tasting

on for meaningful a business, pillars. we channel, sales wholesale important discussed, valuable its of halo previously has see we've business. as the own and a which As X our DTC opportunity DTC, organic one in effect our is right marketing growth

This to versa.Based our deliver accounts post-closing. want our decoy see valuable unlocks growth continues brand, a innovation. portfolio, from wines accounts see speaks is Duckhorn a increase a was We in look within Today, Sonoma-Cutrer continue consumers, the The continues generating decades to to most to most to created I part in of grown individual luxury the double-digit sustaining in Circana the on in brands more than both a wines. the a that one of as to of as The and of per Limited. of sales analysis, as proof incredibly well whole Portfolio recognize Decoy and ago. opportunity strong more cross-sell and close further a opportunity introduce This perspective. brand and we the on-premise brands our in data.Finally, growth on leverage number also tier than strength something is Portfolio to this accounts, XXXX nothing has and with from as Decoy within continue the experiences about we of early Vineyards we opportunity that it. Limited of through of wholesale its growth growth account vice time considerable brand toward to wines varietal reaching includes point, build opportunity our a way the Sonoma-Cutrer that most Duckhorn customers.Drilling as strong the a we our to price acquisition take focus both we curation key Decoy, the excited down channel we're effectively. Perhaps awareness carry of It success consumers to of and acquisition. popular our I excess off-premise number labels available, perspective, higher strength note increase unique in extensions to of and broader position significant strategy at lasting as price Launched the a relationships ultra-high-end delight consistently resonates our to X

to combined we track and note portfolio of of close part initiated growth.Continuing wholesaler with as acquisition I'll have strategy our for for Sonoma-Cutrer, the alignment spring. we is that Additionally, on this market review our remain that to integration comprehensive route a efficient our to of optimized planning, our ensure

per we now is work primarily acquiring number I our near-term the while to work We're we synergies, are the in within the first team we to approximately results in Circana extract OpEx. a outlook we cost while $X brand are for do, of later to for as long-term portfolio operating we we We from the growth.With time opportunities by on I'll look the announced to million described. opportunity combined several more asset our environment. incremental the incredible this additional as have the spring.I'll minimum accounts provide execution in cost data as confidence in an and intervening great we savings pleased saying, months, and excellent sustained expenses. that, strength the forward described speaks the account, to our more evidenced robust costs brand to on ability labels additional financial turn progress making details to When supports plans, entities and be drive that that weather With believe architecture year. to Jennifer our continuing and find in and visibility over just fit capitalize to to profitable equity our quarter our demand fluctuations with and The of you our conclude challenging hard of when updating by close a

Jennifer Fall Jung

you, of as on second QX. well By above management. XXXX, comparisons decrease flat good demand initial the dynamic softness Thank sales everyone.We Deirdre, I'll net with to delivered in results the and beyond expectations. were the X.X% a distributor quarter of channel, our otherwise expense extended we net fiscal profitability and gross were continue effectively retail are Despite and sales stated.Beginning in line, inventory from sales, active top near-term reset provide net the navigate the operating $XXX to afternoon, quarter. a million, environment. unless expectations wholesale-to-distributor the margins now strong All

strategic DXC offset the controls our to inventory our XX roughly drivers previously expectations with typically partners, wholesale-to-distributor of that our chain. tighter what business. across we Distributor leverage and net was sales. by in declined Despite lighter hand days.California continue for wholesale accounts trade impacted quarter wholesale deliver is the which to with down of the to these As in key net represent on accounts, were and line brand direct of per by objectives was label growth. with supply The same account sales line X.X%, factors distributor and net a days the our X.X%, expectations our expand driven retail discussed, factors on new broadly during channel inventory our both direct-to-consumer

business to for As of we previously success DXC P&L. it noted, adjust amidst transition.Moving the a we continue our post-pandemic position down period to

grower diluted X.Xx in $XXX.X we an of driven million, costs the our $XX.X Adjusted the across year-over-year. which improved X% growth, second multiple On share. a net basis, up lower we period million, adjusted million, of due basis influenced strong of of total spend fiscal results luxury our in Adjusted This gross had strong points SG&A expectations outperform declined in well EBITDA rolling was of management pending by to levels.SG&A $XX.X driven the In the have XXX Adjusted keeping in expectations and primarily updated to million, we despite per profit controls. to sales. year-over-year or leverage income million, as XX line and with of share to for the or by points These improved or XXXX to per with leverage wine $X.X million X% of our softness total payments.I'll of XX.X%, $X.XX expenses EBITDA the net more current growth half our the million debt trade be approximately Vineyards.Net our cost initiatives spend for as half volumes basis growth. now driven year-over-year. a line by of cash versus exclude the million the transaction reflects seasonality decrease million operating gross margin and quarter as of $X.X proven ratio XXX $X.X trade out year second full with debt gross $XX.X resulting points our Sonoma-Cutrer industry, offset Second Note prior At XX.X%, margin year. basis was quarter, near-term adjusted expectations our by our in increase ability $XX.X optimize but our flat was cost that the quarter. an both related incremental depletion represents $XX.X quarter. second historical throughout was are by second million end of net margin quarter acquisition XX.X% or diluted income was $X.XX million to year of share. improvement half $XX.X outlook, $XX.X

million year does we approximately second represents $XXX of to Deirdre guidance acquisition expect our low XXXX, positive mid-single-digit our now X% minus implies Sonoma-Cutrer.For XXXX, sales of the growth range $XXX for the to reminder, of fiscal in million, a the which include net As pending discussed. not as full of which X%, growth to half

$X.XX want the on to to represents and XX.X% $XXX our of expect basis what EBITDA, share. range also growth. color Browne to Kosta from previous from midpoint, Browne For a brand. range our on guidance adjusted expect million provide we $XXX annual to This of an Kosta or diluted expect seasonality X% up of offering, some we Series to we focus management.For $X.XX the due a we per EBITDA release points million from I adjusted flat perspective a at largest XX adjusted our execution of cost to primarily margin the Appalachian continue as winery timing EPS,

can find detail in You accompanying also our this presentation.

was release third will the in the XXXX. we've fiscal As previously, this in than be described quarter, quarter fourth as shipped rather case the

in margin of XXXX, year will expect of in impact quarter. a second expect XX% between gross gross prior XX% front, availability quarter some respective net rates growth in split and which the an improvement our significant fourth driven third of the net specifically, approximately we the margin More popular sales in by quarter.On second third the and As half X a factors result, product fiscal are half variance for both sales fourth of versus quarter the most products. we the

which directly margin. at program, indirectly albeit drives glass enhanced the and brand awareness, through by wine our lower restarting we're First, sales both a

and of second first relative year. last the trade The half to is increased factor spend year the

and growth return spend to We continue expectations. align historical expect second our to with to levels half trade

to second gross net we in quarter high the ability pleased our deliver expansion. be XXXX than result, fourth to lower to with sales the a are point the anticipated, we below ensure quarter.While continue As the fiscal we second and business were margin toggle achieved third quarter expect margin to

expect we this largely by a fiscal anticipate in be shifting post-pandemic the half will year. complete Importantly, inventory second adjustments be the and outlook smaller will they caused

the in continue wine hand sustained, it now to and will luxury we confident industry, are our in Deirdre. you. leading a I ability of As with growth.Thank strongest one long-term back company profitable to take share the brands to deliver

Deirdre Mahlan

and Thanks, We including the with profitable launches. I innovation our always completion up growth value plans, making interim remain term strive am of long X-month of Sonoma-Cutrer the Duckhorn challenging to half for second to my Jennifer.I'm And The our pleased the delivering deliver future the to the sustained progress on Portfolio. coming shareholders. mark dynamics, as acquisition is and create will committed growth organization CEO despite in on industry

committee DTC through portfolio, our on will update environment Our a consistent: strength, brief drivers growth our beyond.Before questions, support drivers to These our growing remain and current The and expanding brand long-term narrowed growth of with, made channel. has I'll search. forward evolving demand we network move are wholesale and I and initial that, our the search leveraging our questions. the CEO with provide updating several our Jennifer, available Board your progress to great candidates the as Sean is I to pool down has to pleased the process.With that continue you and I look take very

Operator

first Nik Our is Modi from question with Instructions] [Operator RBC.

Nik Modi

you X I just -- see the at was on in was consumer consumption optimization. wholesale Deirdre, inventory but was just comment can about in dynamics, from your the mentioned level terms you something And just just, So wondering you comment question overall happening. quick a can questions. the function second you backdrop. hoping perspective, if of then what was guidance Certainly, of change I the

provide was you're you think go-to-market And California if your in and the about a that clarity you what just state. business maybe and rethinking hoping so could more I little bit

Deirdre Mahlan

Thanks. Okay.

consumer. my First, I'll give the you on view

you the growth in sector sure fortunate are that to much what time I'm a been forecast be consumption. for difficult hear period. price tiers actually are a remained post operating is as and through to quite wine have we in volatile say, kind growth in in has of would of I this Clearly, pandemic Although many,

guidance to what what's on-premise consumer off-premise.The in that and pandemic the we're been the that reason seems we kind was reflected activity of and our a off-premise. terms more behaviors, think DTC in particular is a to variable response a the versus continued our chain happening both our their and in of I in and the for there time, stable levels seeing And for on- here in X the the from dynamic that business we be of expect range kind that in pandemic in happening period. that's that quote, affecting really both X has -- the there's

it's a little periods, Some down.

Some bumps, a right the from which up. -- the But little stable that's hasn't out it across deviated periods, you word, periods, that's consecutive -- too much range. that take probably it's if look even much pretty but of not some XX-week been is

consumers. data. $XX. is our people of not may but to of tier seeing we're XXs in above see So is come think we're that be trading next of the come X as abatement important interest I we're core I be to $XX, that $XX to trend and mean everyone and $XX People a can that what down inflation, much in seeing, looks into going see expecting we this moving down it through note and like.I actually Circana you important out from price not some it's months, or rates the think consumer the do where not will that this from seeing to some the evidence down behavior

at fiscal for of we look to as in year it a we And Duckhorn your play that we're acquisition is I continue any forward, really, scale brands. mean barring is shift. think significantly on to if show of a second trigger, expecting of respect that the you distributor, the been business, that event the So just would and a rest any consider has has if see the couple scale now Sonoma-Cutrer. acquisition, the question out.With yes, big We're growing pending there I

right aligned. and we're back the a for how us moment was wholesale take step relationships, this thought to look we our at So

alignment wholesaler As talked business table. course, all about the the forward. by we you comprehensive and and But we going in about of our we of do wholesalers represented take we're is as some Portfolio about before. thinking at needed a to potential state.So back on and always different step imagine, of keep anyway, California and Sonoma-Cutrer of I mean, can we evaluating in same review to everything represented our is with the we think looking do decided will happy The the and a We're, business. on kind Duckhorn And a all some with we've had full opportunities states that.

Operator

is with Gajrawala Jefferies. from Our Kaumil next question

Kaumil Gajrawala

This is on follow-up bit a a Nik's question. little of

that? more I what the decide half, to really time, to to think how we the is then that a want what second that on in caused sales think contributor corrections. the we to led the to sense? distribution observing been have a story. just you've much as give growth wholesalers are into And back seeing your try much inventory is they incremental to they or for piece view which them about dig negative distribution maybe embedded obviously Like as some curious quite guidance, And a

Deirdre Mahlan

Okay.

start kind the business. situation of we So weakness and seeing of situation though would end and we've hearing, been at not. clearly, first and wholesalers And can growth let expected quarter second to our I've We first our as distributors guidance in and can the their thought I you with obviously, through the to were what that, did quarter and see came our to of first me our still it us conveyed our that abate. about even kind in talk the guidance orders, have this the first from -- what improve, quarter question.

are our in inventory. softer.And us, bit being of more about What which -- retailers the smaller deals in they retailer buying the through destocking, saw you as kind terms cases saying it same about wholesalers were that of the reticent buying retail has to taking trade. and terms taking been come when fact, that In is softness there thing of a got XXXX, they

managing So inventory. they clearly were their

increases working to price about they in is our they it worry As interest didn't. increasing half grocery own have XXXX, and the us had stopped wholesalers capital, in second their and rates, et improve of to cetera.What told the expected that

So you of into half retailer in got our through seeing behavior. quarter, they then improvement and when weren't second second terms the

prices, and then I the inventory press brands are and this expect the second that they themselves of all consumer to to then a levels say, products.So the inventories And confidence on the looking just much and inflation gives they're -- taking concerns retailers those down. on need some to what return to view think in would the their manage retailers stock what where gotten the us retailers and business they growth. there course, start wholesale that read So we started effectively.From cetera, food the where will can sure the about are seeing and more our to don't managing about question... in have point et just was make our because, are believe inventory conservative reflect spoken people continue we that And growth. that at the is I've do replace know to restock about And longer now to as start growth because that's look,

Jennifer Fall Jung

question. thanks Kaumil, for the

growth, look account as accounts white both the grew the an absolutely And we still and and our we see off-premise over opportunity base. account within space our perspective, course on-premise forward for from So of their quarter.

also customer Paso we've Limited, growth, business which our that's organic demonstrating like pillars Featherweight through Decoy through our which But of So our as acquisitions, and Decoy we're our demonstrating been with our experience, well other portfolio and absolutely DXC our our our coupled expansion, strategy. as growth part inorganic Sonoma-Cutrer. now strategy, like of are still

but with and front part as avenues strategy, we're of other growth that definitely well. center our supporting So

Operator

next is question Barclays. Our Lauren with Lieberman from

Lauren Lieberman

could free curious It in flow pretty you was significantly. bit cash about little I the if just a quarter. talk changed the

a in So I'd bit the more color for on free on going outlook what's love cash little the year. with

Jennifer Fall Jung

for Thanks question. Yes. the

to So and our have due a grower payments, in did the all to quarter cash of big due seasonality. that's we use

And so but normally don't reflected seasonality we business. should free our there. of on within typically outlook that give is And flow, our an cash our it follow

both We fund our facility we will credit will as as as have use well. which the well through acquisition, to internal cash that

Lauren Lieberman

Okay. [indiscernible] Great.

Deirdre Mahlan

Lauren, bit. cutting a you're up

Lauren Lieberman

Okay.

Let slowing, you market so just carrying I'll on there with And [indiscernible] me about the wholesalers a I itself and feel do demand conversations okay? and do of gave with having not, offline. end if on saying, retailers the about it color try the again. consumer consumer on to inventory market was lot and of but being for the customary terms healthier, steps the in behavior consumption. being to closer different trade we in terms overall not industry? of views of hearing in growth their you rate just of Are terms X down, get sort when a more

Jennifer Fall Jung

did. crystal short pick But seeing been we've term, you're reflect, heard historically guidance does least the now. wish up ball Yes. at cutting We thought quite out throughout a so bit, in which I'll QX. what we where And a our have I I the question, was and right don't we

that forward. tried through, we've we've And data our -- we've we that so see into guidance go the to come sure just did since make baked

Operator

from with Evercore. Our Greg next question Porter is

Gregory Porter

down seeing the the Or years? purchases home over overall at have seen that -- trends. you Are last in actually the from you down? sourcing also boil it the underlying the during working few the category weakness we you of on be to, question quick to consumer some down made from when is consumption from. pantry guess, I like a general has seeing Just where levels Are it's come COVID try may that

Deirdre Mahlan

what It's that, consumer's pantry. to hard know in exactly to know know We there the hard It's Greg. was loading. was pantry

off-premise. is course, from. than on-premise business, still volume the is coming the shift of more the tend impact that volume industry and hypothesis where the we've spirits across so beverage what wisdom home come at that well in wine. and destocking through The has to in of does in And terms it that, in of the alcohol they're the been XXXX, consumer has timing to think And behavior softness as the I of as is going while as the some particular, of where occasions of volume

So any the responding than near in we inflation are of know economy. in I and business normal behavior other consumption term. that. the other known see do shift the consumer term overall impacting or trends right that In the happening market now of the what's terms in to consistent don't near and

Operator

question with Teixeira JPMorgan. next from Our Andrea is

Drew Levine

Levine Andrea. This for on is Drew

So you guidance relative able about context kind the slower of more some guidance. to updated is on get inventory just the hoping lower can consumption of much overall be Maybe adjustment trends. to how to talk

talk in thinking and could quarter you helpful. if about the would versus both half, the to inventory kind So depletions were of of in kind depletion that be trends how what your second you're

Deirdre Mahlan

then I Jennifer in mean second we more shipments. is holiday and then -- There's quarter, I'll the in bill reversal add some the every saw reversal. can the there much did see up the that second a -- Look, leading was a a in quarter first deeper depletions we exceed to half there's year, color. What and start a of trend.

we So shipments the more quarter, than what by much depletions in second exceeded anticipated.

what is that they we expecting expect, earlier happen our range upon is half, overall but the rebalance to we're that questions are the a the As are that what degree that the on the itself. one of one based I trend. more still to improvement well wholesalers -- underlying an within normalization.And telling to expect of we come again, that be If that said there in because is we we us of do through normalization start to second doesn't expect think we And assumptions. guidance

I within why our are we guidance as if is, And the We it the growth of that. because about is range And that what there reversal as are anticipating we're is of the expected, so well it industry unknowns think that -- some of entirely doesn't we reverse that still think reason pace specifics as our rates. well do the range. some

Jennifer Fall Jung

Yes. And it the I'll well, this down quarter. within -- inventory What we add on see as just I'll that. continued come our to distributors quarter-over-quarter, in

them. So within it's where well target we

inventory lot So there's of there. out not a

Sean Sullivan

Page question. And in as Jennifer XX, piecing growth probably outlined mentioned, is a elements of also your helpful there in drivers our half is the together on that second other deck

Drew Levine

I of Can activity you follow-up. a but if I then Okay. seeing environment? you the guess, have are growth asking slowed, margin increase guess, the the has activity past in over to well the talk -- brands I just of kind to to as or pickup, some any demand. Great. quarters. competitive Clearly, And gross strong several in kind retailers behind about wholesalers or And the you could drive relation, promotional industry performance for that's

be there any So helpful. would thoughts

Jennifer Fall Jung

Yes.

also start through And mindful buying actually what in standard you value currently promotions. them. versus I promotional saw market where you our a $XX where We're hearing within really below have for the our promotions requests the not very And we're is And then increased that's we with see with share model cadence. segment, quarter distributors, maintained we're for do because of lack receiving play think sustain. to we better word, working we the in a from promotional more to additional was that or where not playing. a promotions -- so activity always of hard

track on we're with So strategy. our

Operator

with Our next BMO. Strelzik Andrew question from is

Andrew Strelzik

the first those margin And think the to you through referenced? confidence you rate? of durable is some particular, hold year? you was are comment Or of the levels this run for good to do in a rest of on rest of whether XQ on SG&A in operating year? Maybe are that the the if that the And could side. you on My one trend you could kind can how gains you quarter, expect hoping you the that I how margin the drivers key cost on management elaborate on

Jennifer Fall Jung

Great. question. the margins. Thanks with for start I'll

that our So high there landed as spend covers was different also bit well a underneath labels, from landed based on the trade in margin the quarter believe was help our the and the of we sales mix QX as mark where our a margin. support do which

As -- up normalize as our for we spoke back we pressure be and tell, mentioned, based in half call, spend on to line with will will there the are the as are on rate the growth we which, trade on back mid-single-digit sales, margin you directly our in about low believe can half. the and

the EBITDA where on side, to the guidance or guidance in adjusted above we op we back margin and lot you and been the SG&A that expect the we've in sales industry been that of was coming throughout reflected do what -- year, a costs lot the tightly really, back side managing And year, of is items. see that's of net half. a So midpoint our cost we our pressure, is. a on receiving cutting our will knew the And line.From we're the where on very there's the really perspective, continue into nonessential

entertainment, very that any extremely supporting just that just stuff which It's growth. cost being about. back-office taking We whether is organization, really of headcount being the of are travel, out or all our kind we're be it prudent, dogmatic not

Andrew Strelzik

which the you speak of And really I Okay. second is you that are relative if you'll to the what's and that? underpinning more the Sonoma-Cutrer much change the be then management inventory could, synergy cadence expressing consumer there kind question, kind optimism could and how is side, portfolio don't That's think But on of helpful. environment that broader know expected? to on you And sense this. can to to acquisition. leverage I initially extent any you the the And the to had able how

Jennifer Fall Jung

the Yes. Thanks question. for

to deeper on synergies, going the we was lot to consumer that our it's through with the share specifically we the in -- how been don't a brand, we've we we'll And when within we play think about those synergies. of look from better first draft get terms months few acquisition, our by feel what lot information the a great had we now and to have. announced on grab where more can that's We've and information based on perspective, go partnering we we no, going where have calls. lot Brown-Forman, acquisition, able a -- a that's a very some about confident like portfolio. then a And to future On

Sean Sullivan

work continue we and and prepare is brand, And we're I good it's very to for part of to to as would Jennifer the to we're Sean. the finding with of feeling add, to think continuing value the once going continuation our respect spring. just out point, we it noted, and what doing just being it well, about the shows further positive we're for of to strength be is able more data, there as Jennifer's to It's this integration portfolio. and Circana add do example, later

Operator

with Our is Bank from Galbo next America. question of Peter

Peter Galbo

of drag. on I that how bit are guess on margin maybe And a I unpack early just going one, just think I can more to or program, little you you by the called now have? you the far -- learnings it the glass of you into restart the it mention wine you be the kind did think expand a a was bit

that Just help bit kind understand a us of more. little

Jennifer Fall Jung

inventory why were into Yes. and the program, for Yes, had about to stock within the some that's getting Peter. about little Duckhorn shortages, the we wine few on Great. specifically a a the back pull back talked Thanks half. in the -- we we those so question, And had glass bit -- Chardonnay on we others. and by back

way of we great brands drain Starting some really what of to some awareness. a though it expose that's people on up, it brand So to momentum. caused -- it's even lose that a margin, really of us get feel all and bit a kind back our of is to us do

our of part pays brands. of it's dividends to off we the continue and it's as investment get more because it program, we in So that worth portfolio feel people into

Operator

at time. this no have questions We additional

back to the closing remarks. So management I'll any pass call team the for

Deirdre Mahlan

us Cheers. and Thanks performance we look with fiscal third to everyone. for for 'XX. you forward year our results. our joining for everyone, Okay. quarter our report guidance quarter today again speaking Thanks, I in again, June second when

Operator

Thank today's you your for all concludes call. That participation. conference

You disconnect may now your line.

The Duckhorn Portfolio, Inc. (NAPA) 7 Mar 242024 Q2 Earnings call transcript