Q3 2024 Duckhorn Portfolio Inc Earnings Call Transcript
Key Points
- The Duckhorn Portfolio Inc (NAPA) achieved strong gross margins and expense control, driving an adjusted EBITDA of $37.7 million with a 40.8% margin.
- The company successfully integrated the Sonoma-Cutrer acquisition, expecting up to $10 million in cost synergies, double the initial forecast.
- New product innovations, such as Decoy Featherweight Sauvignon Blanc, have been well received, with reorder rates exceeding expectations.
- The direct-to-consumer channel saw a significant increase of 71.4%, reflecting a shift in Kosta Browne offerings.
- The company has a strong portfolio of brands and a robust wholesale network, which has been strengthened by a realigned distributor network.
- Net sales growth was modest at 1.4%, with wholesale-to-distributor net sales declining by 11% due to weaker demand.
- The Kosta Browne Appellation series underperformed expectations, contributing to top-line pressure.
- The broader wine industry faced challenging market conditions, with luxury wine consumer data showing a 1% decline in Q3.
- On-premise sales dipped in Q3, impacting the uptake of by-the-glass programs.
- There is ongoing uncertainty in the market, leading to a wide range in the company's Q4 net sales guidance.
Good afternoon, ladies and gentlemen. Thank you for joining today's Duckhorn Portfolio Q3 2024 earnings conference call. My name is Tamira, and I will be your moderator for today's call. (Operator Instructions)
I would now like to pass the call over to Ben Avenia-Tapper, Vice President, Investor Relations. Please proceed.
Good afternoon, and welcome to the Duckhorn Portfolio's third-quarter 2024 earnings conference call. Joining me on today's call are Deirdre Mahlan, President, Chief Executive Officer, and Chairperson; Jennifer Fall Jung, Chief Financial Officer; and Sean Sullivan, Chief Strategy and Legal Officer.
In a moment, we will give brief remarks followed by the Q&A. By now, everyone should have access to the earnings release for the third quarter ended April 30, 2024, that went out at approximately 4:05 PM Eastern time. The press release and an accompanying presentation are accessible on the company's website at [email protected], and
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