The Duckhorn Portfolio Announces Fourth Quarter and Fiscal Year 2024 Financial Results

Rhea-AI Summary

The Duckhorn Portfolio (NYSE: NAPA) reported its Q4 and fiscal year 2024 financial results. Q4 highlights include:

• Net sales of $107.4 million, up 7.3% year-over-year
• Net income of $11.3 million, or $0.08 per diluted share
• Adjusted EBITDA of $39.9 million, up 16.7%

Fiscal year 2024 highlights include:

• Net sales of $405.5 million, up 0.7% year-over-year
• Net income of $56.0 million, or $0.45 per diluted share
• Adjusted EBITDA of $155.1 million, up 7.3%

The company successfully integrated Sonoma-Cutrer, contributing to volume growth. However, excluding Sonoma-Cutrer, net sales declined due to shifts in release timing and product mix.

Positive

• Q4 net sales increased 7.3% to $107.4 million
• Q4 Adjusted EBITDA grew 16.7% to $39.9 million
• Q4 Adjusted EBITDA margin improved by 300 basis points to 37.2%
• Fiscal year 2024 Adjusted EBITDA increased 7.3% to $155.1 million
• Successful integration of Sonoma-Cutrer acquisition
• Company's leverage ratio at 2.0x net debt to trailing twelve months adjusted EBITDA

Negative

• Excluding Sonoma-Cutrer, Q4 net sales declined 13.9%
• Q4 gross profit margin decreased from 55.2% to 47.8%
• Fiscal year 2024 net income decreased to $56.0 million from $69.3 million in the prior year
• Fiscal year 2024 adjusted net income decreased 3.2% to $74.8 million
• Negative price/mix contribution of 16.4% in Q4 due to product release timing shifts

Fourth Quarter Net Sales of $107.4 million, an Increase of 7.3%

Fourth Quarter Net Income of $11.3 million; Adjusted Net Income of $20.4 million

Fourth Quarter Adjusted EBITDA of $39.9 million, an Increase of 16.7%

ST. HELENA, Calif.--(BUSINESS WIRE)-- The Duckhorn Portfolio, Inc. (NYSE: NAPA) (the “Company”) today reported its financial results for the three months and fiscal year ended July 31, 2024.

Fourth Quarter 2024 Highlights

• Net sales were $107.4 million, an increase of $7.3 million, or 7.3%, versus the prior year. Excluding Sonoma-Cutrer, net sales declined $13.9 million or 13.9% versus the prior year, due primarily to the shift in timing of the Kosta Browne Appellation Series release into Q3 in fiscal 2024 from Q4 in fiscal 2023.
• Gross profit was $51.3 million, a decrease of $4.0 million, or 7.2%, versus the prior year. Gross profit margin was 47.8%, versus 55.2% in the prior year. Excluding Sonoma-Cutrer, gross profit declined $10.8 million or 19.5% and gross profit margin was 51.6%.
• Adjusted gross profit was $55.0 million, in line with the prior year. Adjusted gross profit margin was 51.2%, versus 55.1% in the prior year. Excluding Sonoma-Cutrer, adjusted gross profit declined $10.3 million or 18.7% and gross profit margin was 52.1%.
• Net income was $11.3 million, or $0.08 per diluted share, versus $17.8 million, or $0.05 per diluted share, in the prior year. Adjusted net income was $20.4 million, or $0.14 per diluted share, versus $16.7 million, or $0.15 per diluted share, in the prior year.
• Adjusted EBITDA was $39.9 million, an increase of $5.7 million, or 16.7%, and Adjusted EBITDA margin improved by approximately 300 basis points versus the prior year to a margin of 37.2%.
• Cash was $10.9 million as of July 31, 2024. The Company’s leverage ratio was 2.0x net debt (net of deferred financing costs), to trailing twelve months adjusted EBITDA.

Fiscal Year 2024 Highlights

• Net sales were $405.5 million, an increase of $2.8 million, or 0.7%, versus the prior year. Excluding Sonoma-Cutrer, net sales declined $18.4 million or 4.6% versus the prior year.
• Gross profit was $214.9 million, a decrease of $0.8 million, or 0.4%, versus the prior year. Gross profit margin was 53.0% versus 53.6% for the prior year. Excluding Sonoma-Cutrer, gross profit declined $7.6 million or 3.5% and gross profit margin was 54.2%.
• Adjusted gross profit was $217.4 million, a decrease of $0.8 million, or 0.4% versus the prior year. Adjusted gross profit margin was 53.6%, versus 53.7% in the prior year. Excluding Sonoma-Cutrer, adjusted gross profit declined $9.3 million or 4.3% and gross profit margin was 53.9%.
• Net income was $56.0 million, or $0.45 per diluted share, versus $69.3 million, or $0.60 per diluted share, for the prior year. Adjusted net income was $74.8 million, or $0.60 per diluted share, decreasing by $2.5 million, or 3.2%, versus $77.3 million, or $0.67 per diluted share, for the prior year.
• Adjusted EBITDA was $155.1 million, an increase of $10.6 million, or 7.3%, versus the prior year. Adjusted EBITDA margin improved by approximately 230 basis points versus the prior year, to a margin of 38.2%.

“We are pleased to conclude fiscal 2024 with a solid fourth quarter performance,” said Deirdre Mahlan, President, CEO and Chairperson. “We meaningfully advanced our strategic agenda in fiscal 2024, delivering strong operating and financial performance against a dynamic backdrop, including the strategic acquisition of Sonoma-Cutrer. We believe the successful integration of this marquee brand, coupled with the continuing execution against our strategic initiatives positions the business for solid growth and profitability into fiscal 2025 and beyond.”

Fourth Quarter and Fiscal Year 2024 Results

	Three months ended July 31,						Fiscal year ended July 31,
	2024			2023			2024			2023
Net sales growth	7.3	%		28.3	%		0.6	%		8.2	%
Volume contribution	23.7	%		10.6	%		3.1	%		5.6	%
Price / mix contribution	(16.4	)%		17.7	%		(2.5	)%		2.6	%

	Three months ended July 31,						Fiscal year ended July 31,
	2024			2023			2024			2023
Wholesale – Distributors	78.3	%		65.1	%		69.8	%		67.9	%
Wholesale – California direct to trade	14.8			15.9			16.3			17.1
DTC	6.9			19.0			13.9			15.0
Net sales	100.0	%		100.0	%		100.0	%		100.0	%

Fourth Quarter 2024 Financial Information

Net sales were $107.4 million, an increase of $7.3 million, or 7.3%, versus $100.1 million for the prior year. The increase in net sales was driven by 23.7% volume growth with the introduction of our recently acquired Sonoma-Cutrer winery. The negative price/mix contributed 16.4%, as our higher-priced Kosta Browne release shifted to the third quarter versus a fourth quarter release in the prior year. The introduction of Sonoma-Cutrer which is substantially comprised of white varietals which traditionally sell at a lower price point than red varietals also impacted the price/mix contributed for the quarter.

Gross profit was $51.3 million, a decrease of $4.0 million, or 7.2%, versus the prior year. Gross profit margin was 47.8%, declining 740 basis points versus the prior year. Adjusted gross profit which excludes approximately $3.3 million in purchase accounting adjustments from inventory acquired in the acquisition of Sonoma-Cutrer was $55.0 million, approximately in line with the prior year. Adjusted gross profit margin was 51.2% declining 390 basis points versus the prior year, as a result of the shift in timing of the release of higher-margin Kosta Browne to the third quarter of fiscal 2024. A return to more normalized trade spend also contributed to a reduction in gross margin versus the prior year.

Total selling, general and administrative expenses were $30.6 million, an increase of $0.2 million, or 0.7%, versus $30.4 million in the prior year. As a percentage of net sales, SG&A declined 190 basis points due to active operating expense management.

Net income was $11.3 million, or $0.08 per diluted share, versus $17.8 million, or $0.05 per diluted share, in the prior year. Adjusted net income was $20.4 million, or $0.14 per diluted share, versus $16.7 million, or $0.15 per diluted share, in the prior year.

Adjusted EBITDA was $39.9 million, an increase of $5.7 million, or 16.7%, versus $34.2 million in the prior year. Adjusted EBITDA margin improved 300 basis points versus the prior year. The increase was driven by higher net sales and profitability, partially offset by higher cost of goods sold.

Conference Call and Webcast

The Company will no longer host its earnings conference call and webcast previously scheduled for today, Monday, October 7, 2024, at 4:30 p.m. EST.

About The Duckhorn Portfolio, Inc.

The Duckhorn Portfolio is North America’s premier luxury wine company, with eleven wineries, ten state-of-the-art winemaking facilities, eight tasting rooms and over 2,200 coveted acres of vineyards spanning 38 Estate properties. Established in 1976, when vintners Dan and Margaret Duckhorn founded Napa Valley’s Duckhorn Vineyards, today, our portfolio features some of North America’s most revered wineries, including Duckhorn Vineyards, Decoy, Sonoma-Cutrer, Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Postmark, Canvasback and Greenwing. Sourcing grapes from our own Estate vineyards and fine growers in Napa Valley, Sonoma County, Anderson Valley, California’s North and Central coasts, Oregon and Washington State, we offer a curated and comprehensive portfolio of acclaimed luxury wines with price points ranging from $20 to $230 across more than 15 varietals. Our wines are available throughout the United States, on five continents, and in more than 50 countries around the world. To learn more, visit us at: https://www.duckhornportfolio.com/. Investors can access information on our investor relations website at: https://ir.duckhorn.com.

Use of Non-GAAP Financial Information

In addition to the Company’s results, which are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company believes the following non-GAAP measures presented in this press release and discussed on the related teleconference call are useful in evaluating its operating performance: adjusted gross profit, adjusted selling, general and administrative expenses, adjusted EBITDA, adjusted net income and adjusted EPS. Certain of these non-GAAP measures exclude depreciation and amortization, non-cash equity-based compensation expense, purchase accounting adjustments, impairment losses, inventory write-downs, changes in the fair value of derivatives, and certain other items, net of the tax effects of all such adjustments, which are not related to the Company’s core operating performance. The Company believes that these non-GAAP financial measures are provided to enhance the reader’s understanding of our past financial performance and our prospects for the future. The Company’s management team uses these non-GAAP financial measures to evaluate business performance in comparison to budgets, forecasts and prior period financial results. The non-GAAP financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. A reconciliation is provided herein for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Readers are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures.

Forward-Looking Statements

This press release includes forward-looking statements. These forward-looking statements generally can be identified by the use of words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “forecast,” “goal,” “project,” and other words of similar meaning. These forward-looking statements address various matters including statements regarding the timing or nature of future operating or financial performance or other events. For example, all statements The Duckhorn Portfolio makes relating to its estimated and projected financial results or its plans and objectives for future operations, growth initiatives or strategies are forward-looking statements. Each forward-looking statement contained in this press release is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Applicable risks and uncertainties include, among others, the Company’s ability to manage the growth of its business; the Company’s reliance on its brand name, reputation and product quality; the effectiveness of the Company’s marketing and advertising programs, including the consumer reception of the launch and expansion of our product offerings; general competitive conditions, including actions the Company’s competitors may take to grow their businesses; overall decline in the health of the economy and the impact of inflation on consumer discretionary spending and consumer demand for wine; the occurrence of severe weather events (including fires, floods and earthquakes), catastrophic health events, natural or man-made disasters, social and political conditions, war or civil unrest; risks associated with disruptions in the Company’s supply chain for grapes and raw and processed materials, including corks, glass bottles, barrels, winemaking additives and agents, water and other supplies; risks associated with the disruption of the delivery of the Company’s wine to customers; disrupted or delayed service by the distributors and government agencies the Company relies on for the distribution of its wines outside of California; the Company’s ability to successfully execute its growth strategy; risks associated with our acquisition of Sonoma-Cutrer Vineyards, Inc.; decreases in the Company’s wine score ratings by wine rating organizations; quarterly and seasonal fluctuations in the Company’s operating results; the Company’s success in retaining or recruiting, or changes required in, its officers, key employees or directors; the Company’s ability to protect its trademarks and other intellectual property rights, including its brand and reputation; the Company’s ability to comply with laws and regulations affecting its business, including those relating to the manufacture, sale and distribution of wine; the risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to both domestic and to international markets; claims, demands and lawsuits to which the Company is, and may in the future, be subject and the risk that its insurance or indemnities coverage may not be sufficient; the Company’s ability to operate, update or implement its IT systems; the Company’s ability to successfully pursue strategic acquisitions and integrate acquired businesses; the Company’s potential ability to obtain additional financing when and if needed; the Company’s substantial indebtedness and its ability to maintain compliance with restrictive covenants in the documents governing such indebtedness; the Company’s largest shareholders’ significant influence over the Company; the potential liquidity and trading of the Company’s securities; the future trading prices of the Company’s common stock and the impact of securities analysts’ reports on these prices; and the risks identified in the Company’s other filings with the SEC. The Company cautions investors not to place considerable reliance on the forward-looking statements contained in this press release. You are encouraged to read the Company’s filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update or revise any of these statements. The Company’s business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

THE DUCKHORN PORTFOLIO, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except shares and per share data)
	July 31, 2024			July 31, 2023
ASSETS
Current assets:
Cash	$	10,872		$	6,353
Accounts receivable trade, net		52,262			48,706
Due from related party		10,845			—
Inventories		448,967			322,227
Prepaid expenses and other current assets		14,594			10,244
Total current assets		537,540			387,530
Property and equipment, net		568,457			323,530
Operating lease right-of-use assets		27,130			20,376
Intangible assets, net		192,467			184,227
Goodwill		483,879			425,209
Other assets		7,555			6,810
Total assets	$	1,817,028		$	1,347,682
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,774		$	4,829
Accrued expenses		34,164			38,246
Accrued compensation		11,386			16,460
Current operating lease liabilities		2,869			3,787
Current maturities of long-term debt		9,721			9,721
Due to related party		1,714			—
Other current liabilities		1,116			1,417
Total current liabilities		66,744			74,460
Revolving line of credit, net		101,000			13,000
Long-term debt, net of current maturities and debt issuance costs		200,734			210,619
Operating lease liabilities		24,286			16,534
Deferred income taxes		151,104			90,216
Other liabilities		705			445
Total liabilities		544,573			405,274
Stockholders’ equity:
Common stock, $0.01 par value; 500,000,000 shares authorized; 147,073,614 and 115,316,308 issued and outstanding at July 31, 2024, and July 31, 2023, respectively		1,471			1,153
Additional paid-in capital		1,011,265			737,557
Retained earnings		259,135			203,122
Total The Duckhorn Portfolio, Inc. stockholders’ equity		1,271,871			941,832
Non-controlling interest		584			576
Total stockholders’ equity		1,272,455			942,408
Total liabilities and stockholders’ equity	$	1,817,028		$	1,347,682

THE DUCKHORN PORTFOLIO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except shares and per share data)
	Three months ended July 31,							Fiscal year ended July 31,
	2024			2023				2024				2023
Sales	$	108,965		$	101,362			$	410,966			$	408,442
Excise tax		1,570			1,267				5,485				5,446
Net sales		107,395			100,095				405,481				402,996
Cost of sales		56,083			44,813				190,555				187,307
Gross profit		51,312			55,282				214,926				215,689
Selling, general and administrative expenses		30,614			30,404				120,083				109,711
Income from operations		20,698			24,878				94,843				105,978
Interest expense		5,068			3,882				18,103				11,721
Other expense (income), net		2,087			(3,597	)			(84	)			(212	)
Total other expenses, net		7,155			285				18,019				11,509
Income before income taxes		13,543			24,593				76,824				94,469
Income tax expense		2,247			6,825				20,803				25,183
Net income		11,296			17,768				56,021				69,286
Net loss (income) attributable to non-controlling interest		—			1				(8	)			12
Net income attributable to The Duckhorn Portfolio, Inc.	$	11,296		$	17,769			$	56,013			$	69,298
Earnings per share of common stock:
Basic	$0.08			$0.15				$0.45				$0.60
Diluted	$0.08			$0.15				$0.45				$0.60
Weighted average shares of common stock outstanding:
Basic	147,060,134			115,173,211				123,436,717				115,233,324
Diluted	147,077,828			115,376,739				123,549,109				115,407,624

THE DUCKHORN PORTFOLIO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
	Fiscal year ended July 31,
	2024				2023
Cash flows from operating activities
Net income	$	56,021			$	69,286
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes		30				(267	)
Depreciation and amortization		37,168				27,768
Loss on disposal of assets		981				157
Change in fair value of derivatives		716				34
Amortization of debt issuance costs		775				975
Impairment loss		1,200				—
Equity-based compensation		7,319				6,290
Inventory reserve adjustments		479				722
Change in operating assets and liabilities; net of acquisition:
Accounts receivable trade, net		(3,554	)			(11,679	)
Due from related party		(10,845	)			—
Inventories		(61,863	)			(33,894	)
Prepaid expenses and other current assets		(2,773	)			2,281
Other assets		(1,810	)			(917	)
Accounts payable		(1,239	)			1,549
Accrued expenses		(11,143	)			7,002
Accrued compensation		(5,350	)			3,567
Deferred revenue		13				(6	)
Due to related party		1,714				—
Other current and non-current liabilities		(3,679	)			(2,776	)
Net cash provided by operating activities		4,160				70,092
Cash flows from investing activities
Purchases of property and equipment		(27,967	)			(72,843	)
Proceeds from sales of property and equipment		307				271
Acquisition of business, net of cash acquired		(49,614	)			—
Net cash used in investing activities		(77,274	)			(72,572	)
Cash flows from financing activities
Payments under line of credit		(47,000	)			(121,000	)
Borrowings under line of credit		135,000				24,000
Issuance of long-term debt		—				225,833
Payments of long-term debt		(10,000	)			(120,166	)
Proceeds from employee stock purchase plan		247				350
Taxes paid related to net share settlement of equity awards		(496	)			(680	)
Payment of equity issuance costs		(118	)			—
Debt issuance costs		—				(2,671	)
Net cash provided by financing activities		77,633				5,666
Net increase in cash		4,519				3,186
Cash - Beginning of year		6,353				3,167
Cash - End of year	$	10,872			$	6,353
Supplemental cash flow information
Interest paid, net of amount capitalized	$	18,273			$	10,393
Income taxes paid	$	34,110			$	11,562
Non-cash investing and financing activities
Property and equipment additions in accounts payable and accrued expenses	$	8,547			$	3,360
Consideration payable for the acquisition of Sonoma-Cutrer in due to related party	$	1,342			$	—
Value of shares issued related to the acquisition of Sonoma-Cutrer	$	267,072			$	—

THE DUCKHORN PORTFOLIO, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

Adjusted gross profit, adjusted selling, general and administrative expenses, adjusted net income, adjusted EBITDA and adjusted EPS, collectively referred to as “Non-GAAP Financial Measures,” are commonly used in the Company’s industry and should not be construed as an alternative to net income or earnings per share as indicators of operating performance (as determined in accordance with GAAP). These Non-GAAP Financial Measures may not be comparable to similarly titled measures reported by other companies. The Company has included these Non-GAAP Financial Measures because it believes the measures provide management and investors with additional information to evaluate business performance in comparison to budgets, forecasts and prior year financial results.

Non-GAAP Financial Measures are adjusted to exclude certain items that affect comparability. The adjustments are itemized in the tables below. You are encouraged to evaluate these adjustments and the reason the Company considers them appropriate for supplemental analysis. In evaluating adjustments, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments set forth below. The presentation of Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or recurring items.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that the Company calculates as net income before interest, taxes, depreciation and amortization, non-cash equity-based compensation expense, purchase accounting adjustments, transaction expenses, acquisition integration expenses, changes in the fair value of derivatives and certain other items which are not related to our core operating performance. Adjusted EBITDA is a key performance measure the Company uses in evaluating its operational results. The Company believes adjusted EBITDA is a helpful measure to provide investors an understanding of how management regularly monitors the Company’s core operating performance, as well as how management makes operational and strategic decisions in allocating resources. The Company believes adjusted EBITDA also provides management and investors consistency and comparability with the Company’s past financial performance and facilitates period to period comparisons of operations, as it eliminates the effects of certain variations unrelated to its overall performance.

Adjusted EBITDA has certain limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of these limitations include:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• adjusted EBITDA does not reflect changes in, or cash requirements for, the Company’s working capital needs;
• adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debt;
• adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to the Company; and
• other companies, including companies in the Company’s industry, may calculate adjusted EBITDA differently, which reduce their usefulness as comparative measures.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including net income and the Company’s other GAAP results. In evaluating adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company’s presentation of adjusted EBITDA should not be construed as an inference that the Company’s future results will be unaffected by the types of items excluded from the calculation of adjusted EBITDA.

Adjusted Gross Profit

Adjusted gross profit is a non-GAAP financial measure that the Company calculates as gross profit excluding the impact of purchase accounting adjustments (including depreciation and amortization related to purchase accounting), non-cash equity-based compensation expense, and certain inventory charges. We believe adjusted gross profit is a useful measure to us and our investors to assist in evaluating our operating performance because it provides consistency and direct comparability with our past financial performance between fiscal periods, as the metric eliminates the effects of non-cash or other expenses unrelated to our core operating performance that would result in fluctuations in a given metric for reasons unrelated to overall continuing operating performance. Adjusted gross profit should not be considered a substitute for gross profit or any other measure of financial performance reported in accordance with GAAP.

Adjusted Net Income and Adjusted Selling, General and Administrative Expenses

Adjusted net income is a non-GAAP financial measure that the Company calculates as net income excluding the impact of non-cash equity-based compensation expense, purchase accounting adjustments, transaction expenses, acquisition integration expenses, changes in the fair value of derivatives and certain other items unrelated to core operating performance, as well as the estimated income tax impacts of all such adjustments included in this non-GAAP performance measure. We believe adjusted net income assists us and our investors in evaluating our performance period-over-period. In calculating adjusted net income, we also calculate the following non-GAAP financial measures which adjust each GAAP-based financial measure for the relevant portion of each adjustment to reach adjusted net income:

• Adjusted SG&A – calculated as selling, general, and administrative expenses excluding the impacts of purchase accounting, transaction expenses, acquisition integration expenses, equity-based compensation; and
• Adjusted income tax – calculated as the tax effect of all adjustments to reach adjusted net income based on the applicable blended statutory tax rate for the period.

Adjusted net income should not be considered a substitute for net income or any other measure of financial performance reported in accordance with GAAP.

Adjusted EPS

Adjusted EPS is a non-GAAP financial measure that the Company calculates as adjusted net income divided by diluted share count for the applicable period. We believe adjusted EPS is useful to us and our investors because it improves the comparability of results of operations from period to period. Adjusted EPS should not be considered a substitute for net income per share or any other measure of financial performance reported in accordance with GAAP.

THE DUCKHORN PORTFOLIO, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share data)
	Three months ended July 31, 2024
	Net sales				Gross profit				SG&A				Adjusted EBITDA				Income tax				Net income				Diluted EPS
GAAP results	$	107,395			$	51,312			$	30,614			$	11,296			$	2,247			$	11,296			$	0.08
Percentage of net sales						47.8	%			28.5	%			10.5	%
Interest expense														5,068
Income tax expense														2,247
Depreciation and amortization expense						143				(1,902	)			10,470
EBITDA													$	29,081
Purchase accounting adjustments						3,320								3,320				551				2,769				0.02
Transaction expenses										(739	)			739				56				683				—
Acquisition integration costs										(307	)			307				51				256				—
Change in fair value of derivatives														2,433				404				2,029				0.01
Equity-based compensation						226				(1,894	)			2,120				328				1,792				0.01
Impairment loss										(1,200	)			1,200				199				1,001				0.01
Loss on property and equipment										(710	)			710				118				592				—
Non-GAAP results	$	107,395			$	55,001			$	23,862			$	39,910			$	3,954			$	20,418			$	0.14
Percentage of net sales						51.2	%			22.2	%			37.2	%
	Three months ended July 31, 2023
	Net sales				Gross profit				SG&A				Adjusted EBITDA				Income tax				Net income				Diluted EPS
GAAP results	$	100,095			$	55,282			$	30,404			$	17,769			$	6,825			$	17,769			$	0.15
Percentage of net sales						55.2	%			30.4	%			17.8	%
Interest expense														3,882
Income tax expense														6,825
Depreciation and amortization expense						114				(2,105	)			7,240
EBITDA													$	35,716
Purchase accounting adjustments						19								19				5				14				—
Transaction expenses										(256	)			256				71				185				—
Change in fair value of derivatives														(2,909	)			(807	)			(2,102	)			(0.02	)
Equity-based compensation						140				(1,212	)			1,352				321				1,031				0.01
Lease income, net		(364	)			(364	)			(141	)			(223	)			(62	)			(161	)			—
Non-GAAP results	$	99,731			$	55,191			$	26,690			$	34,211			$	6,353			$	16,736			$	0.15
Percentage of net sales						55.1	%			26.7	%			34.2	%

Note: Sum of individual amounts may not recalculate due to rounding.

THE DUCKHORN PORTFOLIO, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share data)
	Fiscal year ended July 31, 2024
	Net sales				Gross profit				SG&A				Adjusted EBITDA				Income tax				Net income				Diluted EPS
GAAP results	$	405,481			$	214,926			$	120,083			$	56,013			$	20,803			$	56,013			$	0.45
Percentage of net sales						53.0	%			29.6	%			13.8	%
Interest expense														18,103
Income tax expense														20,803
Depreciation and amortization expense						469				(10,463	)			37,168
EBITDA													$	132,087
Purchase accounting adjustments						3,379								3,379				915				2,464				0.02
Transaction expenses										(9,963	)			9,963				834				9,129				0.07
Acquisition integration costs										(923	)			923				250				673				0.01
Change in fair value of derivatives														716				194				522				—
Equity-based compensation						806				(5,614	)			6,420				1,589				4,831				0.04
Impairment loss										(1,200	)			1,200				325				875				0.01
Loss on property and equipment										(710	)			710				192				518				—
Lease income, net		(2,176	)			(2,176	)			(1,862	)			(314	)			(85	)			(229	)			—
Non-GAAP results	$	403,305			$	217,404			$	89,348			$	155,084			$	25,017			$	74,796			$	0.60
Percentage of net sales						53.6	%			22.0	%			38.2	%
	Fiscal year ended July 31, 2023
	Net sales				Gross profit				SG&A				Adjusted EBITDA				Income tax				Net income				Diluted EPS
GAAP results	$	402,996			$	215,689			$	109,711			$	69,298			$	25,183			$	69,298			$	0.60
Percentage of net sales						53.5	%			27.2	%			17.2	%
Interest expense														11,721
Income tax expense														25,183
Depreciation and amortization expense						476				(7,815	)			27,768
EBITDA													$	133,970
Purchase accounting adjustments						350								350				93				257				—
Transaction expenses										(4,051	)			4,051				982				3,069				0.03
Change in fair value of derivatives														34				9				25				—
Equity-based compensation						420				(5,042	)			5,462				1,299				4,163				0.04
Debt refinancing costs														865				231				634				0.01
Lease income, net		(364	)			(364	)			(141	)			(223	)			(59	)			(164	)			—
Non-GAAP results	$	402,632			$	216,571			$	92,662			$	144,509			$	27,738			$	77,282			$	0.67
Percentage of net sales						53.7	%			23.0	%			35.9	%

Note: Sum of individual amounts may not recalculate due to rounding.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241007005375/en/

Investor Contact

Ben Avenia-Tapper

ir@duckhorn.com

707-339-9232

Media Contact

Jessica Liddell, ICR

DuckhornPR@icrinc.com

203-682-8200

Source: The Duckhorn Portfolio, Inc.

FAQ

What was Duckhorn Portfolio's (NAPA) Q4 2024 net sales?

Duckhorn Portfolio's Q4 2024 net sales were $107.4 million, an increase of 7.3% compared to the prior year.

How did Duckhorn Portfolio's (NAPA) Q4 2024 adjusted EBITDA perform?

Duckhorn Portfolio's Q4 2024 adjusted EBITDA was $39.9 million, an increase of 16.7% compared to the prior year.

What was Duckhorn Portfolio's (NAPA) fiscal year 2024 net income?

Duckhorn Portfolio's fiscal year 2024 net income was $56.0 million, or $0.45 per diluted share.

How did the Sonoma-Cutrer acquisition affect Duckhorn Portfolio's (NAPA) Q4 2024 results?

The Sonoma-Cutrer acquisition contributed to 23.7% volume growth in Q4 2024, but also impacted price/mix due to its lower-priced white varietals.

What was Duckhorn Portfolio's (NAPA) leverage ratio at the end of fiscal year 2024?

Duckhorn Portfolio's leverage ratio was 2.0x net debt to trailing twelve months adjusted EBITDA as of July 31, 2024.