The Duckhorn Portfolio (NAPA) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 increased 1.4% year-over-year to $92.5 million, driven by timing shifts in DTC offerings and higher price/mix, despite industry headwinds and softer Kosta Browne performance.

• Net income declined 20.7% year-over-year to $13.3 million, or $0.12 per diluted share; adjusted net income was $16.3 million, or $0.14 per diluted share.

• Adjusted EBITDA rose 5.3% to $37.7 million, with margin improving 150 basis points to 40.8%.

• Integration of Sonoma-Cutrer acquisition and wholesale distributor network realignment are key strategic initiatives, with cost synergies expected up to $10 million.

• Outperformed the luxury wine market, supported by operating efficiency and cost management.

Financial highlights

• Q3 net sales were $92.5 million, up 1.4% year-over-year; nine-month net sales were $298.1 million, down 1.6%.

• Adjusted EBITDA was $37.7 million for Q3 and $115.2 million for nine months, both up year-over-year.

• Gross profit for Q3 was $51.4 million, with gross margin at 55.6%; nine-month gross margin was 54.9%.

• Net income for Q3 was $13.3 million; adjusted net income was $16.3 million.

• Cash at quarter end was $15.7 million; total debt was $315.3 million; leverage ratio at 2.1x net debt.

Outlook and guidance

• FY2024 net sales guidance revised to $398–$408 million, including $16 million from Sonoma-Cutrer in Q4.

• Adjusted EBITDA expected at $146–$150 million (1–4% growth), with a margin of 36.7%.

• Adjusted EPS guidance is $0.56–$0.58 per diluted share; effective tax rate: 27–29%.

• Interest expense expected at ~$18 million.

• Management expects Sonoma-Cutrer acquisition to be accretive in the first full fiscal year, with estimated run-rate synergies up to $10 million.