Shares of Duckhorn Portfolio (NAPA +0.00%) were down 12% on Thursday after the California-based winemaker announced weaker-than-expected quarterly results.
For its fiscal first quarter ended Oct. 31, 2023, Duckhorn's revenue fell 5.2% year over year to $102.5 million, translating to adjusted (non-GAAP) net income of $15.5 million, or $0.13 per share. Analysts, on average, were expecting higher earnings of $0.15 per share on revenue of $103.6 million.
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Key Data Points
Why management is pleased with Duckhorn's quarter
Even so, Duckhorn Chairperson and CEO Deirdre Mahlan noted the quarter's results were near the higher end of management's expectations, particularly as the company "lapped an unseasonably strong first quarter in the prior year."
"We saw growth across multiple brands, as our carefully curated portfolio of luxury wines continue to outperform a mixed industry climate."
Trending toward the bottom line, Duckhorn's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) declined a more modest 2.7% to $34.7 million. Adjusted EBITDA margin expanded by 90 basis points from the same year-ago period thanks to less discounting and astute cost management.
Last month Duckhorn also announced a $400 million cash-and-stock deal to acquire Sonoma-Cutrer Vineyards from Brown-Forman (BF.A 2.04%) (BF.B 2.42%).
"We are excited about our pending acquisition of Sonoma-Cutrer Vineyards, which we believe will add depth to our brand architecture with one of the most recognized and celebrated luxury Chardonnay brands on the market," added Ms. Mahlan.
What's next for Duckhorn stock?
In the meantime, excluding any contributions from Sonoma-Cutrer, Duckhorn narrowed its guidance for full fiscal-year 2024 (ending July 31, 2024) net sales of $420 million to $427 million (from $430 million at the top end before), and adjusted EBITDA of $150 million to $153 million (from $155 million on the high end previously). The company reiterated its full-year outlook for adjusted earnings per share of $0.67 to $0.69.
All told, though management was pleased with the quarter relative to internal expectations, Wall Street obviously wanted more. Duckhorn stock is simply responding in kind today.
