Cover
Cover - shares | 6 Months Ended | |
Jan. 31, 2024 | Feb. 28, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jan. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-40240 | |
Entity Registrant Name | The Duckhorn Portfolio, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-3866305 | |
Entity Address, Address Line One | 1201 Dowdell Lane | |
Entity Address, City or Town | Saint Helena | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94574 | |
City Area Code | 707 | |
Local Phone Number | 302-2658 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | NAPA | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 115,409,107 | |
Entity Central Index Key | 0001835256 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --07-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Position - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Current assets: | ||
Cash | $ 13,139 | $ 6,353 |
Accounts receivable trade, net | 51,822 | 48,706 |
Inventories | 392,634 | 322,227 |
Prepaid expenses and other current assets | 12,254 | 10,244 |
Total current assets | 469,849 | 387,530 |
Property and equipment, net | 324,461 | 323,530 |
Operating lease right-of-use assets | 17,937 | 20,376 |
Intangible assets, net | 180,447 | 184,227 |
Goodwill | 425,209 | 425,209 |
Other assets | 6,047 | 6,810 |
Total assets | 1,423,950 | 1,347,682 |
Current liabilities: | ||
Accounts payable | 14,252 | 4,829 |
Accrued expenses | 25,060 | 38,246 |
Accrued compensation | 9,382 | 16,460 |
Deferred revenue | 5,211 | 66 |
Current maturities of long-term debt | 9,721 | 9,721 |
Other current liabilities | 4,965 | 5,138 |
Total current liabilities | 68,591 | 74,460 |
Revolving line of credit | 68,000 | 13,000 |
Long-term debt, net of current maturities and debt issuance costs | 205,677 | 210,619 |
Operating lease liabilities | 14,145 | 16,534 |
Deferred income taxes | 90,216 | 90,216 |
Other liabilities | 517 | 445 |
Total liabilities | 447,146 | 405,274 |
Commitments and Contingencies (Note 9) | ||
Stockholders’ equity: | ||
Common stock, $0.01 par value; 500,000,000 shares authorized; 115,409,107 and 115,316,308 issued and outstanding at January 31, 2024 and July 31, 2023, respectively | 1,154 | 1,153 |
Additional paid-in capital | 740,548 | 737,557 |
Retained earnings | 234,516 | 203,122 |
Total The Duckhorn Portfolio, Inc. stockholders’ equity | 976,218 | 941,832 |
Non-controlling interest | 586 | 576 |
Total stockholders’ equity | 976,804 | 942,408 |
Total liabilities and stockholders’ equity | $ 1,423,950 | $ 1,347,682 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Position (Parenthetical) - $ / shares | Jan. 31, 2024 | Jul. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 115,409,107 | 115,316,308 |
Common stock, shares outstanding (in shares) | 115,409,107 | 115,316,308 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Income Statement [Abstract] | ||||
Net sales (net of excise taxes of $1,407, $1,469, $2,801 and $3,052, respectively) | $ 103,045 | $ 103,488 | $ 205,554 | $ 211,659 |
Cost of sales | 44,727 | 48,302 | 93,383 | 101,763 |
Gross profit | 58,318 | 55,186 | 112,171 | 109,896 |
Selling, general and administrative expenses | 29,247 | 29,579 | 59,730 | 55,318 |
Income from operations | 29,071 | 25,607 | 52,441 | 54,578 |
Interest expense | 4,500 | 2,684 | 8,504 | 4,846 |
Other expense, net | 2,696 | 2,743 | 883 | 2,656 |
Total other expenses, net | 7,196 | 5,427 | 9,387 | 7,502 |
Income before income taxes | 21,875 | 20,180 | 43,054 | 47,076 |
Income tax expense | 6,021 | 5,265 | 11,650 | 12,352 |
Net income | 15,854 | 14,915 | 31,404 | 34,724 |
Net loss (income) attributable to non-controlling interest | 3 | 2 | (10) | 8 |
Net income attributable to The Duckhorn Portfolio, Inc. | $ 15,857 | $ 14,917 | $ 31,394 | $ 34,732 |
Earnings per share of common stock: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.27 | $ 0.30 |
Diluted (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.27 | $ 0.30 |
Weighted average shares of common stock outstanding: | ||||
Basic (in shares) | 115,376,711 | 115,191,575 | 115,358,242 | 115,187,868 |
Diluted (in shares) | 115,415,348 | 115,327,660 | 115,593,594 | 115,424,809 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Income Statement [Abstract] | ||||
Excise taxes | $ 1,407 | $ 1,469 | $ 2,801 | $ 3,052 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Total The Duckhorn Portfolio, Inc. stockholders’ equity | Common stock | Additional paid-in capital | Retained earnings | Non-controlling interest |
Beginning balance (in shares) at Jul. 31, 2022 | 115,184,161 | |||||
Beginning balance at Jul. 31, 2022 | $ 867,161 | $ 866,573 | $ 1,152 | $ 731,597 | $ 133,824 | $ 588 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 34,724 | 34,732 | 34,732 | (8) | ||
Issuance of common stock under equity incentive plans (in shares) | 22,365 | |||||
Equity-based compensation (Note 10) | 2,985 | 2,985 | 2,985 | |||
Issuance of employee stock purchase plan (in shares) | 12,870 | |||||
Issuance of employee stock purchase plan | 181 | 181 | 181 | |||
Ending balance (in shares) at Jan. 31, 2023 | 115,219,396 | |||||
Ending balance at Jan. 31, 2023 | 905,051 | 904,471 | $ 1,152 | 734,763 | 168,556 | 580 |
Beginning balance (in shares) at Oct. 31, 2022 | 115,184,161 | |||||
Beginning balance at Oct. 31, 2022 | 888,150 | 887,568 | $ 1,152 | 732,777 | 153,639 | 582 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 14,915 | 14,917 | 14,917 | (2) | ||
Issuance of common stock under equity incentive plans (in shares) | 22,365 | |||||
Equity-based compensation (Note 10) | 1,805 | 1,805 | 1,805 | |||
Issuance of employee stock purchase plan (in shares) | 12,870 | |||||
Issuance of employee stock purchase plan | 181 | 181 | 181 | |||
Ending balance (in shares) at Jan. 31, 2023 | 115,219,396 | |||||
Ending balance at Jan. 31, 2023 | $ 905,051 | 904,471 | $ 1,152 | 734,763 | 168,556 | 580 |
Beginning balance (in shares) at Jul. 31, 2023 | 115,316,308 | 115,316,308 | ||||
Beginning balance at Jul. 31, 2023 | $ 942,408 | 941,832 | $ 1,153 | 737,557 | 203,122 | 576 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 31,404 | 31,394 | 31,394 | 10 | ||
Issuance of common stock under equity incentive plans (in shares) | 106,631 | |||||
Issuance of common stock under equity incentive plans | 1 | 1 | $ 1 | |||
Equity-based compensation (Note 10) | 3,214 | 3,214 | 3,214 | |||
Shares withheld related to net share settlement (in shares) | (28,237) | |||||
Shares withheld related to net share settlement | $ (342) | (342) | (342) | |||
Ending balance (in shares) at Jan. 31, 2024 | 115,409,107 | 115,409,107 | ||||
Ending balance at Jan. 31, 2024 | $ 976,804 | 976,218 | $ 1,154 | 740,548 | 234,516 | 586 |
Beginning balance (in shares) at Oct. 31, 2023 | 115,367,710 | |||||
Beginning balance at Oct. 31, 2023 | 958,767 | 958,178 | $ 1,154 | 738,365 | 218,659 | 589 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 15,854 | 15,857 | 15,857 | (3) | ||
Issuance of common stock under equity incentive plans (in shares) | 26,992 | |||||
Equity-based compensation (Note 10) | 2,064 | 2,064 | 2,064 | |||
Issuance of employee stock purchase plan (in shares) | 14,405 | |||||
Issuance of employee stock purchase plan | $ 119 | 119 | 119 | |||
Ending balance (in shares) at Jan. 31, 2024 | 115,409,107 | 115,409,107 | ||||
Ending balance at Jan. 31, 2024 | $ 976,804 | $ 976,218 | $ 1,154 | $ 740,548 | $ 234,516 | $ 586 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Cash flows from operating activities | ||
Net income | $ 31,404 | $ 34,724 |
Adjustments to reconcile net income to net cash from operating activities: | ||
Depreciation and amortization | 17,037 | 13,290 |
(Gain) loss on disposal of assets | (11) | 93 |
Change in fair value of derivatives | 1,258 | 2,061 |
Amortization of debt issuance costs | 388 | 593 |
Equity-based compensation | 3,214 | 2,985 |
Change in operating assets and liabilities: | ||
Accounts receivable trade, net | (3,115) | (11,298) |
Inventories | (68,687) | (39,881) |
Prepaid expenses and other current assets | (2,080) | 26 |
Other assets | (684) | (555) |
Accounts payable | 9,390 | 15,020 |
Accrued expenses | (10,200) | 830 |
Accrued compensation | (7,078) | (3,669) |
Deferred revenue | 5,144 | 3,013 |
Other current and non-current liabilities | (1,841) | 865 |
Net cash (used in) provided by operating activities | (25,861) | 18,097 |
Cash flows from investing activities | ||
Purchases of property and equipment, net of sales proceeds | (17,130) | (12,388) |
Net cash used in investing activities | (17,130) | (12,388) |
Cash flows from financing activities | ||
Payments under line of credit | (13,000) | (119,000) |
Borrowings under line of credit | 68,000 | 9,000 |
Issuance of long-term debt | 0 | 225,833 |
Payments of long-term debt | (5,000) | (115,166) |
Proceeds from employee stock purchase plan | (342) | 0 |
Proceeds from employee stock purchase plan | 119 | 181 |
Payments for debt issuance costs | 0 | (2,432) |
Net cash provided by (used in) financing activities | 49,777 | (1,584) |
Net increase in cash | 6,786 | 4,125 |
Cash - Beginning of period | 6,353 | 3,167 |
Cash - End of period | 13,139 | 7,292 |
Supplemental cash flow information | ||
Interest paid, net of amount capitalized | 8,304 | 1,649 |
Income taxes paid | 23,484 | 10,621 |
Non-cash investing activities | ||
Property and equipment additions in accounts payable and accrued expenses | $ 407 | $ 467 |
Description of Business
Description of Business | 6 Months Ended |
Jan. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of Business The Duckhorn Portfolio, Inc. and its subsidiaries (collectively, “the Company,” “Management,” “we,” “us,” “our” and “Duckhorn”), headquartered in St. Helena, California, produce luxury and ultra-luxury wine across a portfolio of winery brands, including Duckhorn Vineyards, Decoy, Goldeneye, Paraduxx, Migration, Canvasback, Calera, Kosta Browne, Greenwing and Postmark. The Company’s revenue is comprised of sales to distributors and direct to trade accounts in California (“wholesale”) and direct to consumer (“DTC”). Wholesale revenue is generated through sales directly to California retailers and restaurants, sales to distributors and agents located in other states throughout the United States (“U.S.”) and sales to export distributors that sell internationally. DTC revenue results from individual consumers purchasing wine directly from the Company through club membership, the Company’s website or tasting rooms located in Napa Valley, California; Anderson Valley, California; Sebastopol, California; Hollister, California; and Walla Walla, Washington. The Company owns or controls, through long-term leases, certain high-quality vineyards throughout Northern and Central California and Washington. Vinification takes place at wineries owned, leased or under contract with third parties predominately located in Napa Valley, California; Anderson Valley, California; Hopland, California; Hollister, California; San Luis Obispo, California; Sebastopol, California; and Walla Walla, Washington. Fiscal year The Company ’ s fiscal year ends on July 31. Unless otherwise stated, references to particular years or quarters refer to the Company’s fiscal years and the associated periods in those fiscal years. Except as otherwise specified, information in this report is provided as of January 31, 2024. Secondary Offering |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Pronouncements | 6 Months Ended |
Jan. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Recent Accounting Pronouncements | Basis of Presentation and Recent Accounting Pronouncements Basis of presentation The Company’s Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 10 of the Securities and Exchange Commission’s Regulation S-X. These Condensed Consolidated Financial Statements have been prepared on the same basis as the Company ’ s audited annual financial statements and, in the opinion of Management, reflect all adjustments, consisting only of normal, recurring adjustments, which are necessary for the fair statement of the Company ’ s financial information for the interim periods presented. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 2024, for any other interim period or for any future year. The Condensed Consolidated Statement of Financial Position as of July 31, 2023 was derived from the Company's audited financial statements for the fiscal year ended July 31, 2023, previously filed with the SEC. The Condensed Consolidated Financial Statements do not include all of the information and note disclosures required by U.S. GAAP and should be read in conjunction with the audited Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Principles of consolidation The Condensed Consolidated Financial Statements include the accounts of The Duckhorn Portfolio, Inc. and its subsidiaries, including a consolidated variable interest entity (“VIE”) of which the Company has determined it is the primary beneficiary. All intercompany balances and transactions are eliminated in consolidation. Accounting estimates The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Preferred stock The Company has 100,000,000 shares of $0.01 par value preferred stock authorized, none of which are issued and outstanding. Variable interest entities The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidations . These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Thus, it represents a Level 3 measurement as defined in ASC Topic 820, Fair Value Measurement . Based on these evaluations, if the Company determines that it is the primary beneficiary of a VIE, the entity is consolidated into the financial statements. At January 31, 2024 and July 31, 2023, the Company ’ s ownership percentage of the sole identified VIE was 76.2%. The total net assets of the VIE included on the Condensed Consolidated Statements of Financial Position were $2.3 million as of January 31, 2024 and July 31, 2023. The assets and liabilities, which may only be used to settle its own obligations, are primarily related to property, equipment and working capital accounts, which generally represent the amounts owed by or to the Company for grape sales under current contracts and farming costs. Recently adopted accounting pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosures, primarily through enhanced disclosures related to significant segment expenses regularly provided to the chief operating decision maker (“CODM”) and by requiring current annual disclosures to be provided in interim periods. Additionally, it requires public entities with a single reportable segment to provide all the disclosures provided by the standard. ASU 2023-07 will be effective for the Company beginning with the fiscal year ended July 31, 2025, and for interim periods beginning in the fiscal year ended July 31, 2026, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its Condensed Consolidated Financial Statements and related disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) to enhance the transparency and decision usefulness of income tax disclosures, primarily requiring disaggregated information about a reporting entity's effective tax rate reconciliation and income taxes paid. ASU 2023-09 will be effective for the Company beginning with the fiscal year ended July 31, 2026, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Condensed Consolidated Financial Statements and related disclosures. No other new accounting pronouncements issued or effective as of January 31, 2024 have had, or are expected to have, a material impact on the Condensed Consolidated Financial Statements or the related disclosures. |
Revenue
Revenue | 6 Months Ended |
Jan. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregated revenue information The following table presents the percentages of consolidated net sales disaggregated by sales channels: Three months ended January 31, Six months ended January 31, 2024 2023 2024 2023 Wholesale — Distributors 62.1 % 61.3 % 69.6 % 69.0 % Wholesale — California direct to trade (a) 18.9 19.1 17.2 17.4 DTC (b) 19.0 19.6 13.2 13.6 Net sales (c) 100.0 % 100.0 % 100.0 % 100.0 % _______________________________________________ (a) Includes $0.7 million and $0.6 million of sales related to bulk and grape sales for both the six months ended January 31, 2024 and 2023. (b) Includes shipping and handling revenue of $1.1 million and $0.9 million for the three months ended January 31, 2024 and 2023, respectively, and $1.2 million and $1.0 million for the six months ended January 31, 2024 and 2023, respectively. (c) For the three and six months ended January 31, 2024, excludes lease income of $0.9 million and $1.8 million, respectively, from Geyserville winery acquired in June 2023. Charges, recoveries and reductions related to credit loss on accounts receivable and the related allowance were immaterial for the three and six months ended January 31, 2024 and 2023. As of January 31, 2024 and July 31, 2023, the allowance for credit losses was $0.5 million for both periods. Contract balances When the Company receives payment from a customer, prior to meeting the performance obligation under the terms of a contract, the Company records deferred revenue, which represents a contract liability. The Company’s deferred revenue is primarily comprised of cash collected from wine sold through our DTC channel ahead of the wine shipment date. The Company does not recognize revenue until control of the wine is transferred and the performance obligation is met. Deferred revenue in the Condensed Consolidated Statements of Financial Position was $5.2 million and $0.1 million at January 31, 2024 and July 31, 2023, respectively. The Company recognized revenue of $11.1 million and $12.1 million during the three months ended January 31, 2024 and 2023, included in the opening contract liability balance for the corresponding period. The Company recognized revenue of $0.1 million and $0.3 million during the six months ended January 31, 2024 and 2023, included in the opening contract liability balance for the corresponding period. |
Inventories
Inventories | 6 Months Ended |
Jan. 31, 2024 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories were comprised of the following: (in thousands) January 31, 2024 July 31, 2023 Finished goods $ 127,287 $ 145,355 Work in progress 261,446 161,795 Raw materials 3,901 15,077 Inventories $ 392,634 $ 322,227 Inventories are stated at the lower of cost or net realizable value and are primarily measured on a first-in-first-out basis. The Company records valuation adjustments to the carrying value of its inventories based on periodic reviews of slow-moving, obsolete and excess inventory to determine the need for reserves by comparing inventory carrying values with their net realizable values upon ultimate sale or disposal. The Company’s estimates of net realizable value are based on historical experience as well as Management’s judgments with respect to future market conditions. In the period the Company determines a reserve is required, the Company recognizes a charge to cost of sales for the excess of the carrying value over net realizable value. The inventory reserve was $0.8 million and $0.9 million at January 31, 2024 and July 31, 2023, respectively. The Company capitalizes into inventories depreciation related to property and equipment used in the production of inventory. For the three months ended January 31, 2024 and 2023, the amount capitalized was $6.2 million and $5.2 million, respectively, and $10.0 million and $8.6 million for the six months ended January 31, 2024 and 2023, respectively. The Company also capitalizes total lease costs related to leases used in the production of inventory. The amount capitalized was $1.1 million for both the three months ended January 31, 2024 and 2023. For the six months ended January 31, 2024 and 2023, the amount capitalized was $2.3 million and $2.2 million, respectively. |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jan. 31, 2024 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses were comprised of the following: (in thousands) January 31, 2024 July 31, 2023 Trade spend (a) $ 12,587 $ 12,721 Income taxes payable (b) — 11,019 Deferred compensation liability (c) 3,451 3,261 Barrel purchases — 2,589 Accrued professional fees 1,646 599 Bulk wine and other received not invoiced 1,332 529 Accrued invoices and other accrued expenses 6,044 7,528 Accrued expenses $ 25,060 $ 38,246 _______________________________________________ (a) Trade spend refers to estimated amounts the Company owes to distributors for depletion-based incentives. (b) Effective March 2023, as revised in October 2023, the IRS postponed certain tax filings and payment deadlines, until November 2023, in areas designated with eligible Federal Emergency Management Agency declarations. During the third fiscal quarter of 2023, the Company deferred federal and state tax payments which were paid in full during the six months ended January 31, 2024. (c) The Company intends to use the cash surrender value of life insurance policies to partially settle its deferred compensation plan liability. The cash surrender value of the life insurance policies was $3.4 million and $2.7 million at January 31, 2024 and July 31, 2023, respectively, and is included in other assets on the Condensed Consolidated Statements of Financial Position. |
Debt
Debt | 6 Months Ended |
Jan. 31, 2024 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt, net of current maturities and debt issuance costs was comprised of the following: (in thousands) January 31, 2024 July 31, 2023 Revolving line of credit $ 68,000 $ 13,000 Term loan, first lien 215,832 220,832 Total debt 283,832 233,832 Less: Current maturities of long-term debt (9,721) (9,721) Total long-term debt 274,111 224,111 Debt issuance costs (a) (434) (492) Total long-term debt, net of current maturities and debt issuance costs $ 273,677 $ 223,619 _______________________________________________ (a) Debt issuance costs are the costs associated with the term loan facility. Debt issuance costs of $2.5 million and $2.8 million at January 31, 2024 and July 31, 2023, respectively, associated with the revolving credit and delayed draw term loan facilities are recorded in other assets on the Condensed Consolidated Statements of Financial Position. On November 4, 2022, Mallard Buyer Corp., Selway Wine Company and certain other subsidiaries of The Duckhorn Portfolio, Inc. (collectively, the “Borrowers”) entered into the Amended and Restated First Lien Loan and Security Agreement (“Credit Facility” and “Credit Agreement”) with the lenders named therein and BMO Harris (as successor in interest to Bank of the West), as administrative agent and collateral agent. The Credit Agreement provides for $675.8 million in first lien senior secured credit facilities consisting of (i) a $425.0 million revolving credit facility, (ii) a $225.8 million term loan facility and (iii) a $25.0 million delayed draw term loan facility. The maturity date for loans borrowed under the Credit Agreement is November 4, 2027. The principal of the term loan facility is repayable in quarterly installments equal to $2.4 million, with a final installment equal to the entire remaining outstanding principal amount due on the maturity date. The Credit Agreement allows the Borrowers, at any time, to request additional term loans, revolver commitments and delayed draw term loan commitments in an aggregate amount of up to $400.0 million (the “Incremental Facility”). The lenders are not under any obligation to provide the Incremental Facility, and the Incremental Facility is subject to certain customary conditions precedent and other limitations. Borrowings under the revolver portion of the Credit Agreement generally bear interest based on the sum of the forward-looking term rate based on the Secured Overnight Financing Rate (“Term SOFR”) plus a loan margin based on average availability as follows: (a) less than or equal to 33% of average availability, a loan margin of 1.50%, (b) greater than 33% and less than or equal to 66% of average availability, a loan margin of 1.25%, and (c) greater than 66% of average availability, a loan margin of 1.00%. Borrowings under the term loan and delayed draw portions of the Credit Agreement generally bear interest based on the sum of (i) Term SOFR plus (ii) a credit spread adjustment of 10 basis points for 1-month and 3-month interest periods and 15 basis points for a six-month interest period plus (iii) a loan margin of 1.625%. The Credit Agreement also includes an unused line fee and contains customary representations and warranties and affirmative and negative covenants for agreements of this type. In addition, the Credit Agreement requires compliance with the following financial covenants, in each case commencing from fiscal quarter ending January 31, 2023: (i) a debt to capitalization ratio not to exceed 0.55:1.00, measured at the end of each fiscal quarter and (ii) a fixed charge coverage ratio not to be less than 1.15:1.00, measured at the end of each fiscal quarter. As of January 31, 2024, the Company was in compliance with all covenants. At January 31, 2024 and July 31, 2023, the Company had unused capacity of $357.0 million and $412.0 million, respectively, under the revolving credit facility, excluding the incremental seasonal borrowing amount of an additional $30.0 million of capacity. There were no amounts outstanding on the delayed draw term loan, letter of credit sub-facility or the swingline sub-facility at January 31, 2024 or July 31, 2023. |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jan. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company manages exposure to interest rates and foreign currency movements by entering into derivative contracts from time to time, as movements in such markets could impact the Company’s financial results. The changes in estimated fair values of derivative instruments result from changes in interest rates and foreign currency exchange rates. Such changes serve to offset exposure in related business assets or liabilities. The Company is exposed to credit loss in the event of nonperformance by a counterparty. Certain of the Company ’ s derivative instruments are subject to master netting agreements. In certain circumstances, this agreement allows the Company to net-settle amounts payable or receivable related to multiple derivative transactions with the same counterparty. The fair values of derivative instruments are presented on a gross basis, even when the derivative instruments are subject to master netting arrangements. Collateral is generally not required of the Company or of the counterparties to the master netting agreements, and no cash collateral was received or pledged under such agreements as of January 31, 2024 or July 31, 2023. The Company does not enter into derivative instruments for trading or speculative purposes. The Company does not apply hedge accounting treatment to derivative instruments. On January 4, 2023, the Company entered into an interest rate swap that partially mitigates the risk to the Company due to potential future Term SOFR movements by trading floating rate payments for fixed rate payments on an applicable notional amount of outstanding variable rate debt. Effective September 30, 2022, the Company amended its interest rate swap initially entered into in March 2020, which expired on March 23, 2023, to transition from a London Interbank Offered Rate based floating rate to a Term SOFR based floating rate. As of January 31, 2024, the Company held the following interest rate swap agreement, which fixed the interest rate on the applicable notional amount of outstanding variable rate debt: Notional amount (in thousands) Interest rate Effective date Expiration date $100,000 3.735% January 4, 2023 November 4, 2027 The total notional amounts of the Company’s derivative instruments outstanding are as follows: (in thousands) January 31, 2024 July 31, 2023 Interest rate swap contract $ 100,000 $ 100,000 Foreign currency forward contracts — 5,610 Total derivative instruments not designated as hedging instruments $ 100,000 $ 105,610 The Company manages annual barrel purchases by engaging domestic and foreign cooperages to provide specified barrel quantities on agreed delivery dates. A significant portion of these invoices are paid in Euros. In order to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate, the Company enters into foreign currency forward contracts, generally aligning settlement dates with expected barrel deliveries and the anticipated timing of payments to various coopers. See Note 9 (Commitments and contingencies) for additional information related to the Company’s barrel purchase commitments. Results of period derivative activity The estimated fair value and classification of derivative instruments on the Condensed Consolidated Statements of Financial Position for January 31, 2024 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contract Other assets $ — Other liabilities $ 72 Foreign currency forward contract Prepaid expenses and other current assets — Other current liabilities — Total derivatives not designated as hedging instruments $ — $ 72 The estimated fair value and classification of derivative instruments on the Condensed Consolidated Statements of Financial Position for July 31, 2023 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contract Other assets $ 1,117 Other liabilities $ — Foreign currency forward contracts Prepaid expenses and other current assets 69 Other current liabilities — Total derivatives not designated as hedging instruments $ 1,186 $ — The amounts and classification of the gains and losses in the Condensed Consolidated Statements of Operations related to derivative instruments not designated as hedging instruments are as follows: Three months ended January 31, Six months ended January 31, (in thousands) Classification 2024 2023 2024 2023 Interest rate swap contract Other expense, net $ 3,154 $ 2,518 $ 1,189 $ 2,373 Foreign currency forward contracts Other expense, net (7) (89) 69 (312) Total loss $ 3,147 $ 2,429 $ 1,258 $ 2,061 |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jan. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company applies a fair value hierarchy pursuant to ASC Topic 820, Fair Value Measurement , which consists of three levels of inputs used to measure fair value: Level 1 Inputs to fair value are quoted prices in active markets for identical assets or liabilities; Level 2 Inputs to fair value are based on observable data other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data such as interest rates or yield curves for substantially the full term of the instrument; and Level 3 Inputs to fair value are based on unobservable data for the instrument and are supported by little or no market activity. The following is a description of the valuation methodologies used for instruments measured at fair value in the Condensed Consolidated Financial Statements, as well as the general classification of such instruments under the valuation hierarchy. Interest rate swap contract: The fair value of the Company’s interest rate swap agreement is estimated with the assistance of a third-party, using inputs that can be corroborated by observable market data (Level 2 of the fair value hierarchy). Foreign currency forward contracts: The fair value of the Company’s outstanding foreign currency forward contracts is estimated with the assistance of a third-party, using inputs that can be corroborated by observable market data (Level 2 of the fair value hierarchy). Deferred compensation plan: Contributions to the Company’s deferred compensation plan are managed by a third-party administrative agent. The fair value of the total contributed plan assets and liabilities are based on inputs that can be corroborated by observable market data (Level 2 of the fair value hierarchy). The Company’s other financial instruments consist mainly of cash, accounts receivable, accounts payable, accrued expenses and debt. The carrying value of all other financial instruments, except debt, approximates fair value due to the short-term nature of these assets and liabilities. The carrying value of the Company ’ s debt approximates fair value as the interest rates are variable and reflective of market rates (Level 2 of the fair value hierarchy). The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at January 31, 2024, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Deferred compensation plan asset $ — $ 3,354 $ — Liabilities: Deferred compensation liability $ — $ 3,451 $ — Interest rate swap contract $ — $ 72 $ — The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at July 31, 2023, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Deferred compensation plan asset $ — $ 2,670 $ — Interest rate swap contract $ — $ 1,117 $ — Foreign currency forward contracts $ — $ 69 $ — Liabilities: Deferred compensation liability $ — $ 3,261 $ — |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jan. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Long-term purchase contracts The Company has entered into certain grape purchase contracts with various growers to supply a significant portion of its future grape requirements for wine production. Grapes are delivered during the harvest season, a period which generally spans from August to October. The original lengths of the contracts vary from one Purchase commitments The Company enters into commitments to purchase barrels for each harvest, a significant portion of which are settled in Euros. As of July 31, 2023, the Company had $10.6 million in barrel purchase commitments. During the six months ended January 31, 2024, the Company paid the remaining commitments and liabilities associated with barrel purchases for the 2023 harvest. As of January 31, 2024, the Company does not yet have any commitments for the 2024 harvest. In order to reduce the foreign exchange risk associated with the Euro to U.S. Dollar conversion rate, the Company enters into foreign currency forward contracts, generally aligning settlement dates with expected barrel deliveries and the anticipated timing of payments to various coopers. The Company does not enter into these contracts for speculative purposes. Gains and losses on these contracts are recorded in other expense, net on the Condensed Consolidated Statements of Operations. See Note 7 (Derivative instruments) for the total notional value and impact on the Condensed Consolidated Financial Statements due to foreign currency forward contracts. The Company enters into various purchase commitments related to production activities. During the three and six months ended January 31, 2024, the Company entered into an equipment agreement resulting in a purchase commitment of $15.9 million. Under the agreement, the Company is obligated to pay milestone payments as equipment and services are rendered of $2.4 million, $10.4 million and $0.8 million, respectively, for the remainder of fiscal years 2024, 2025 and 2026. Upon execution of the agreement, the Company made a nonrefundable advance payment of $2.4 million, which is included in property and equipment, net, in the Condensed Consolidated Statement of Financial Position. The Company enters into various contracts with third parties for custom crush, storage, glass and bottling services. The costs related to these contracts are recorded in the period the service is provided. The contracts for custom crush services typically have minimums that the Company is required to pay if certain grape volume thresholds are not delivered. The Company does not record these minimums related to service contracts as contingent liabilities on the Condensed Consolidated Statements of Financial Position given the harvest yield size, resulting volumes and qualities of grape deliveries are not known or estimable until harvest, when all related contingencies would be resolved. Sonoma-Cutrer Vineyard Agreement and Plan of Merger On November 16, 2023, the Company, Auguste Merger Sub, Inc., a California corporation and an indirect wholly-owned subsidiary of the Company (“Merger Sub”), Brown-Forman Corporation, a Delaware corporation (“Brown-Forman”), and Sonoma-Cutrer, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into Sonoma-Cutrer (the “Merger”) with Sonoma-Cutrer continuing as the surviving entity after the Merger. Sonoma-Cutrer specializes in luxury Chardonnay. Sonoma-Cutrer owns six estate vineyards with approximately 1,100 acres in both the Russian River Valley and Sonoma Coast appellations. It sells its luxury wine across the U.S. in the wholesale channel through distributors and in the DTC channel with retail price points ranging from $20 to $70 per bottle. At consummation of the Merger, Brown-Forman will receive 31,531,532 shares of the Company’s common stock valued at approximately $350.0 million, based on a per-share value of $11.10 per share, and $50.0 million payable in cash, subject to adjustments set forth in the Merger Agreement, including for cash, working capital, indebtedness and transaction expenses. The cash consideration is expected to be funded through cash on hand and borrowings under the Company’s revolving credit facility. The transaction is expected to close in the spring of 2024, subject to customary closing conditions. Contingent liabilities The Company evaluates pending or threatened litigation, operational events which could result in regulatory or civil penalties, environmental risks and other sources of potential contingent liabilities during the year. In accordance with applicable accounting guidance, the Company establishes an accrued liability when those matters present loss contingencies which are both probable and reasonably estimable. As of January 31, 2024 and July 31, 2023, there were no material contingent obligations requiring accrual or disclosure. In the ordinary course of business, the Company enters into agreements containing standard indemnification provisions. The aggregate maximum potential future liability of the Company under such indemnification provisions is uncertain, as these involve potential future claims against the Company that have not occurred. The Company expects the risk of any future obligations under these indemnification provisions to be remote. As of January 31, 2024 and July 31, 2023, no amounts have been accrued related to such indemnification provisions. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jan. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Equity-Based Compensation | Equity-Based Compensation In March 2021, the Company ’ s Board of Directors approved the 2021 Equity Incentive Plan (“2021 Equity Plan”), which provides for granting up to 14,003,560 shares of the Company ’ s common stock. Restricted stock units (“RSUs”) and non-qualified stock options (“stock options”) are granted to certain employees of the Company, advisors and directors (collectively “grants”). The grants are considered equity awards for purposes of calculating compensation expense and are equity-classified in the Condensed Consolidated Statements of Financial Position. Stock options Stock option awards are valued using the Black-Scholes option pricing model to estimate the fair value of each stock option award on the date of grant and expense ratably over the vesting period, generally four years. Stock options have a ten-year term. The following table represents the stock option activity: Number of options outstanding Weighted-average exercise price (per share) Weighted-average remaining contractual life (in years) Aggregate intrinsic value (in thousands) Balance at July 31, 2023 2,321,233 $ 15.98 8.0 $ — Granted 1,254,867 9.90 Exercised — — Forfeited (446,042) 15.40 Expired (385,708) 16.41 Balance at January 31, 2024 2,744,350 $ 13.23 8.7 $ — Exercisable as of January 31, 2024 567,066 $ 16.42 7.5 $ — The total unrecognized compensation expense related to the 2021 Plan stock options was $8.5 million as of January 31, 2024, which is expected to be recognized over a weighted-average period of 3.0 years. The weighted-average grant-date fair value of options granted during the six months ended January 31, 2024 was $3.98 per share. The following assumptions were applied in the Black-Scholes option pricing model to estimate the grant-date fair value of the stock options granted: Six months ended January 31, 2024 2023 Expected term (in years) (a) 6.22 6.23 Expected dividend yield (b) — % — % Risk-free interest rate (c) 4.55 % 3.96 % Expected volatility (d) 30.9 % 33.9 % _______________________________________________ (a) Calculated as the midpoint between the weighted-average time to vest and the time to expiration. (b) The Company has not historically paid and does not expect to pay dividends in the foreseeable future. (c) The risk-free rate was estimated from the U.S. Treasury Constant Maturity Rates for a period consistent with the expected term in effect at the grant date. (d) Due to a lack of sufficient trading history of the Company's common stock, the expected volatility was estimated based on analysis of the historical and implied volatility of the Company's common stock and a group of guideline public companies deemed to be comparable publicly traded peers within the Company’s industry. Restricted stock units RSUs are valued using the closing market price of our common stock on the date of grant. Expense is recognized ratably over the vesting period, generally four years for RSUs issued to employees and one year for RSUs issued to our independent directors. The following table represents the RSU grant activity under the 2021 Plan: Number of units Weighted-average grant-date fair value (per share) Unvested as of July 31, 2023 562,861 $ 15.52 Granted 599,423 10.30 Vested (106,631) 14.90 Forfeited (149,688) 15.39 Unvested as of January 31, 2024 905,965 $ 12.16 The total intrinsic value of restricted stock that vested during the six months ended January 31, 2024 was $1.2 million. The total unrecognized compensation expense related to the 2021 Plan RSUs was $8.8 million as of January 31, 2024, which is expected to be recognized over a weighted-average period of 2.6 years. Compensation expense During the three months ended January 31, 2024 and 2023, the Company recognized total equity-based compensation expense due to units vesting over their requisite service periods for all plans of $2.1 million and $1.7 million, respectively, and $3.2 million and $3.0 million for the six months ended January 31, 2024 and 2023, respectively. The Company recognizes equity-based compensation in selling, general and administrative expenses, net of actual forfeitures as incurred, in the Condensed Consolidated Statements of Operations, except for amounts capitalized to inventories in the Condensed Consolidated Statements of Financial Position. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jan. 31, 2024 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing the net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflects the dilution that would occur if any potentially dilutive instruments were exercised or converted into shares of common stock. The following is a reconciliation of the Company ’ s basic and diluted earnings per share calculation: Three months ended January 31, Six months ended January 31, (in thousands, except share and per share amounts) 2024 2023 2024 2023 Numerator: Net income attributable to The Duckhorn Portfolio, Inc. $ 15,857 $ 14,917 $ 31,394 $ 34,732 Denominator: Weighted average number of shares outstanding for basic per share calculation 115,376,711 115,191,575 115,358,242 115,187,868 Effect of dilutive potential shares (a) : Stock options 1,637 — 2,877 — Restricted stock units 37,000 136,085 232,475 236,941 Adjusted weighted average shares outstanding for diluted per share calculation 115,415,348 115,327,660 115,593,594 115,424,809 Earnings per share attributable to The Duckhorn Portfolio, Inc.: Basic $ 0.14 $ 0.13 $ 0.27 $ 0.30 Diluted $ 0.14 $ 0.13 $ 0.27 $ 0.30 _______________________________________________ (a) Calculated using the treasury stock method. For the three months ended January 31, 2024 and 2023, there were 1.9 million and 0.6 million incremental common shares issuable upon the exercise of certain stock options, respectively, and for the six months ended January 31, 2024 and 2023, there were 1.4 million and 0.5 million incremental common shares issuable upon the exercise of certain stock options, respectively, that were not included in the calculation of diluted earnings per share because the effect of their inclusion would have been antidilutive under the treasury stock method. For the three and six months ended January 31, 2024, there were 0.1 million incremental common shares issuable upon vesting of certain RSUs, respectively, that were not included in the calculation of diluted earning per share because the effect of their inclusion would have been antidilutive. Refer to Note 10 (Equity-based compensation) for the terms of the awards. |
Income Taxes
Income Taxes | 6 Months Ended |
Jan. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax expense was $6.0 million and $5.3 million, with an effective tax rate of 27.5% and 26.1% for the three months ended January 31, 2024 and 2023, respectively, and $11.7 million and $12.4 million, with an effective tax rate of 27.1% and 26.2% for the six months ended January 31, 2024 and 2023, respectively. The effective tax rates for both periods presented were higher than the federal statutory rate of 21% primarily due to the impact of state income taxes and discrete tax adjustments related to the expiration of non-qualified stock options and vested restricted stock units shortfalls. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Pay vs Performance Disclosure | ||||
Net income attributable to The Duckhorn Portfolio, Inc. | $ 15,857 | $ 14,917 | $ 31,394 | $ 34,732 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jan. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation and Rec_2
Basis of Presentation and Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jan. 31, 2024 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The Company’s Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 10 of the Securities and Exchange Commission’s Regulation S-X. These Condensed Consolidated Financial Statements have been prepared on the same basis as the Company ’ s audited annual financial statements and, in the opinion of Management, reflect all adjustments, consisting only of normal, recurring adjustments, which are necessary for the fair statement of the Company ’ s financial information for the interim periods presented. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending July 31, 2024, for any other interim period or for any future year. |
Principles of consolidation | Principles of consolidation The Condensed Consolidated Financial Statements include the accounts of The Duckhorn Portfolio, Inc. and its subsidiaries, including a consolidated variable interest entity (“VIE”) of which the Company has determined it is the primary beneficiary. All intercompany balances and transactions are eliminated in consolidation. |
Accounting estimates | Accounting estimates The preparation of Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Preferred stock | Preferred stock |
Variable interest entities | Variable interest entities The Company evaluates its ownership, contractual relationships and other interests in entities to determine the nature and extent of the interests, whether such interests are variable interests and whether the entities are VIEs in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidations . These evaluations can be complex and involve Management judgment as well as the use of estimates and assumptions based on available historical information, among other factors. Thus, it represents a Level 3 measurement as defined in ASC Topic 820, Fair Value Measurement |
Recently adopted accounting pronouncements | Recently adopted accounting pronouncements In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to improve reportable segment disclosures, primarily through enhanced disclosures related to significant segment expenses regularly provided to the chief operating decision maker (“CODM”) and by requiring current annual disclosures to be provided in interim periods. Additionally, it requires public entities with a single reportable segment to provide all the disclosures provided by the standard. ASU 2023-07 will be effective for the Company beginning with the fiscal year ended July 31, 2025, and for interim periods beginning in the fiscal year ended July 31, 2026, on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its Condensed Consolidated Financial Statements and related disclosures. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures (“ASU 2023-09”) to enhance the transparency and decision usefulness of income tax disclosures, primarily requiring disaggregated information about a reporting entity's effective tax rate reconciliation and income taxes paid. ASU 2023-09 will be effective for the Company beginning with the fiscal year ended July 31, 2026, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its Condensed Consolidated Financial Statements and related disclosures. No other new accounting pronouncements issued or effective as of January 31, 2024 have had, or are expected to have, a material impact on the Condensed Consolidated Financial Statements or the related disclosures. |
Derivative instruments | The changes in estimated fair values of derivative instruments result from changes in interest rates and foreign currency exchange rates. Such changes serve to offset exposure in related business assets or liabilities. The Company is exposed to credit loss in the event of nonperformance by a counterparty. Certain of the Company ’ |
Contract balances | Contract balances |
Inventories | Inventories are stated at the lower of cost or net realizable value and are primarily measured on a first-in-first-out basis. The Company records valuation adjustments to the carrying value of its inventories based on periodic reviews of slow-moving, obsolete and excess inventory to determine the need for reserves by comparing inventory carrying values with their net realizable values upon ultimate sale or disposal. The Company’s estimates of net realizable value are based on historical experience as well as Management’s judgments with respect to future market conditions. In the period the Company determines a reserve is required, the Company recognizes a |
Fair value measurements | The Company applies a fair value hierarchy pursuant to ASC Topic 820, Fair Value Measurement , which consists of three levels of inputs used to measure fair value: Level 1 Inputs to fair value are quoted prices in active markets for identical assets or liabilities; Level 2 Inputs to fair value are based on observable data other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data such as interest rates or yield curves for substantially the full term of the instrument; and Level 3 Inputs to fair value are based on unobservable data for the instrument and are supported by little or no market activity. |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents the percentages of consolidated net sales disaggregated by sales channels: Three months ended January 31, Six months ended January 31, 2024 2023 2024 2023 Wholesale — Distributors 62.1 % 61.3 % 69.6 % 69.0 % Wholesale — California direct to trade (a) 18.9 19.1 17.2 17.4 DTC (b) 19.0 19.6 13.2 13.6 Net sales (c) 100.0 % 100.0 % 100.0 % 100.0 % _______________________________________________ (a) Includes $0.7 million and $0.6 million of sales related to bulk and grape sales for both the six months ended January 31, 2024 and 2023. (b) Includes shipping and handling revenue of $1.1 million and $0.9 million for the three months ended January 31, 2024 and 2023, respectively, and $1.2 million and $1.0 million for the six months ended January 31, 2024 and 2023, respectively. (c) For the three and six months ended January 31, 2024, excludes lease income of $0.9 million and $1.8 million, respectively, from Geyserville winery acquired in June 2023. |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories were comprised of the following: (in thousands) January 31, 2024 July 31, 2023 Finished goods $ 127,287 $ 145,355 Work in progress 261,446 161,795 Raw materials 3,901 15,077 Inventories $ 392,634 $ 322,227 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses | Accrued expenses were comprised of the following: (in thousands) January 31, 2024 July 31, 2023 Trade spend (a) $ 12,587 $ 12,721 Income taxes payable (b) — 11,019 Deferred compensation liability (c) 3,451 3,261 Barrel purchases — 2,589 Accrued professional fees 1,646 599 Bulk wine and other received not invoiced 1,332 529 Accrued invoices and other accrued expenses 6,044 7,528 Accrued expenses $ 25,060 $ 38,246 _______________________________________________ (a) Trade spend refers to estimated amounts the Company owes to distributors for depletion-based incentives. (b) Effective March 2023, as revised in October 2023, the IRS postponed certain tax filings and payment deadlines, until November 2023, in areas designated with eligible Federal Emergency Management Agency declarations. During the third fiscal quarter of 2023, the Company deferred federal and state tax payments which were paid in full during the six months ended January 31, 2024. (c) The Company intends to use the cash surrender value of life insurance policies to partially settle its deferred compensation plan liability. The cash surrender value of the life insurance policies was $3.4 million and $2.7 million at January 31, 2024 and July 31, 2023, respectively, and is included in other assets on the Condensed Consolidated Statements of Financial Position. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | Long-term debt, net of current maturities and debt issuance costs was comprised of the following: (in thousands) January 31, 2024 July 31, 2023 Revolving line of credit $ 68,000 $ 13,000 Term loan, first lien 215,832 220,832 Total debt 283,832 233,832 Less: Current maturities of long-term debt (9,721) (9,721) Total long-term debt 274,111 224,111 Debt issuance costs (a) (434) (492) Total long-term debt, net of current maturities and debt issuance costs $ 273,677 $ 223,619 _______________________________________________ (a) Debt issuance costs are the costs associated with the term loan facility. Debt issuance costs of $2.5 million and $2.8 million at January 31, 2024 and July 31, 2023, respectively, associated with the revolving credit and delayed draw term loan facilities are recorded in other assets on the Condensed Consolidated Statements of Financial Position. |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | As of January 31, 2024, the Company held the following interest rate swap agreement, which fixed the interest rate on the applicable notional amount of outstanding variable rate debt: Notional amount (in thousands) Interest rate Effective date Expiration date $100,000 3.735% January 4, 2023 November 4, 2027 |
Schedule of Derivative Instruments | The total notional amounts of the Company’s derivative instruments outstanding are as follows: (in thousands) January 31, 2024 July 31, 2023 Interest rate swap contract $ 100,000 $ 100,000 Foreign currency forward contracts — 5,610 Total derivative instruments not designated as hedging instruments $ 100,000 $ 105,610 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The estimated fair value and classification of derivative instruments on the Condensed Consolidated Statements of Financial Position for January 31, 2024 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contract Other assets $ — Other liabilities $ 72 Foreign currency forward contract Prepaid expenses and other current assets — Other current liabilities — Total derivatives not designated as hedging instruments $ — $ 72 The estimated fair value and classification of derivative instruments on the Condensed Consolidated Statements of Financial Position for July 31, 2023 were as follows: Derivative Assets Derivative Liabilities (in thousands) Balance Sheet Classification Fair Value Balance Sheet Classification Fair Value Interest rate swap contract Other assets $ 1,117 Other liabilities $ — Foreign currency forward contracts Prepaid expenses and other current assets 69 Other current liabilities — Total derivatives not designated as hedging instruments $ 1,186 $ — |
Schedule of Derivative Instruments, Gain (Loss) | The amounts and classification of the gains and losses in the Condensed Consolidated Statements of Operations related to derivative instruments not designated as hedging instruments are as follows: Three months ended January 31, Six months ended January 31, (in thousands) Classification 2024 2023 2024 2023 Interest rate swap contract Other expense, net $ 3,154 $ 2,518 $ 1,189 $ 2,373 Foreign currency forward contracts Other expense, net (7) (89) 69 (312) Total loss $ 3,147 $ 2,429 $ 1,258 $ 2,061 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at January 31, 2024, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Deferred compensation plan asset $ — $ 3,354 $ — Liabilities: Deferred compensation liability $ — $ 3,451 $ — Interest rate swap contract $ — $ 72 $ — The Company’s assets and liabilities measured and recorded at fair value on a recurring basis at July 31, 2023, were as follows: (in thousands) Fair value measurements using: Quoted prices in active markets (Level 1) Significant other observable inputs Significant unobservable inputs Assets: Deferred compensation plan asset $ — $ 2,670 $ — Interest rate swap contract $ — $ 1,117 $ — Foreign currency forward contracts $ — $ 69 $ — Liabilities: Deferred compensation liability $ — $ 3,261 $ — |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Payment Arrangement, Option, Activity | The following table represents the stock option activity: Number of options outstanding Weighted-average exercise price (per share) Weighted-average remaining contractual life (in years) Aggregate intrinsic value (in thousands) Balance at July 31, 2023 2,321,233 $ 15.98 8.0 $ — Granted 1,254,867 9.90 Exercised — — Forfeited (446,042) 15.40 Expired (385,708) 16.41 Balance at January 31, 2024 2,744,350 $ 13.23 8.7 $ — Exercisable as of January 31, 2024 567,066 $ 16.42 7.5 $ — |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following assumptions were applied in the Black-Scholes option pricing model to estimate the grant-date fair value of the stock options granted: Six months ended January 31, 2024 2023 Expected term (in years) (a) 6.22 6.23 Expected dividend yield (b) — % — % Risk-free interest rate (c) 4.55 % 3.96 % Expected volatility (d) 30.9 % 33.9 % _______________________________________________ (a) Calculated as the midpoint between the weighted-average time to vest and the time to expiration. (b) The Company has not historically paid and does not expect to pay dividends in the foreseeable future. (c) The risk-free rate was estimated from the U.S. Treasury Constant Maturity Rates for a period consistent with the expected term in effect at the grant date. (d) Due to a lack of sufficient trading history of the Company's common stock, the expected volatility was estimated based on analysis of the historical and implied volatility of the Company's common stock and a group of guideline public companies deemed to be comparable publicly traded peers within the Company’s industry. |
Schedule of Share-based Payment Arrangement, Restricted Stock Unit, Activity | The following table represents the RSU grant activity under the 2021 Plan: Number of units Weighted-average grant-date fair value (per share) Unvested as of July 31, 2023 562,861 $ 15.52 Granted 599,423 10.30 Vested (106,631) 14.90 Forfeited (149,688) 15.39 Unvested as of January 31, 2024 905,965 $ 12.16 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jan. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Common Shares | The following is a reconciliation of the Company ’ s basic and diluted earnings per share calculation: Three months ended January 31, Six months ended January 31, (in thousands, except share and per share amounts) 2024 2023 2024 2023 Numerator: Net income attributable to The Duckhorn Portfolio, Inc. $ 15,857 $ 14,917 $ 31,394 $ 34,732 Denominator: Weighted average number of shares outstanding for basic per share calculation 115,376,711 115,191,575 115,358,242 115,187,868 Effect of dilutive potential shares (a) : Stock options 1,637 — 2,877 — Restricted stock units 37,000 136,085 232,475 236,941 Adjusted weighted average shares outstanding for diluted per share calculation 115,415,348 115,327,660 115,593,594 115,424,809 Earnings per share attributable to The Duckhorn Portfolio, Inc.: Basic $ 0.14 $ 0.13 $ 0.27 $ 0.30 Diluted $ 0.14 $ 0.13 $ 0.27 $ 0.30 _______________________________________________ (a) Calculated using the treasury stock method. |
Description of Business (Detail
Description of Business (Details) - Secondary Offering $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended |
Apr. 30, 2023 $ / shares shares | Apr. 30, 2023 USD ($) $ / shares | |
Subsidiary, Sale of Stock [Line Items] | ||
Sale of stock, number of shares issued in transaction | shares | 6,000,000 | |
Sale of stock, price per share (in dollars per share) | $ / shares | $ 15.35 | $ 15.35 |
Payments of deferred offering costs | $ | $ 0.4 |
Basis of Presentation and Rec_3
Basis of Presentation and Recent Accounting Pronouncements - (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | 12 Months Ended |
Jan. 31, 2024 | Jul. 31, 2023 | |
Accounting Policies [Line Items] | ||
Preferred stock, shares authorized (in shares) | 100,000,000 | |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.01 | |
Preferred stock, shares issued (in shares) | 0 | |
Preferred stock, shares outstanding (in shares) | 0 | |
Variable Interest Entity, Primary Beneficiary | ||
Accounting Policies [Line Items] | ||
Variable interest entity, ownership percentage | 76.20% | 76.20% |
Variable interest entity, net assets | $ 2.3 | $ 2.3 |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer, percent | 100% | 100% | 100% | 100% |
Revenue | $ 103,045 | $ 103,488 | $ 205,554 | $ 211,659 |
Lease income | 900 | 1,800 | ||
Bulk and Grape Sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 700 | 600 | ||
Shipping and Handling | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 1,100 | $ 900 | $ 1,200 | $ 1,000 |
Wholesale — Distributors | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer, percent | 62.10% | 61.30% | 69.60% | 69% |
Wholesale - California direct to trade | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer, percent | 18.90% | 19.10% | 17.20% | 17.40% |
DTC | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract with customer, percent | 19% | 19.60% | 13.20% | 13.60% |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | Jul. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |||||
Allowance for credit losses on current accounts receivable | $ 500 | $ 500 | $ 500 | ||
Deferred revenue | 5,211 | 5,211 | $ 66 | ||
Revenue recognized | $ 11,100 | $ 12,100 | $ 100 | $ 300 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 127,287 | $ 145,355 |
Work in progress | 261,446 | 161,795 |
Raw materials | 3,901 | 15,077 |
Inventories | $ 392,634 | $ 322,227 |
Inventories - Narrative (Detail
Inventories - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | Jul. 31, 2023 | |
Inventory Disclosure [Abstract] | |||||
Excess and obsolete inventory reserve | $ 0.8 | $ 0.8 | $ 0.9 | ||
Capitalized depreciation costs | 6.2 | $ 5.2 | 10 | $ 8.6 | |
Capitalized leases costs used in production of inventory | $ 1.1 | $ 1.1 | $ 2.3 | $ 2.2 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Payables and Accruals [Abstract] | ||
Trade spend | $ 12,587 | $ 12,721 |
Income taxes payable | 0 | 11,019 |
Deferred compensation liability | 3,451 | 3,261 |
Barrel purchases | 0 | 2,589 |
Accrued professional fees | 1,646 | 599 |
Bulk wine and other received not invoiced | 1,332 | 529 |
Accrued invoices and other accrued expenses | 6,044 | 7,528 |
Accrued expenses | 25,060 | 38,246 |
Cash surrender value of life insurance | $ 3,400 | $ 2,700 |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | $ 283,832 | $ 233,832 |
Less: Current maturities of long-term debt | (9,721) | (9,721) |
Total long-term debt | 274,111 | 224,111 |
Total long-term debt, net of current maturities and debt issuance costs | 273,677 | 223,619 |
Revolving Credit and Delayed Draw Term Loan | ||
Line of Credit Facility [Line Items] | ||
Debt issuance costs, gross | 2,500 | 2,800 |
Line of Credit | Revolving Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | 68,000 | 13,000 |
Secured Debt | Term Loan Facility | ||
Line of Credit Facility [Line Items] | ||
Long-term debt, gross | 215,832 | 220,832 |
Debt issuance costs | $ (434) | $ (492) |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Nov. 04, 2022 | Jan. 31, 2024 | Jul. 31, 2023 |
Debt Instrument [Line Items] | |||
Revolving line of credit | $ 68,000,000 | $ 13,000,000 | |
Senior Secured Credit Facility | |||
Debt Instrument [Line Items] | |||
Incremental facility | $ 400,000,000 | ||
First Lien Senior Secured Credit Facilities | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 675,800,000 | ||
First Lien Senior Secured Credit Facilities | Maximum | |||
Debt Instrument [Line Items] | |||
Debt capitalization ratio | 0.55 | ||
First Lien Senior Secured Credit Facilities | Minimum | |||
Debt Instrument [Line Items] | |||
Debt capitalization ratio | 1.15 | ||
First Lien Senior Secured Credit Facilities | Less Than or Equal to 33% of Average Availability | SOFR | |||
Debt Instrument [Line Items] | |||
Loan margin (percent) | 1.50% | ||
First Lien Senior Secured Credit Facilities | Greater Than 33% and Less Than or Equal to 66% of Average Availability | SOFR | |||
Debt Instrument [Line Items] | |||
Loan margin (percent) | 1.25% | ||
First Lien Senior Secured Credit Facilities | Greater Than 66% of Average Availability | SOFR | |||
Debt Instrument [Line Items] | |||
Loan margin (percent) | 1% | ||
First Lien Senior Secured Credit Facilities | Revolving Line of Credit | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 425,000,000 | ||
First Lien Senior Secured Credit Facilities | Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | 225,800,000 | ||
Debt instrument, periodic payment, principal | 2,400,000 | ||
First Lien Senior Secured Credit Facilities | Delayed Draw Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 25,000,000 | ||
First Lien Senior Secured Credit Facilities | Term Loan and Delayed Draw Term Loan Facilities | SOFR | |||
Debt Instrument [Line Items] | |||
Loan margin (percent) | 1.625% | ||
First Lien Senior Secured Credit Facilities | Term Loan and Delayed Draw Term Loan Facilities | SOFR | Variable Rate Component One | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (percent) | 0.10% | ||
First Lien Senior Secured Credit Facilities | Term Loan and Delayed Draw Term Loan Facilities | SOFR | Variable Rate Component Two | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate (percent) | 0.15% | ||
First Lien Loan Agreement | |||
Debt Instrument [Line Items] | |||
Revolving line of credit | 0 | 0 | |
First Lien Loan Agreement | Revolving Line of Credit | |||
Debt Instrument [Line Items] | |||
Unused capacity | 357,000,000 | 412,000,000 | |
Line Of credit facility, remaining borrowing capacity, accordion feature | $ 30,000,000 | $ 30,000,000 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) | Jan. 31, 2024 | Jul. 31, 2023 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Cash collateral received | $ 0 | $ 0 |
Cash collateral pledged | $ 0 | $ 0 |
Derivative Instruments - Intere
Derivative Instruments - Interest Rate Swaps (Details) - Interest Rate Swap Expiring November 2027 $ in Thousands | Jan. 31, 2024 USD ($) |
Derivative [Line Items] | |
Notional amount | $ 100,000 |
Interest rate | 3.735% |
Derivative Instruments - Total
Derivative Instruments - Total Notional Amount (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Derivative [Line Items] | ||
Notional amount | $ 100,000 | $ 105,610 |
Interest rate swap contract | ||
Derivative [Line Items] | ||
Notional amount | 100,000 | 100,000 |
Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Notional amount | $ 0 | $ 5,610 |
Derivative Instruments - Estima
Derivative Instruments - Estimated Fair Value and Classification of Derivative Instruments on the Condensed Consolidated Statements of Financial Position (Details) - Not Designated as Hedging Instrument - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Derivatives, Fair Value [Line Items] | ||
Derivative asset | $ 0 | $ 1,186 |
Derivative liability | 72 | 0 |
Interest rate swap contract | Other assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 1,117 |
Interest rate swap contract | Other liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | 72 | 0 |
Foreign currency forward contracts | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative asset | 0 | 69 |
Foreign currency forward contracts | Other current liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative liability | $ 0 | $ 0 |
Derivative Instruments - Amount
Derivative Instruments - Amounts and Classification of the Gains and Losses in the Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Derivative [Line Items] | ||||
Total gain | $ 1,258 | $ 2,061 | ||
Not Designated as Hedging Instrument | ||||
Derivative [Line Items] | ||||
Total gain | $ 3,147 | $ 2,429 | 1,258 | 2,061 |
Not Designated as Hedging Instrument | Interest rate swap contract | ||||
Derivative [Line Items] | ||||
Total gain | 3,154 | 2,518 | 1,189 | 2,373 |
Not Designated as Hedging Instrument | Foreign currency forward contracts | ||||
Derivative [Line Items] | ||||
Total gain | $ (7) | $ (89) | $ 69 | $ (312) |
Fair Value Measurements - (Deta
Fair Value Measurements - (Details) - USD ($) $ in Thousands | Jan. 31, 2024 | Jul. 31, 2023 |
Quoted prices in active markets (Level 1) | ||
Assets: | ||
Deferred compensation plan asset | $ 0 | $ 0 |
Liabilities: | ||
Deferred compensation liability | 0 | 0 |
Quoted prices in active markets (Level 1) | Interest rate swap contract | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Foreign currency forward contracts | 0 | |
Quoted prices in active markets (Level 1) | Foreign currency forward contracts | ||
Assets: | ||
Derivative asset | 0 | |
Significant other observable inputs (Level 2) | ||
Assets: | ||
Deferred compensation plan asset | 3,354 | 2,670 |
Liabilities: | ||
Deferred compensation liability | 3,451 | 3,261 |
Significant other observable inputs (Level 2) | Interest rate swap contract | ||
Assets: | ||
Derivative asset | 1,117 | |
Liabilities: | ||
Foreign currency forward contracts | 72 | |
Significant other observable inputs (Level 2) | Foreign currency forward contracts | ||
Assets: | ||
Derivative asset | 69 | |
Significant unobservable inputs (Level 3) | ||
Assets: | ||
Deferred compensation plan asset | 0 | 0 |
Liabilities: | ||
Deferred compensation liability | 0 | 0 |
Significant unobservable inputs (Level 3) | Interest rate swap contract | ||
Assets: | ||
Derivative asset | 0 | |
Liabilities: | ||
Foreign currency forward contracts | $ 0 | |
Significant unobservable inputs (Level 3) | Foreign currency forward contracts | ||
Assets: | ||
Derivative asset | $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ / shares in Units, T in Thousands, $ in Millions | 6 Months Ended | ||||
Nov. 16, 2023 USD ($) a vineyard $ / shares $ / bottle shares | Jan. 31, 2024 USD ($) | Jan. 31, 2023 USD ($) T | Jan. 31, 2022 USD ($) T | Jul. 31, 2023 USD ($) | |
Commitments and Contingencies [Line Items] | |||||
Long-term purchase contract, amount purchased, mass | T | 32 | 29 | |||
Sonoma-Cutrer Vineyards | |||||
Commitments and Contingencies [Line Items] | |||||
Number of real estate properties | vineyard | 6 | ||||
Area of property (acre) | a | 1,100 | ||||
Sonoma-Cutrer Vineyards | Brown-Forman Corporation | |||||
Commitments and Contingencies [Line Items] | |||||
Number of shares of common stock to be transferred | shares | 31,531,532 | ||||
Value of common stock to be transferred | $ 350 | ||||
Share price (in dollars per share) | $ / shares | $ 11.10 | ||||
Amount payable in cash | $ 50 | ||||
Indemnification Agreement | |||||
Commitments and Contingencies [Line Items] | |||||
Accruals relating to indemnification provisions | $ 0 | $ 0 | |||
Inventories | |||||
Commitments and Contingencies [Line Items] | |||||
Long-term purchase commitment, amount purchased, cost | $ 85.7 | $ 71 | |||
Barrels | |||||
Commitments and Contingencies [Line Items] | |||||
Purchase commitment, amount committed | 0 | $ 10.6 | |||
Equipment | |||||
Commitments and Contingencies [Line Items] | |||||
Purchase commitment, amount committed | 15.9 | ||||
Obligated to pay milestone payments for the fiscal year 2024 | 2.4 | ||||
Obligated to pay milestone payments for the fiscal year 2025 | 10.4 | ||||
Obligated to pay milestone payments for the fiscal year 2026 | 0.8 | ||||
Nonrefundable advance payment | $ 2.4 | ||||
Minimum | |||||
Commitments and Contingencies [Line Items] | |||||
Long-term purchase contract, period | 1 year | ||||
Minimum | Sonoma-Cutrer Vineyards | |||||
Commitments and Contingencies [Line Items] | |||||
Luxury wine price (usd per bottle) | $ / bottle | 20 | ||||
Maximum | |||||
Commitments and Contingencies [Line Items] | |||||
Long-term purchase contract, period | 16 years | ||||
Maximum | Sonoma-Cutrer Vineyards | |||||
Commitments and Contingencies [Line Items] | |||||
Luxury wine price (usd per bottle) | $ / bottle | 70 |
Equity-Based Compensation - Nar
Equity-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Total equity-based compensation expense | $ 2.1 | $ 1.7 | $ 3.2 | $ 3 | |
RSU | Employee | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
RSU | Independent Directors | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 1 year | ||||
2021 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares available for future grants (in shares) | 14,003,560 | ||||
Unrecognized compensation expense of stock options | 8.5 | $ 8.5 | |||
Weighted-average grant-date fair value of options granted (in dollars per share) | $ 3.98 | ||||
2021 Equity Incentive Plan | Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
Expiration period | 10 years | ||||
Unrecognized compensation expense, period for recognition (years) | 3 years | ||||
2021 Equity Incentive Plan | RSU | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense, period for recognition (years) | 2 years 7 months 6 days | ||||
Fair value of vested restricted shares | $ 1.2 | ||||
Unrecognized compensation expense | $ 8.8 | $ 8.8 |
Equity-Based Compensation - Sto
Equity-Based Compensation - Stock Option Activity (Details) - 2021 Equity Incentive Plan - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jan. 31, 2024 | Jul. 31, 2023 | |
Number of options outstanding | ||
Balance as of beginning of period (in shares) | 2,321,233 | |
Granted (in shares) | 1,254,867 | |
Exercised (in shares) | 0 | |
Forfeited (in shares) | (446,042) | |
Expired (in shares) | (385,708) | |
Balance as of ending of period (in shares) | 2,744,350 | 2,321,233 |
Exercisable (shares) | 567,066 | |
Weighted-average exercise price (per share) | ||
Balance as of beginning of period (in dollars per share) | $ 15.98 | |
Granted (in dollars per share) | 9.90 | |
Exercised (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 15.40 | |
Expired (in dollars per share) | 16.41 | |
Balance as of ending of period (in dollars per share) | 13.23 | $ 15.98 |
Exercisable (in dollars per share) | $ 16.42 | |
Additional disclosures: | ||
Weighted-average remaining contractual life (in years) | 8 years 8 months 12 days | 8 years |
Exercisable, weighted-average remaining contractual life (in years) | 7 years 6 months | |
Aggregate intrinsic value | $ 0 | $ 0 |
Exercisable, aggregate intrinsic value | $ 0 |
Equity-Based Compensation - Val
Equity-Based Compensation - Valuation Assumptions (Details) - 2021 Equity Incentive Plan - Stock options | 6 Months Ended | |
Jan. 31, 2024 | Jan. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 6 years 2 months 19 days | 6 years 2 months 23 days |
Expected dividend yield (percent) | 0% | 0% |
Risk-free interest rate (percent) | 4.55% | 3.96% |
Expected volatility (percent) | 30.90% | 33.90% |
Equity-Based Compensation - Act
Equity-Based Compensation - Activity for Awards (Details) - RSU - 2021 Equity Incentive Plan | 6 Months Ended |
Jan. 31, 2024 $ / shares shares | |
Number of units | |
Unvested, beginning (in shares) | shares | 562,861 |
Granted (in shares) | shares | 599,423 |
Vested (in shares) | shares | (106,631) |
Forfeited (in shares) | shares | (149,688) |
Unvested, ending (in shares) | shares | 905,965 |
Weighted-average grant-date fair value (per share) | |
Unvested, beginning (in dollars per share) | $ / shares | $ 15.52 |
Granted (in dollars per share) | $ / shares | 10.30 |
Vested (in dollars per share) | $ / shares | 14.90 |
Forfeited (in dollars per share) | $ / shares | 15.39 |
Unvested, ending (in dollars per share) | $ / shares | $ 12.16 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Basic and Diluted Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Numerator: | ||||
Net income attributable to The Duckhorn Portfolio, Inc. | $ 15,857 | $ 14,917 | $ 31,394 | $ 34,732 |
Denominator: | ||||
Weighted average number of shares outstanding for basic per share calculation (in shares) | 115,376,711 | 115,191,575 | 115,358,242 | 115,187,868 |
Adjusted weighted average shares outstanding for diluted per share calculation (in shares) | 115,415,348 | 115,327,660 | 115,593,594 | 115,424,809 |
Earnings per share attributable to The Duckhorn Portfolio, Inc.: | ||||
Basic (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.27 | $ 0.30 |
Diluted (in dollars per share) | $ 0.14 | $ 0.13 | $ 0.27 | $ 0.30 |
Stock options | ||||
Denominator: | ||||
Effect of dilutive potential shares (in shares) | 1,637 | 0 | 2,877 | 0 |
Restricted stock units | ||||
Denominator: | ||||
Effect of dilutive potential shares (in shares) | 37,000 | 136,085 | 232,475 | 236,941 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
RSU | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive shares (in shares) | 0.1 | 0.1 | ||
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive shares (in shares) | 1.9 | 0.6 | 1.4 | 0.5 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jan. 31, 2024 | Jan. 31, 2023 | Jan. 31, 2024 | Jan. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense | $ 6,021 | $ 5,265 | $ 11,650 | $ 12,352 |
Effective income tax rate, percent | 27.50% | 26.10% | 27.10% | 26.20% |