Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Andrew Peller Ltd (ADWPF, Financial) reported a 9% year-over-year increase in sales for Q2 2025, reaching $109.2 million.
- The company successfully capitalized on the LCBO strike by increasing product availability in retail stores, leading to a boost in revenue.
- Margins improved to 42.4% from 41.2% in the previous year, aided by increased sales and production efficiency.
- The company gained market share in the total wine category and improved its national position in both VQA and ICB wines.
- Andrew Peller Ltd (ADWPF) reduced long-term debt from $208.3 million to $180.3 million, showing improved financial health.
Negative Points
- The company continues to face softness in the estates and direct-to-consumer channels due to reduced traffic and lower consumer discretionary spending.
- There are ongoing cost pressures from raw materials and international freight and shipping charges.
- Selling and administration expenses increased by 8% compared to the prior year, impacting overall profitability.
- The Ontario retail modernization has introduced increased costs to serve the additional 5,200 new points of distribution.
- Challenging weather events in BC have impacted the company's operations, requiring a replacement strategy to maintain wine availability.
Q & A Highlights
Q: Can you provide insights into the early trends of the Ontario retail modernization, particularly regarding channel shifts from LCBO to other retail channels? Also, what are the major cost components involved in serving the additional 5,200 distribution points?
A: It's still early to provide detailed insights as the convenience and gas channels opened in September, and big box and grocery expanded in late October. We will have more updates in the next quarter. Regarding costs, the industry is more complex now, similar to Alberta, and we are working through these changes with our partners. We will share more updates in the upcoming quarters.
Q: Is there interest from grocery and big box customers in Ontario to have your brands on their shelves?
A: Yes, we have strong relationships with these partners nationally, including in Alberta and BC. We believe our portfolio offers great value and experience for consumers, and we are developing these relationships in Ontario as well.
Q: How are the higher-margin channels like estates and direct-to-consumer performing compared to pre-pandemic levels?
A: We are trending around pre-pandemic levels. Post-pandemic, we saw a spike in traffic, but it has moderated to historical levels. In the east, traffic has stabilized, and we are optimistic about future trends. The west has faced challenges due to weather events, but we are seeing positive signs for recovery.
Q: Can you quantify the revenue lift from the LCBO strike during the quarter?
A: The strike led to a 30-50% increase in traffic at our wine shops, translating to an estimated $2 million revenue benefit for the quarter.
Q: There was a mention at the AGM about working with a firm regarding the current shares' value. Can you clarify this?
A: I don't recall discussing this at the AGM, and there's nothing to report on that matter. However, I'm open to discussing it further if needed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
