Thank you. All right. Wow. You good? Thanks. Good morning, everyone. Welcome to day two at the B of A Consumer Conference in Miami. My name's Peter Galbo from the food and beverage team here at B of A. Really pleased to be joined this morning at the conference by Duckhorn Portfolio, roughly $400 million in revenue this year, and the only pure play public company in the luxury wine category. Typical price range of $20-$200 a bottle, including the famous Decoy, Duckhorn, and Kosta Browne labels. It might be a little too early. I do encourage everyone at some point later today, have a glass of wine from one of Duckhorn's many brands. I'll make that plug for Alex. My personal favorite right now is the Canvasback from Washington. I also love the Goldeneye Pinot Noir from Anderson Valley. That's what I've been drinking. I have that in the question list for later. We'll definitely have to discuss what you're drinking, Alex. We can start now, too. Just please, everyone, please welcome to the stage Chairman, President and CEO, Alex Ryan; CFO, Lori Beaudoin; and Chief Strategy and Legal Officer, Sean Sullivan. Thank you guys all for being here. Really appreciate it. Thanks for having us. Alex, maybe we can just start off. Was hoping you could give us a quick recap of 2 key results you reported last week? Just any big questions you've had coming out of the call, as you've been speaking to folks? It was a great quarter for us. Obviously, the numbers reflected that. It continues to support our long-term growth strategy focused on luxury wine. It's the only growing category, as you know, in scan data. We continue to have a diversified customer base, diversified production base. We've talked about the visibility we've had into our costs, the price increases that offset them. I think as we continue to take share, we continue to gain momentum in the market, and the market's re-responding to that. I think most importantly, the consumers have accepted the prices and the styles of wine we're making. Broadly speaking, there aren't any regional differences, so we are truly a national luxury brand, and we continue to create a lot of value for our consumers and they're rewarding us with disproportionately high rate sales compared to our competition. Good quarter, and we think it's a good omen for the continuation for the year. Great. Just in, on the topic of kind of new, newish news, Lori, you know, will be kind of stepping down. Mm-hmm. Your role or retiring later this year. Just curious kind of how the process has gone so far? Yeah. In kind of trying to recruit, you know, a new CFO. It's an attractive position, obviously, to move out to Napa Valley. Just kind of any update you can give us on how the process is going. Well, the new, he or she has got some tough shoes to fill, that's for sure, right? We have hired a national firm. We got onto it early. We've got a good strategy, kind of a continuation strategy with Lori to kinda make sure it's a seamless transition. It's going well. We've got some great candidates. We're in the process now moving toward kinda ratcheting down to a finer list, and I'm confident that we're on track with getting the right person in the seat at the right time later this spring. Great. Maybe we can just take a step back. You know, Alex, a theme over the past two days has obviously been a lot of conversation around the state of the consumer elasticities. Mm-hmm. That you mentioned a little bit in your, in your comments. Yeah. I think, you know, where Napa is a little different, obviously, you offer the perspective just on the luxury consumer, which I think has been behaving a bit differently. Just curious how you're, you know, seeing? Yeah. More mainstream consumer versus luxury consumer at this point. Well, we're seeing, I think he kinda touched on it, kind of the success that our company has proven. We're focused. We're really focused. We don't do anything but luxury wine. Luxury wine's been around since the Romans. We believe that is a solid long-term category. We're focused there, as he talked about earlier in that price point, about $200-$20, $20-$200, kind of a retail bottle price. That focus, I think, allows us to get really good, really deep with our consumers. What we're seeing at the trade level, the distribution level, and most importantly, the consumer level, is we're not seeing any trade down now in our products. We've all looked at the scan data, it's moderated a little bit in total wine and luxury wine. We are far and away exceeding those rates for luxury wine, and I think it's we're kinda hitting all the important benchmarks, right? They've got an incredible brand strength they're working with. I've been doing it for over 40 years, so there's a lot of depth to it. Our trade and our distribution partners are getting the right incentive. They're making money on our products. As people are focusing more on what they're purchasing and putting into their stores and their restaurants, they're looking at smaller offerings of things they know will turn and sell. We clearly fit that bill. We're seeing overall a lot of resiliency in our luxury customer base for our products. Great. One of the things I think you often talk about, Alex, is just the benefits of being a pure play. Yeah. Standalone luxury wine company. I think that's maybe a different message versus some of the spirits companies. Mm-hmm. Across multiple categories. Yeah. some of your other competitors that are total beverage alcohol. just what are the merits to just being, you know, wine versus-. Yeah. Being more of a broader total beverage alcohol? I don't wanna oversimplify anything, but I think that in luxury, I think you get rewarded by not being a jack of all trades. The authenticity in a luxury product is that's what you do, that's what you know, that's what you focus on, right? We grow luxury grapes. We make luxury wine. We sell and distribute luxury wines in the places our customers wanna buy luxury wines. We don't want to claim to be good at everything. Our bev is a broad category, a very diversified, broad category, and fine wine is done as fine wine is. We're slightly different than beer and spirits. I think that, for my team, and our overall company and our focus, it allows us to be strategically on point with what we do, making money, making wine, making sure it's profitable, looking at long-term shareholder value, but just we don't get distracted. That point has resonated with investors, and I think it continues to allow us. We've all read the same reviews, right? There's a lot of our competitors out there who are doing a lot of things well, but we're doing one thing great. Great. Lori, maybe if I can bring you in here. You know, a significant portion of the company's growth is coming from expanded distribution of Decoy in the U.S. You've put out some targets in terms of, you know, account penetration, where you think the business can be over the long term. Can you just update us on the progress in terms of the distribution goals? How many customer accounts do you have? You know, what the addressable market is? Just where the biggest white space opportunities are from maybe a geographic standpoint. Yeah. Thanks, Peter. As you mentioned, we have identified the incredible white space we have in distribution, and generally, Sean addresses that. Do you want to take a pinch of that? Sure. Sure. Yeah. I, you know, we talked about the broad-based on our call recently, we talked about the broad-based availability of our wines. You talked about food retailers, you talked about liquor stores, restaurants. I think the greatest quantum of opportunity still lies in the off-premise, just given its size and its opportunity. We have a strong presence in grocery, you look at Albertsons, Safeway, Costco, you see a very nice representation of our wines. Even in larger chains like Kroger, BJ's, and then of course, the independents, there's still a lot of a lot of room for us to be a more active part of their wine assortment. That's where we see those opportunities come. There's good distribution across the country of our Duckhorn wines, including Decoy, as you called out. I look at focus states like New York, Pennsylvania, here in Florida. New York's a great example. We recently, as part of our investment over the past year, split some territory that we had, where our sales team augments the distributor sales team. We saw, you know, the beginnings of some nice depletions growth, in the areas where folks had a more focused territory because of that. That's an investment that sort of feeding into what we see as that increase in addressable market. I'll refer back to the TAM analysis we do once a year. Over the past three years, we've picked up 3 percentage points of penetration into the account base that we think is appropriate for our wines. We set a goal for ourselves of going from 24% account penetration to 29% account penetration, again, with the denominator being wines appropriate, or stores appropriate for our wines and over the course of the years leading up to and including fiscal 2026. We think we're making good progress on that. When you couple that with increasing the number of wines at each store and good velocities, that sets up really nicely our positioning for our algorithm of high single-digit growth. Just to clarify, Sean, on that. From, you know, calendar 22, basically start to finish, you went from 21% to 24% account penetration. That's kind of how we should think about it? No, no. That was over the past three years. The past three years. Yes. Got it. Okay. 3% growth over the past three years in account penetration. As we noted in October, we've set a goal of going from 24% to 29% over the next. Remind us just what's the total number of accounts you have kind of in that TAM? You know, you've given a breakdown of-. Right, right now, we're at about 59,000 accounts that we're in. Again, that could be 1 SKU, that could be 30 SKUs, depending on the situation. To put it in context, out of about 250,000 that we've identified. Right. would be appropriate for Duckhorn luxury style wine. Right. Right. Okay. Great. Remember, on the growth algorithm, that penetration is one nice, kind of gauge in your performance. Price increases, direct to consumer, right, innovation are all other levers on top of that are gonna continue to make sure we hit our goals. Right. The way I've kind of thought about the algorithm, and Lori and I have had a lot of conversations about this, is for every kind of point you get, you know, that gets you basically halfway or a little more to your organic sales target. Right. if you add in some SKUs. Right. some, you know, innovation and pricing, you can kinda get to the algorithm. We call it frosting. We Peter, think of it as three vectors. It's the TAM addressable, what accounts we're in. You have the number of SKUs per account, you have the velocity. Right. Okay, my favorite topic. Let's talk about some innovation within some of the brands. Oh, yeah. You know, you've had some line extensions in Decoy- Mm-hmm. some others. Kosta Browne has obviously been very top of it this year. Can you just tell us a little bit about what's been in the pipeline, what we should start seeing in the marketplace, as we kinda get over the next, you know, 12 months? Just as a frame it up for everybody, you know, innovation invigorates a lot of the key components of your company. Invigorates your winemakers and your staff, right? You don't want them to become bored. Certainly invigorates your customers. Something new to talk about when you go trying to open up a new door with a distributor or a trade account. Innovation, it's not easy, but it's a critical part of exciting the market. That's really, really important because if not, you run the risk of becoming same old. We've for 40 years now, had innovation as a big part of how we wanna continue to entice the market, open up doors, make contacts with customers. You mentioned the Burgundy offering with Kosta Browne with precedent setting, right? Nobody is doing this. That was our kind of a regulatory, Herculean effort. A lot of communication across the pond with our winemaker friends over there. Really exciting stuff. That was a lot of fun. The larger commercial scale, we've continued to migrate people from the traditional Decoy white label into Decoy Limited, more premium. Actually, it's quite a bit different, as most of the market typically has a line extension drag you down the price category. We're trying to bring people up the price category with our innovations. A slightly higher priced Decoy product called Decoy Limited, coming up the price chain from the Decoy standard white label. Just recently, we introduced some sparkling wines under Decoy and some a numero under the Decoy Limited brands. So far, excellent uptake. Again, I think there are no black and white answers. It's all interrelated. Our customers trust us, right? It's gonna be easier for them to take on a line extension from an overall trusted company than a brand new company. We're seeing huge successes, huge initial buy-ins and uptakes, and the follow-up with the consumer has been really positive. We think that there's a lot more to do within that brand. Our other brands, we're always, especially at DTC level, we're always offering new vineyard brands, new regional brands under the current label architecture. The uptake has probably exceeded our expectations. People now expect that, right? It's the, you know, it's the keep on giving. Our winemakers are tasked to continually look in the cellar. What new and exciting out there can we offer to our customers that aren't, that isn't currently out there? We're looking at some innovative things. Don't take this as fact, but things like lower alcohol, healthy wines, these are important categories that we should know about. We do a lot of R&D. You should be built part of the R&D panel. It's really a labor of love, but we do. We're always looking at new wine opportunities for our customers, and I think that you should expect that into the future. Great. I would love to be on that R&D panel. That sounds like a good time. Maybe I'll just pause there and see if there's any questions in the room. I know we have Mike going around. We'll go to Brian. you know, just some perspective, Duckhorn's a bit of an outlier, right? We think about public wine companies. The history is... I noticed that, yes. Thank you. The landscape is littered, right? Yeah. You know, we can go back to Golden State Vintners. Sure. Kendavi, right? Sure. Some of the more, you know, into wine estates, like there's some, you know. It's not been a great experience. We usually call them our competitors. We normally don't name people. Well, we can disparage more here. Okay. Okay. Fair enough. Just, you know, you spent a lot of time before going public. Yeah. thinking about going public. You know, I think we had a conversation- Mm-hmm. Three or four years ago about this, right? If you could just kinda talk about your perspective on, you know, why Napa is different. Yeah. More important, you know, like the durability of it, right? Like, what's gonna sustain it? Yeah. as a, you know, an equity investment, you know, in the public markets in a way that, you know, other wine companies haven't been able to be sustainable. Next question, please. It's a great question, and I think you have to go back to the company's founding, right? We've always had shareholders. Dan and Margaret Duckhorn, our founders, created this wonderful idea of producing the best Merlot in the world and growing a Napa Valley winery. We always had a shareholder base, right? Shareholder value, growth, profitability, shareholder value, innovation, these are not new concepts that came up when we decided to go public. These are in our DNA, focused on wine and luxury wine only. It's focused in our DNA. This is not a new, let's go public, come up with the right story. This is who we are. We just have a broader set of shareholders now. We still run the company as winemakers first, as really good business people second. I think if you confuse that, especially in a luxury wine business, it's an emotional purchase, right? You have, you have to know your audience, you have to know your cost, you have to know your distribution partners and what incentivizes them. I don't wanna say we're really good at our business, but our focus allows us to concentrate on things that make us really good at our business. I would just say that in our DNA, growing shareholder value at a reasonable and expected rate, even before we're public, is not something new. To have that high single-digit growth rate is not something I had to convince my staff was important. It's always been important. Now we're just telling the world about it every 90 days. You know, you've heard us talk a lot about it's not just selling wine, it's thinking four years ahead of time with a really diversified and understanding a really well-diversified production schedule to make sure that you can deliver what your customers, what the market wants you to do. You can't wake up tomorrow and decide to make good wine and get it out in the next week. You had to make that decision three to four years ago. We understand that really, really well. I've been doing this for 40 years, very, very profitable, very, very focused for 40 years. We have a broader set of shareholders, but our core philosophies of growth and innovation and profitability are not different, any different than they were in 1986 or 1978. Well, I was just gonna add, Brian. Yeah. Our long-term growth algorithm is high single digits, right? Volume is our growth driver. We won't do that at any expense, right? We won't make crazy acquisitions that don't make sense to us. They need to be accretive. We grow our volume, but we also have resources that we commit to that to help ensure we're gonna grow it. We don't discount crazy. We won't, you know, there's certain levers we know we can pull and others that we know we should stay away from. We invest in our sales team, we invest in our internal, back into the work as well to make sure we can grow and scale. We think of it, as Alex said, very long term, and we have strategy how we're gonna get there. We do the TAM analysis. We know what we have to go after to get there in the long run. I think all that adds up to really make it so that we have a lot of confidence in achieving our goals. We've studied, as you mentioned, we talked four years ago. We've spent a lot of money, a lot of time to make sure we're well prepared to enter this new world. We've seen a lot of mistakes that you and I offline could probably agree on, some of our competitors have made, right? We manage inventory for the benefit of the market, not for our distributor or for us. It's for the benefit of the market, 'cause ultimately, that'll take you where you wanna go. Making sure that all the important things are managed correctly and all the little things are managed correctly, I think we've got a good handle on it. Very confident, though, that we do have a handle on it, and it is sustainable. It's. Well, nothing's easy. All the good things in life aren't easy, but I think it is absolutely sustainable to continue to hold our luxury position, the luxury performance and results into the future. We're setting ourselves up, as Lori said, on a long-term basis to be able to continue to achieve that. The other point of differentiation that we talked a lot about was knowing what you are in terms of luxury. Particularly present at this point, the fact that we have a tailwind of premiumization that has been strong for the past 20 years. We are firmly and solely in luxury, which differentiates ourselves from pretty much all the competitors that had a much broader lens in terms of how they approach wine. You know, Sean brings up a very interesting point. I think in the world of business today, right, being solely into something might be a little scary. We are in the band of luxury that has the most scale and growth, right? We could agree that a $500 bottle of wine is luxury. What growth and scale is there? At that $20-$200, we think we've carved out, and I think the data is showing it, the sweet spot of luxury, and we firmly believe that luxury is not going away. They may might move around in luxury, the luxury buyer in today's world, probably not gonna jump to buying a $4 bottle of wine. We just The data doesn't bear it out. We're seeing none of that, so we think we're in the right spot of the luxury category. That makes sense. It's a luxury company. As much as it is a wine company, it's also a luxury company. Being the fact they don't have a lot of pure play wine comps out there, sure. We're up there with all the great luxury companies we wanna talk about. All right. Just follow up. Our second question is just, you know, the weather in California has been, you know, in the headlines, right? A lot of rain, a lot of snow. Just to the extent that. Mm-hmm. Is it a positive? Is it a negative? Just, again, as we're thinking about, like, going forward. Net positive. Net positive. We're a farming company. A big part of our business is farming, right? That's really important. The infrastructure in California needs work. We're in good shape. There's a couple trees that blew down and all that stuff, but the reality is, it's not really impacted the important parts of sales and distribution for us. Sales were tasting room visits were a little slow in December because of the weather, they bounced back in January. We believe those customers want to be part of the wine lifestyle. Net-net, for the future of farming in California, I think the rains are absolutely good. Brian, as Alex often says, vineyards go to sleep in the winter, right? They can flood, it doesn't matter, because there's nothing happening in the vineyard in the winter, and it's really good for the soils, for the water to soak in and to refill the aquifers. The rains have been excellent for California in general and for us in particular. I think we had another question up front. Oh, about weather. Oh, okay. Did I answer your question? Yeah. Climate change. Yeah. On a broader picture, the way I look at climate change is, it is absolutely real and we have to be doing our parts, and we have a lot of ESG initiatives and just farming initiatives to offset the risk of climate change. Diversification, though, will always be the leading offset to that risk. We have vineyards in many locations. It's been proven historically for us, at least for 40 years, but I think you can look beyond that diversification of vineyard locations continually, year in and year out allows us to manage our costs, our quantity, our style, our quality consistently on a consistent basis for the production of our wine. Nobody should be comfortable with climate change, but we're comfortable that our strategy of diversification of our supply and production is gonna offset that and allow us to continue to do what we do well. Our ESG strategy, writ large, is based on what fortifies and strengthens our business, because we believe that's the best way not only to provide for the sustainability of the broader environment, but also of our business. We talk about things like even the root stock we choose when we replace a vineyard. The different avenues we have of production and balancing and optimizing in-house versus custom crush. All of those things go back to Alex's point of diversification and really build resiliency as we look forward to, you know, to the eventuality of climate change and being able to manage it in a very productive and cost-effective way. Okay, Lori, I'm ready for some financial questions. Okay. Maybe just to start, right, this came up on the call last week. I think there's maybe been a little bit of confusion. You've raised the guidance, you know, on gross margins twice this year, you know, from being down call it 50 to 100 basis points. Now you're talking about moderate expansion that happened in the course of two quarters. Just what's been driving the upside? You know, anything you can do to help us just in terms of the balance of the year, kind of how we should think about specifically the gross margin line? Yeah. Thank you. We've guided to modest margin expansion for the year. That won't hold true for Q3 as much as Q4, because remember the cadence switch for the cost of ground shipping, but for the end of the year. That's mostly driven by realization of the pricing strategy that we've put in place, and then also some brand mix is helping us there. Remember, we have really three channels that have different gross margins. As our wines sell through in the different channels, I'll remind you it's direct to consumer, direct in California and then the other 49 states and export. They have different gross profit margins, but they also have different operating expense. When it comes right down to earnings, they have very similar earnings results. We're a little bit different than a normal CPG company where gross profit margin will really influence the bottom line. It's not so for us as much as it's more brand driven. Brand will go straight to the bottom line, as well as, like I said, this benefit from some of the pricing strategies we've implemented. We're somewhat channel agnostic, right? Because the profitability all the way down is. It makes it easier to make sales decisions that way. Right. Right. We don't have conflicting, competing strategies. Competing channels. Right. Exactly. Sure. Then maybe the one other thing that's kind of been unique to Napa, you probably haven't experienced as much inflation as other CPG companies. I mean, it's something I think we've spent a lot of time talking about. Eventually, I would think some of that would catch up, whether it's higher farming costs or labor costs for, you know, for vineyards. Just kind of remind us the cadence of how your costs flow through the P&L on sort of a delayed basis. Sure, yes. Cost of a bottle of wine, 65%-85% of that is the fruit, the grapes component. That we contract out long term in advance. We grow some of our own fruit, as well as we have long-term relationships with a lot of growers. We have, what is it now? 250-300- Maybe just over $300. grower partners that we work with. We have long-term contracts with those folks. We know today what our fruit costs will be for the most part for the 2024 harvest. Those fruit contracts don't vary with current near-term inflation. They're based on a industry index. We have those contracts, we're constantly going in and out of them, depending if it's a good grower, we have good relationships with them, they deliver great fruit, those continue on for a long term. We've got great visibility into the cost of, you know, up to 85% of the cost of 1 bottle of wine, long term out. It takes us five to 48 months to produce wine, depending on where that wine falls within our portfolio. We have visibility into where that cost is gonna come through. Now, as you mentioned, the near term, we've had some price increases. The other big piece of that is our packaging. The packaging component can change a little more near term, right? The bottles that we bottle the wine in, some of our whites go to market much quicker than some of the reds. Mm. Those we have long-term contracts as well, and they have prices that can change on an annual basis, but those price changes are capped, so we know what the cost of that is. We have a lot of levers as we go through our cost of goods. Every label that we make has a target margin, so we focus on it on a label-by-label basis. We have a target margin. Sometimes we're a little over, sometimes we're below. We don't have to have it exact for every label. On average, our winemakers, our production team have a target for a particular brand, and we have a lot of, you know, long-term history of hitting our margins because of these levers they can pull. That's how we go about it when we think about cost and margin on our wines. Great. Alex, maybe, you know, next topic is something I know you're very passionate about. I've heard you speak very passionately about it. Tasting. Something I'm passionate about as well. You've done a really nice job of reinvesting in the business, in particular, the sales force. I feel like you view it as a, as a key kind of competitive advantage. Can you just talk about, you know, your sales force both on and off premise, particularly the on-premise piece, which I think doesn't get as much attention as it probably deserves, and just how you kinda see that, you know, going forward. We, you know, I'll go back by saying, luxury wine, I think luxury purchases at some level, but certainly luxury wine, it's a very emotional purchase, right? You don't need a $75 bottle of wine necessary. There's a lot of hand-to-hand combat out there in the market. It's about developing relationships. You're selling an emotional product that you don't absolutely need. It's a block and tackling, having good people, having people out there telling the story in the markets. We have consistently since the beginning of time, invested in having the right salespeople and then kinda continually decreasing more focused geographies throughout the United States as we've grown, again, kinda looking back there. Right now, we're looking at really making sure that we target investments in salespeople in the areas that are gonna get us the best buck, actually. Really making sure we have the right amount of people. There's a ramp-up to it. To tell the Duckhorn story, you can't just start tomorrow and be fully effective. There's a ramp-up. There's understanding the market, understanding making your contacts within the buying industry. We do make step-up investments from time to time to make sure it's offensive, really. If I need salespeople and I'm behind the eight ball, then I'm too late. It's a long way of saying having the right people on the ground to leverage our distributor sales force, to leverage and make sure the goals of our distributors are being attained to, and making sure that we have good visibility into the market on and off in any given market throughout United States and around the world is just critically important. Making investments during a downturn usually pays off in the, in the upswing. We've seen it time and time again. I think that it also has been evidenced by the fact that depletions are on target to make sure we hit our goals. Almost more importantly, the data showing that we're taking share from somebody. It's not just because our products are great because they are, but it's also the route in which we're going to market, the context, relationships we're building with key customers, and then the trust and the reliance that we're given as a company. We will continue to do that. I think that the last year, we all noted in your write-ups that we did make a lock-step change in investment in sales, some sales systems and salespeople. We're seeing in those markets some increased, depletion rates, growth rates, which you're looking for. Over the next six to six months to three years, as these people dependent on the market get fully ingrained, we're gonna expect to see continued taking of share and increased sales rates. On that particular subject, I'll also throw in, you know, marketing, right? Making marketing investments, digital marketing, traditional marketing. Remember also, in our industry, direct-to-consumer sales, you could look at that as a high growth margin sales channel, or you could also look at it as just marketing. It's our customers are paying for our marketing. Those are the highest, most connected ways in which we talk to our customers is our direct-to-consumer sales because those people then do buy a lot of our wines through the traditional wholesale channels. I think it would be silly to expect us as a luxury company not to make sure that we have the highest quality marketing and sales approach in the industry. By the same token, as we've all noted, we gotta make sure that we maintain the right kind of operational efficiencies going forward for a luxury company. I think we've got that well in hand. Great. We touched on marketing, so maybe we can move on to, you know, cash flow. Lori, obviously, company has a pretty healthy cash flow profile. You've de-levered the balance sheet pretty materially since the IPO. I think there's a lot of questions. We're seeing a lot of headlines, obviously, about some wineries in Napa, you know, that may be having some financial issues, obviously, over the past week. Just kind of pose for us kind of where Napa sits, right? Obviously, balance sheet's in a good spot, how you think about cash flow, capital allocation, you know, M&A. Alex, just, you know, you speak to a lot of contacts, obviously, in the industry. Just kind of what are you hearing from folks out there, even in the past, you know, past week, given the headlines? Typically, people drink a lot of wine during banking crises. Somebody had to bring that up. Yeah, Peter, as you mentioned, we do have a very strong balance sheet, and we're very happy about that. That didn't just happen. You know, we have been well aware of some, you know, macroeconomic concerns out there this time. We've been very thoughtful. We have a very positive cash flow business, and we're able to de-lever, which is what we have been doing, you know, 1.7x. We'll continue to do that. Our preference is to de-lever, we also have, as you mentioned, the strong balance sheet, which gives us the ability to invest if we find the right opportunity. Opportunities have to be accretive before we will invest. We've looked at a lot of things and we continue to do that, but, you know, we would never lever more than, like, 4x just because that doesn't make sense to us to put the business at risk. In terms of thinking about M&A, we will invest in both brands as well as vineyards, wineries, those types of things. Sean, maybe you can update us on currently how we're what we're seeing out there available in M&A and how we're approaching it. Yeah, I think you said it very, very well. You know, we're focused on doing the right deals as they come along. You know, the SVB situation, as you alluded to, and other banking failures, we thankfully had, you know, no meaningful exposure and we're in good shape there. There were some that did have a presence in wine. I'm not sure when all falls out from that, if there'll be too much that flows from that given how The Fed has stepped in. We don't really change our analysis when it comes to either branded wineries, which would be kind of what you'd think of as bolt-ons or production and production assets and vineyards that we think of as right-sizing our wine making and our fruit sourcing. The focus is on running the model, finding something that's accretive, making sure it's firmly in luxury, making sure it works well with our brand architecture and is something where we could add further value. As Lori has managed our leverage ratio to where it is today, that gives us both, I think, superb capital allocation and also some dry powder when coupled, especially also with our public company stock as a currency to be creative and to do deals that I think would make sense. Given that we have a long-term growth algorithm based entirely on organic, our feet are never to the fire to have to do that, and that's a really pleasant position for one to be in. Great. Just a few minutes left. I don't know if there's any other questions in the room. If not, I'm gonna go to my last question, which is the one I've been waiting for. Brian's good. All right, Brian asked all the questions. Okay, guys, fun one. What's your favorite wine in the portfolio right now that we're all gonna go out and buy right after this? You had to pick one. I know you love all your children. I love all my children. My wife and I have been drinking the Duckhorn Sauvignon Blanc. Sémillon, which is somewhat untypical, and it makes a richer, larger style of Sauvignon Blanc. I think while we're all down here in Florida, where it's a little warmer than anywhere else in the United States, I think that's what I would suggest we have with our next one. You guys are touching base and writing your notes. I'd have a glass of Sauvignon Blanc sitting right next to your laptop. Yeah. It's interesting that you mentioned the Canvasback, which is an amazing wine and it really over-delivers, I think, for the price point. Right now I'd have to say, Paraduxx Red Blend is really one of my all-time favorites. How about you, Sean? I have two. Two? You can give two. You can give two. Thank you. They're both in the same family. Duckhorn, Decoy Limited right now is drinking so well, and it is available broadly. It is, in particular, I'm loving the Cab, and then our Merlot just came out. First time we've done Decoy Limited Merlot. It's phenomenal. It really is. Run, don't walk to buy some. Is everybody aware of the brands just in your personal life or just? Are you guys fairly aware of the brands? Okay, good. That's good. Awesome. Great. Well, guys, thank you so much for the time. Really appreciate it. Everybody go out and have a nice glass of wine later tonight from Duckhorn. We'll leave it there. Thanks, guys. Thank you, Peter. Appreciate it. Thank you.