Good afternoon. Thank you for attending today's Duckhorn Portfolio Fiscal Year 2023 Second Quarter Earnings Conference Call. My name is Tamia, and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. It is now my pleasure to pass the conference over to your host, Sean Sullivan, Chief Strategy and Legal Officer. You may proceed. Good afternoon, and welcome to The Duckhorn Portfolio's second quarter 2023 earnings conference call. Joining me on today's call are Alex Ryan, our President, CEO, and Chairman, and Lori Beaudoin, our Chief Financial Officer. In a moment, we will give brief remarks followed by Q&A. By now, everyone should have access to the earnings release for the fiscal quarter ended January 31, 2023, that went out at approximately 4:05 P.M. Eastern Time. The press release is accessible on the company's website at ir.duckhorn.com. Shortly after the conclusion of today's call, a webcast will be archived for the next 30 days. Before we begin, I would like to remind you that today's discussion contains forward-looking statements based on the environment as we currently see it, and as such, includes risks and uncertainties. If you refer to Duckhorn's earnings release, as well as the company's most recent SEC filings, you will see a discussion of factors that could cause the company's actual results to differ materially from these forward-looking statements. Please remember, the company undertakes no obligation to update or revise these forward-looking statements in the future. We will make a number of references to non-GAAP financial measures. We believe that these measures provide investors with useful perspectives on the underlying growth trends of the business and have included in our earnings release a full reconciliation of non-GAAP financial measures to the most comparable GAAP measures. In addition, please note that all total U.S. food scanner data cited on today's call will refer to dollar or unit consumption for the 12-week period ended January 29th, 2023, and growth versus the same period in the prior year, unless otherwise noted. With that, I will turn the call over to Alex. Thank you, Sean. Good afternoon, everyone. Thank you for joining us today to discuss another strong quarter of financial performance, demonstrating sound execution of our long-term growth strategy and continued outperformance of the luxury wine subsegment. Following my opening remarks, Lori will walk us through our quarterly results and will also provide an update on our raised guidance for fiscal year 2023. We will open the call for questions. I would like to begin today's call by offering a few highlights from the quarter. First, we delivered nearly 5% organic net sales growth at the high end of our expectations for the quarter and lapping the robust 18% growth we realized in the prior year period. This marks a sequential acceleration on our two-year trends, with wholesale volume remaining the primary driver to our growth. Second, demand for our high-quality luxury wines remains very healthy, and our wholesale depletion growth once again exceeded the pace of shipments in the quarter. We continue to execute against our considerable distribution-wide space opportunity, extending the reach of our high-quality luxury brands into new doors and adding additional labels in existing accounts. During the quarter, we made solid progress on increasing the number of accounts in which our wines are sold and the number of labels in each account, both on and off-premise and across account types. Third, the premiumization trend toward luxury wine continues. Luxury remains the fastest-growing subsegment in wine, and our strong consumption trends continue to far outpace the subsegment and the broader category. Led by our largest winery brands, Duckhorn Vineyards and Decoy, we were once again a growth leader among scaled luxury suppliers, marked by continued distribution gains. This superior performance resulted in consistent share gains measured in both dollars and volume. We continue to see little, if any, signs of trade-down within The Duckhorn Portfolio and believe that this is a result of both the resiliency of our more affluent luxury consumer during times of uncertainty as well as our superior brand strength. Fourth, the strength of our business extends beyond wholesale, with performance in our high-margin DTC channel continuing according to plan, up nearly 60% in the quarter. Our exclusive limited-time Kosta Browne Single Vineyard Series and Burgundy releases were tremendously successful. In addition, sales from our wine clubs were solid across our winery brands, which speaks to the multiple ways we are successfully connecting directly with our loyal consumers and driving top-line growth. Fifth, our highly diversified approach to grape sourcing and wine production, coupled with clear visibility into our cost structure, enabled us to deliver strong results up and down the P&L, with adjusted gross profit margin and Adjusted EBITDA margin each several hundred basis points above the prior year period and also ahead of our plan. This quarter's strong performance is rooted in our omni-channel growth strategy, which is diversified and well-balanced across our winery brands. In both on and off-premise, we continue to see strong depletions reflecting solid gains in accounts sold and the number of labels in each account, as well as velocities per account that remain above pre-pandemic levels. Returning to the longer-term channel dynamics, our on-premise depletions growth outperformed off-premise depletions growth, increasing double digits in spite of a challenging comparison in the prior year period. On-premise depletions continue to grow, underscoring the momentum we have in that channel as restaurateurs continue to view us as a trusted partner that consistently supplies high-quality luxury wines that consumers prefer. The underlying health of our off-premise channel is also strong, as depletions continue to grow in line with our expectations. We observe good balance between national and independent accounts. In cases, accounts sold, and number of labels in each account contributed as strongly as expected over this timeframe. As we have discussed before, the off-premise channel remains our greatest opportunity for future growth. As we further optimize our pricing and strategically invest in sales to drive distribution and awareness of our winery brands, we are confident that we can continue to take share in the channel. Our high-margin direct-to-consumer business realized tremendous growth in the quarter. We have previously discussed the change in the timing of the offerings of our ultra-luxury Kosta Browne wines that we are implementing over the course of this year. Consistent with that new cadence, the Single Vineyard Series offering moved from the first quarter into the second quarter, where it joined our highly innovative Kosta Browne Burgundy offering, which together provided a considerable tailwind to sales and gross margin. As you may recall, that Kosta Browne is sold predominantly in the DTC channel through a limited allocation model. Each of these wines is offered only once per year. These limited time offerings afford some of our most passionate customers an opportunity to purchase some of the rarest wines in The Duckhorn Portfolio. Given the scarcity and small production size of these ultra-luxury wines, the backlog to be eligible to purchase Kosta Browne wine is extensive, and we consistently sell out every offering. As we enter the second half of our fiscal year, we expect a similar performance from the Kosta Browne releases in each of the next two quarters. Notably, our Appellation Series offering, Kosta Browne's largest offering, ships in the fourth quarter. Because this is a shift in timing compared to the prior year, we expect it will serve as a considerable driver to our top and bottom-line performance later in the year. Complementing the strength of Kosta Browne were solid trends in our wine club sales, as our most loyal customers enjoyed cherished favorites along with our new innovative offerings. At our tasting rooms, results were generally stable in spite of inclement weather that temporarily impacted visitation during the quarter. As we look ahead, we are encouraged by how early bookings are shaping up for this spring. Our innovation extends well beyond the boundaries of DTC. Our new wines have also achieved great success at scale in the wholesale channel. One of our proudest accomplishments is the success of Decoy Limited, our elevated blue label Decoy offering. Leveraging the strength of the Decoy winery brand, we have managed to deliver incremental growth by filling a previously open space in the portfolio. Since the initial introduction of Decoy Limited, with four varietals offered in early 2021, Decoy Limited has continued to post outsized growth through increased distribution of the original varietals and the market's warm acceptance of new offerings, with strong initial sell-in of our new Decoy Limited Brut Rosé and Limited Alexander Valley Merlot serving as recent positive examples. We are delighted to be bringing to the market these delicious wines at the attainable luxury price point, and we are increasingly being recognized for it by both the consumer and trade. In fact, Decoy Limited Red Blend was recently named the 2022 number two value wine by Wine Spectator across all wine varieties globally, rated 90 points or higher and widely available at $40 or less. This recognition highlights and validates our ability to provide outstanding wine at an attainable luxury price point. In summary, I'm very pleased with our second quarter and first half performance. The underpinnings that support continued premiumization and the outperformance of the luxury subsegment relative to the total wine segment remain intact. The key components of our long-term growth strategy that have allowed us to outpace the luxury subsegment only continues to strengthen. We head into the back half of the fiscal year with good momentum. I'm confident in our ability to continue to deliver strong, highly profitable growth, which is reflected in the upwardly revised full-year guidance that we are announcing today. With that, I'll now turn it over to Lori to discuss our second quarter performance and updated fiscal year 2023 outlook in greater detail. Thank you, Alex. Good afternoon, everyone. It's delightful to speak with you about another solid quarter as our highly diversified and scaled omni-channel luxury platform, coupled with sound execution of our long-term growth strategy, continue to provide strong financial results. Beginning with our top line. Net sales were $103.5 million, a 4.8% increase in organic growth compared to the prior year period. These results reflect 5.2% growth in price mix, driven primarily by favorable channel mix and price increases. As anticipated, our high-margin DTC channel delivered robust growth in the quarter, benefiting from the previously mentioned change in cadence of the Kosta Browne Single Vineyard Series offering from the first quarter into the second quarter, as well as the highly successful inaugural Kosta Browne Burgundy offering. Positive price mix was partially offset by a de minimis 0.4% decline in volumes. This was in line with our expectations and primarily driven by Duckhorn Vineyards and Decoy as we lapped a tremendous 24.8% volume growth comparison in the prior year period. As Alex noted earlier, second quarter wholesale depletion growth outpaced shipment growth, with accounts sold and, to a slightly lesser extent, number of labels in each account continuing to serve as the driving forces behind our top-line results, while velocity per account remained consistently strong. Turning to net sales performance by channel. As we forecasted, the direct-to-consumer channel was our greatest growth contributor in the quarter, increasing 58.9% over the prior year period. This significant increase was due predominantly to the offering cadence shift for the Kosta Browne offerings I mentioned a moment ago. Wine Club sales growth also contributed nicely to the quarter, while revenue from our tasting rooms was flat, with visitations impacted by inclement weather. California direct to trade was up 1.1% compared to the prior year period. We were pleased with this result, particularly given the challenging 19% year-ago comparison when California saw significant reopening at on-premise businesses. Our wholesale to distributor channel declined 4.5% compared to the prior year quarter. While this is an outlier relative to our historical performance, these results were in line with our expectations. Once again, one year performance only tells part of the story. Looking at our two-year trends, the channel increased 27.4%, a sound acceleration relative to the 22.4% growth rate realized in the first quarter. Second quarter gross profit was $55.2 million, an increase of $5.7 million, or 11.5%, compared to the prior year period. On an adjusted basis, gross profit grew to $55.5 million, an increase of 11.6% compared to the prior year period. This represented a 53.6% adjusted gross margin, up approximately 320 basis points year-over-year, driven by improved channel mix from DTC and price increases implemented earlier in the fiscal year. Total selling, general, and administrative expenses were largely in line with our expectations, up $5.7 million or 24% compared to the prior year period. This increase is primarily attributable to professional fees and planned growth investments intended to optimally position us for continued execution against our significant multiyear wholesale distribution white space opportunity. On an adjusted basis, total operating expenses increased by $2.9 million or 14.8%. Net income was $14.9 million and diluted EPS was $0.13 per share, compared to net income of $17.9 million and $0.16 per share in the prior year period. Adjusted net income came in at $21.1 million. Adjusted EPS was $0.18 per diluted share, compared to $19.5 million and $0.17 per diluted share in the prior year period. Adjusted EBITDA for the quarter increased 13.1% to $38.8 million. This represented 37.5% of net sales, compared to 34.7% of net sales in the prior year period. This 280 basis point increase reflects our solid top-line growth as well as robust gross profit generation, partially offset in the quarter by planned growth investments, including in our sales force. At the end of the quarter, we had cash of $7.3 million and total debt of $225.8 million, resulting in our leverage ratio declining to 1.7x net debt. Let's now look to our outlook for the rest of the fiscal year. Given our strong year-to-date performance and confidence in our ability to execute throughout the remainder of the year, we are raising our guidance for fiscal year 2023, which now calls for net sales of $398 million-$404 million, reflecting approximately 7%-8.5% organic volume-led growth. Adjusted EBITDA of $135 million-$138 million. Adjusted EPS of $0.63-$0.65 per diluted share. We are also making a few updates to certain assumptions underlying our full year guidance, namely interest expense and adjusted gross margin. We now expect interest expense of approximately $11 million-$12 million, which is down from the $13.5 million-$14.5 million range we indicated last quarter and reflects some upside from interest rate hedges. To reflect our second quarter and first half outperformance, we now expect adjusted gross margins for fiscal 2023 to reflect modest expansion, which is an improvement versus our prior guide of flat to down approximately 50 basis points year-over-year. While we are raising our guidance for the full fiscal year, as it relates to cadence, we would point you to the detailed quarterly net sales guidance we provided on our last two calls, including our discussion of Q4. As a reminder, our largest Kosta Browne offering, the Appellation Series, has shifted entirely from the third quarter into the fourth quarter starting in this fiscal year. It is also important to remember that variability in monthly wholesale channel performance can influence any given quarter, including those late in the fiscal year. We remain confident in our overall ability to deliver outsized and broad-based growth embedded in our guidance for the second half in both our wholesale and DTC channels. Overall, we are very pleased with the second quarter and our strong results in the first half have provided us with a high degree of confidence as we enter the back half of fiscal year 2023. As we discussed when we reported earnings after the first quarter, I plan to retire in the next few months. Accordingly, this is likely to be the last quarterly earnings conference call for which I will have the pleasure of joining you. I'm pleased to be retiring from The Duckhorn Portfolio at a time when the company continues to deliver strong performance with momentum into the future. With that, Alex has a few closing comments. Thank you, Lori. We truly appreciate your invaluable contributions to the company that will leave a lasting impression for years to come. Our national search for Lori's successor continues along our expected timeline. To close, I'd like to reiterate my confidence in premiumization serving as a persistent tailwind to the industry and for the Duckhorn portfolio to continue to outperform the fastest-growing subsegment in wine, luxury. To ensure that we remain a category growth leader, we are committed to making the necessary investments in our business to support the continued execution against our considerable wholesale distribution white space opportunity. As we scale, we will be vigilant in bringing a healthy balance between growth and profitability as we seek to maximize long-term shareholder value. With that, Lori, Sean and I are available to take your questions. Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a quick reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions register. The first question comes from Gerald Pascarelli with Wedbush Securities. You may proceed. Hi. Thanks very much for the question. Understanding that DTC is obviously going to see lumpiness, and we're kind of, you know, over two months into the quarter here, can you maybe speak to some of the quarter-to-date trends that you've seen in your wholesale business from a top-line perspective? Is it performing relative to your expectations from both a volume and pricing perspective? Just looking for any kind of color that you've seen, you know, headed into the third quarter here. Thank you. Hey, Gerald. Thanks for joining us this afternoon. I can tell you that our third quarter Kosta Browne offering has completed, and it's been fully subscribed, and we're very excited about it, but also remind you that historically that it happens with Kosta Browne. It's all generally fully subscribed, and we've seen the same thing with this quarter. You know, that gives us a lot of confidence into our Q4 plans as well, because a big piece of the growth in Q4 is the Kosta Browne Appellation offering. We expect similar results there as well. Right. No, understanding DTC, but from your core wholesale channel, I guess just looking for- Oh. like, any kind of read on, you know, how things are trending? Sure. It looks like it was implied down at work. Sorry about that. Okay. All right. Sorry, I didn't understand. We, we don't expect any change in Q3. You know, from our expectations. We're increasing our guidance slightly because we've had strong performance across the top-- up and down our P&L. We expect a continued strong performance. In our forecasting in Q3 and Q4, you know, we have very reasonable expectations on depletions, and we expect things to continue. We don't see any changes coming down the pipe. Got it. Thanks very much for the color. Thank you. The following question comes from Gregory Porter with Evercore. You may proceed. Hey, thank you for taking my question. Just a quick question in terms of your guidance. What would be the key driver, I guess, of the upside, you know, for your guidance change? Secondarily, is there any assumption of a weakening consumer environment in the back half? Is the assumption that kind of things stay as they are now? Thank you. Sure, yeah. On the top line, we're really rolling through all of the first half outperformance. Some of the things that we're thinking about as we think about that is in our wholesale channel, inventories are really in a good position. We're forecasting shipments, which align very well with our targeted, days on hand. We're seeing the benefits rolling through from our pricing changes. Also we're seeing benefits from the strategic investments that we've made in our sales team. As I've mentioned earlier, we have our depletion plan for Q3 and Q4 is really reasonable, based on what we've seen in the first half, and then, the historic experience we've had with our Kosta Browne offerings and how reliable those are and how we have them planned in the quarters. I believe your second question had to do with... Yeah. trade down? Yeah. Yeah, just with the consumer environment is baked in. Yeah. Just to follow up on that. It's a good question, and right now, we're not making any adjustment for changes in our consumer's behavior. I stress that point, the people, you know, buying and enjoying our wines, which has been, you know, obviously big part of our high performance. We haven't seen our consumer trading out of luxury, and we don't anticipate that they will. They will still stay within the luxury sub-segment. Great. Thank you. Thank you. The following question comes from Kaumil Gajrawala with Credit Suisse. You may proceed. Hi. Can you maybe clarify, give some more details on your comments on incremental investing? I think you said, increasing sales force, a few other things. Are they, Is this incremental in the sense that, you know, quarters obviously come in better... Not the quarter, the first half has come in better than expected, maybe freeing up some additional marketing spend? Is this something that was maybe always part of the plan? Hi, Kaumil. Thank you. Thank you for the questions. We don't have any change in our guide. You know, when we announced our Fiscal Year 2023 guidance, we mentioned that we'd be investing in some in our sales team. Those investments have been made, and we're seeing results, but we don't have any changes to our plans in that regard. I'd just add from a strategy perspective, historically, we've looked at companies that have invested during downturns, and they have generally performed better when the upswing or period of dislocation ends. We believe that the investments we've made in innovation, in efforts to secure a high quality grape supply and investment in people and systems, that's gonna bode well for us in the long term. Hey, Kaumil, it's a good question. Those investments gonna help us continue to take share and we're very confident in that. I think to Sean's point, by taking share now and into the future, we think, when the really good days come back, we'll be extremely well-poised to continue to capitalize on that in the luxury market. Okay, great. Maybe an update on the incremental distribution. You mentioned wholesale strength, and that you continue to gain distribution. I think you shared some figures at ICR on kind of the opportunity and how far along you are. I'm just curious if you could maybe give an update or talk about, you know, your progress on some of these shelf space wins. Sure. The focus that we spoke of that I think you're referring to is our what we view as our total addressable market of accounts that are appropriate for our wines. In our year-end earnings in October, we spoke to what we view as our goals for our potential to increase that penetration from 24% to 29% over the course of the four fiscal year period. For where we are now in that journey, which is obviously early, we feel very good. We continue to feel very good about not only meeting that goal, but also effectively getting where we want to be on the other two vectors, which is increasing the number of SKUs on the shelf, and then obviously increasing velocity over time of those SKUs. We feel like we're where we should be to make good progress on that goal. Okay, great. Thank you. Thank you. The next question comes from Andrea Teixeira with JP Morgan. You may proceed. Hi, good afternoon, everyone. Lori, congrats again on your retirement, and thank you for educating all of us. One of the questions that I had is like, and you quoted very strong, of course, from Kosta Browne and also the improvement in the Decoy Limited. I think when we look at Nielsen, and I know obviously there are puts and takes there, can you kind of help us understand kind of like the disconnect a bit with the track channel data? Related to, and just a clarification also on your guide, I understand, like Lori said, you raised the bid. It seems that the top line bid was about $11 million and EBITDA bid by $7 million. You only raised at the end of the fiscal year by $4 million and then $2 million respectively. Wondering if you were saying, it doesn't look like you're embedding any deceleration there, but perhaps, just being conservative, how to think about, the bridge to guidance. Thank you. Andrea, I'll take the first one. I think I'm gonna pass the second one to Lori. You know, we're seeing really solid We can all skin, you know, scan our data, Nielsen and others, many different ways, but we're seeing really solid Nielsen data reporting on our sub-segment and certainly on our company. we're not anticipating really any changes than, you know, continued growth in that area and resulting growth with us. As you guys will all recall, you know, scanner data represents about a third of our overall business. Because of the diversification theme we've stressed numerous times, that one-third's important, but there's two-thirds of other areas of business that continue to perform and will kinda, continue to, we feel confident, you know, get us to where we're guiding and continue growth in the future. Nielsen's a good guide, but it's difficult in the time period. Again, it's not our exclusive barometer. Andrea. No, yeah, I know I get that, Alex. Just one clarification on that, on the cadence of the quarter also. I think, like, when we saw the data in general, right? Not only in Nasdaq, all of the other ways that we can try to anticipate the trends, right? Obviously, it's not perfect, but it's the only thing we can look at. It seems as if, like, there was a December softness, and then January was better, and then February was a bit softer again. Is that the trend you're seeing? Sorry, Lori, I just wanna make sure that I get that clarification. We did see that trend, but it really didn't hamper our overall performance. We did see the trend. We could chalk it up to a number of factors, probably national crazy weather might be part of it. We saw, as you, as you noted, some pull-out in January and for us into February. We're not concerned that that was... We think that was more of an isolated blip, not necessarily a trend that's affected the way we're looking at our business. That's helpful. Thank you. Just one other point on that. You know, overall, our results were in line with our expectations. I think you'll recall in the prior year, there was some significant growth rates that we experienced as on-premise was reopening and some of these things. We see that the luxury market is really settling into a stable state with growth rates that we, you know, expect to see into the future. With that said, I think you ask about EBITDA. As we're guiding on our EBITDA, we're not rolling through all the first half Adjusted EBITDA favorability, as you pointed out. Most of that has to do with some expenses, Andrea. The timing, they didn't roll through in the first half as we anticipated, and we expect those to push into the second half. There's nothing unusual there, no increased spend. It's just kind of the normal cadence of our monthly and quarterly flow through, and anticipation of when those things will hit. Mm-hmm. No, that's helpful. That's what? Marketing or some of increased costs? You know, it's not, it's just a wide array of things across the board, a bunch of little things that add up to, you know, to a bigger number. It's not increased spend necessarily as much as it's just things that we had forecast would land in, you know, Q2, they're pushing into Q3 or what have you. Okay, perfect. All right, I'll pass it on. Thank you so much. Congrats again. Thank you. The next question comes from Christian Junquera with Bank of America. You may proceed. Hey, everyone. You have Christian on for Pete. Thanks for taking our question. Gross margins came in better, much better than anticipated. Can you discuss the key drivers behind the upside? It would also be helpful if you could discuss cost inflation. Are you guys beginning to see it moderate on your end? Thanks again for the question. Sure. Yeah, thank you for your question as well. You know, we anticipate modest adjusted gross margin expansion, and as we've seen, it's driven mostly by we're seeing the benefit of the pricing strategy and the pricing increases. Then also we have some favorable brand mix in there. You know, I think we've talked about before, we're constantly looking for ways to improve our margins and continue to deliver quality wines at the same time. Part of what we're seeing is we talked about, we made price adjustments to manage inflation. We're seeing that come through beneficially. With regard to our Decoy brand in specific, we're seeing improved margin. We've been focusing on it very hard over the last few years. One of the things that we've done is we've moved our Decoy White to a California Appellation, our Decoy White label that is, while continuing to high grade the quality of the wine and also ensure we have sufficient supply to meet our consumer demand. In addition to that, we're seeing really strong performance from our Decoy Limited offering, which is our blue label, and that has margins that are favorable to our Decoy wine brand, which we're seeing as well. In regard to your question on inflation, we've talked about that in the past, and we've made those pricing adjustments to accommodate for that, and we feel very confident that we're getting the results there that we anticipated. Very helpful. Thank you. Thank you. The next question comes from Lauren Lieberman with Barclays. Your line is open. Great. Thanks. Hi, everyone. I want to talk a bit about gross margins. My first question was just how much of the gross margin recovery or, you know, expansion this quarter stemmed from Kosta Browne and Burgundy this quarter versus other, you know, channel mix considerations and pricing? As we talked about last quarter, we anticipated that quite a big piece of that would be related to Kosta Browne. Kosta Browne has a big impact on our margin in that as we change those, the cadence of those shipments. It did have an outsized impact. We don't really report on individual brand margins or their results, but it was a sizable impact. Okay. If you look forward, right, the Kosta Browne dynamics in the second half, it's just a shift from one quarter to the other. On a, you know, the half a year should theoretically even out. It still implies, the guidance now implies the gross margin performance really decelerates second half versus first half. I'm not terribly clear on why. If you could help with that, it would be great. Kosta Browne has been in our results historically, and it continues. It just has been shifting, as we talked about before, moving. The bigger piece of the shipment was in Q3 last year. This year, it'll be in Q4. In general, you know, our end of the year margins will not be impacted by that. The guidance that we're providing with regard to margin and the slight improvement there has to do more with the other things that we've talked about, the realizing the pricing, as well as a little bit of brand mix. I'm just saying, but I guess what I'm getting at is that second half gross margins, given the guidance, I think is implied to be lower than first half gross margins. I don't believe that there's seasonality in the business that would support that. I'm just curious, you know, to say another way, the second half gross margin guidance look frankly or implied, looks a bit conservative, and I just was wondering if you're building in or leaving cushion for maybe some, you know, greater promotional activity, leaving wiggle room for weakness in the consumer, or if there's just something I'm missing in terms of timing on inflation. Yeah. We won't see the same level of gain in Q3 as we saw in Q2, because Q2 had a bigger, a much bigger Kosta Browne Single Vineyard Series offering, and it's a smaller offering in Q3. That will have some impact in margin. We do anticipate having strong margins in the back half. You know, our forecasting is the best look that we have today, right? It may have some a little bit of conservative in it. Conservative is in it just to give us the flexibility in a dynamic market if, you know, would desire to take advantage of that. We'll see. Remember our gross profit margin has a lot to do with mix. Ultimately at the end of the day, when we get down to earnings, the gross profit margin fluctuation isn't always impactful to our earnings line. If it's because we're selling into California, versus direct to distributor, that'll impact our gross profit margin, but it doesn't impact our earnings margin. Okay. All right. Thanks a lot. Thank you. As a quick reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Noah Erni with Jefferies. You may proceed. Great. Thank you for taking my question. Two for me, if possible. On the revenue guidance, your upwardly revised guide implies about 10%-13% growth back half. You provided some context earlier from Gregory's question on the high-end assumptions. Could you also provide some background on the low-end assumptions and any big risks that could potentially affect that heading to the back half of the year? Second, sort of looking at the weakness of consumption we have seen in the wine category more broadly, can you comment on overall weakness in wine consumption compared to beer and spirits and what the industry should be doing collectively to attract more consumers to the category? Thanks. All right. Good series of questions there for you. To start is, we're pretty optimistic. We're pretty confident, optimistic on our guidance, as you would expect. I don't think I could sit here and isolate any, you know, materials and identifiable concerns that we have, right? It's a dynamic market. Some might call it challenging. We seem to be doing extremely well in it for a whole host of reasons, kind of our long-term plan of how we're supposed to be executing, and we are executing on that area. I need to give you my prudent comments, but the reality is we are comfortable with the guidance range we gave you on both ends, you know, given that we got, you know, five and a half more months of execution into the summer to take place. As you pointed out, guidance is just a range, right? You know how we think things will come out, it's kind of our best estimate at this time. There's nothing that's causing us undue concern in the bottom range of that guidance. It's just, you know, we take into account the information we obtain from our distributors, what we're seeing out there in the market, what we're seeing, in, you know, just basic overall economic dynamics. We put that all in together and create our forecasts. There's nothing that gives us undue concern in the bottom range versus the high end. I'd just note to Lori's point about range. You'll note that not only did we take up guidance, but we also tightened those ranges, both on the net sales and Adjusted EBITDA guidelines. That gives you a, probably a sense of where we as a management team, see that risk profile. What was the second part of your question? Sorry, I think we missed it as we were processing the first part of your question. No, no worries. It's a long one. The second one was sort of with the overall weakness in consumption in the category, sort of what industry participants should be doing together collectively to attract more consumers. Been asked that a lot. Let me start by just taking a quick victory lap for our particular plans, right. We've executing a very focused, very exclusive luxury-based wine strategy. We've talked about it now for months and years in some cases, and I think it really shows. That focus on concentrating on really the accessible part of luxury continues to pay off, and we understand what our trade and our distributors and certainly what our consumers desire from us, and it's working really, really well. The broader category and the broader wine market, as you've noticed, we've all seen the data, has some challenges it's got to work through. I don't know if taking a play out of big beer or big spirits is the right approach. I think, you know, we are touching our consumers largely in DTC ways. It's a form of marketing in the ways they want to be contacted and engaged with. We as an industry are going to have to continue to do that. We seem to be doing it very well. The industry probably has a little more work to do in it, and I think that DTC to us is sometimes viewed as really successful marketing efforts on our part. Maybe the industry has to look at how they engage customers better, whether it be more traditional advertising or ways that luxury wine does it in more experiential ways is probably up for some debate. I'll leave that comment with just saying that we do have the knowledge in that area as the customers for our band of price points really want to be engaged. I think it's been demonstrated in our continued results and certainly this wonderful quarter. I hope that gives you a little bit of color. Yeah, great. No, I appreciate all that. Thank you. There are no other questions registered at this time. As a final reminder, if you would like to ask a question, please press star one on your telephone keypad. There are no other questions. I will now pass it back to the management team for any closing remarks. Wonderful. Well, thank you all. I want to thank you again for joining us today to review our second quarter performance and our improved outlook for the remainder of the fiscal year. I look forward again to speaking with you in early June when we report our third quarter 2023 results. Until then, take care and thank you. This concludes today's call. Thank you for your participation. You may now disconnect your line.