Greetings. Welcome to the Vintage Wine Estates, Inc. First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Deborah Pawlowski, Investor Relations for Vintage Wine Estates. You may begin. Thanks, Kyle, and hello, everyone. We certainly appreciate your time today and your interest in Vintage Wine Estates. Joining me on the call are Pat Roney, our Founder and CEO, Terry Wheatley, our President, and Kathy DeVillers, our CFO. Pat and Terry are gonna provide an overview of our first quarter of fiscal year 2022 results and discuss our strategy for growth as well as our outlook for fiscal 2022. After that, we will open the call for questions. As you are aware, we will probably make some forward-looking statements during this formal discussion as well as during the Q&A session, which are outlined here on slide two. These statements apply to future events that are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from what is stated here today. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed with Securities and Exchange Commission. These documents can be found at our website or at sec.gov. During today's call, we will also discuss some non-GAAP financial measures. We believe these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. With that, if you will turn to slide three, I will turn it over to Pat- o r I'm sorry, Terry, to begin. Terry? Hello. Thank you. Yes, thank you, Deb, and welcome everyone. These are very exciting times here at Vintage Wine Estates and we're making excellent progress gaining market share, advancing our multi-brand omni-channel strategy while building a stronger operations and finance infrastructure. We grew over 3% in the quarter over last year and importantly had a 37% revenue growth in our direct-to-consumer business, and this growth was up against headwinds presented by supply chain challenges. Russell Joy, our COO, has joined us at an opportune time to help us deal with juggling of current and new suppliers to get the glass and other supplies we need and working to meet our customer requirements. Looking to our growth efforts, VWE launched the first ever celebrity branded e-commerce retail store that is vertically integrated to VWE direct-to-consumer production, management and fulfillment. The e-commerce store is rich with content information and appeal to an established customer base, supported with best practice and proven digital to delivery success. We are first movers in this arena and believe the e-commerce retail store model is the next frontier in celebrity alignment. We believe our strength in digital marketing is a clear differentiator for us as we directly touch close to 1 million individuals who love our wines. We expect to leverage this channel with our ready-to-drink offerings as well. Looking at slide four, we're making solid progress on our efforts to strengthen our financial infrastructure to address the incremental demands of being a public company, but also the variances in the accounting processes. We engaged a consultant to review our control processes and staffing. They are providing the suggested adjustments to our inventory and costing oversight to ensure we have the needed processes and the right people throughout the organization to support a strong, reliable and sustainable finance and accounting structure. We also continue to progress building out the business and today announced the acquisition of a cider company. Pat will review the acquisition in greater detail, but it's an excellent addition to our RTD offerings, providing us a greater diversity with a leading cider brand and adding a new channel to our market. Turning to slide five, you will see we remain fairly evenly balanced among our three business channels. In our direct-to-consumer segment, as I mentioned, we had significant growth of 37% as we consistently amplify efforts through our many direct-to-consumer channels, including our tasting rooms, wine clubs, e-commerce, QVC, telemarketing, digitally native brands, and the addition of the Sommelier Company. Our customer -first philosophy, combined with our top-tier digital marketing capabilities, are driving our growth. Our marketing tactics leverage customer advocates to drive brand recognition and celebrate loudly our superior customer experience. We had increased tasting room traffic, significant growth in wine club membership and retention, and are continuing to gain traction in our e-commerce and digital channels. Of note, our average order value across all key transaction sites was up 3%. Volume for direct-to-consumer was up 13% and operating income improved 127%, reflecting an excellent improvement in product mix. Moving on to wholesale. Our revenue was up about 8% and benefited from increased international volume and more favorable product mix. This more than offsets some minor brand and marketing programs that we discontinued since the first quarter last year. Strong margin in this business also reflects the favorable product mix. Our prime brands are winning market share. We continue to be encouraged by the reception of Bar Dog by retailers and the engagement with consumers for this brand. Bar Dog is up almost 37% in depletions. Firesteed, B.R. Cohn, Kunde and Cherry Pie are also brands that continue to grow above the industry average. We continually evaluate the portfolio to determine where brands are succeeding and manage our distribution channels to drive sales. Next, our B2B business. Demand remained very solid in B2B, which is our private label and custom crush and production services. Shipments for this segment were challenged because of the difficulty of getting enough glass in a timely fashion in order to meet customer schedules. As a result, we had shipments to a major retailer rescheduled into the last nine months of fiscal 2022. These programs are shipping now and will continue through the third and fourth quarters as well. We also have new commitments from a large retailer for a third quarter buy that will support our B2B business, as well as proposals with several other B2B customers we should see materialize in the later quarters. With that, let me turn it over to Pat to talk more about our results, the recent acquisitions and our outlook. Pat? Thank you, Terry, and good afternoon, everyone. If you'll turn to slide six, I'll first touch on our most recent acquisition, ACE Cider. ACE is one of the fastest-growing craft ciders in the country. This is a great addition to our ready-to-drink portfolio and also complements our channels to market and extends our market research by adding beer distributors to our wholesale network. This creates a new growth opportunity for our ready-to-drink portfolio of products. We also see this as providing another platform for growth and diversification, such as wine on tap and new ready-to-drink brands. ACE was founded in 1993 and is located in the heart of Sonoma County, a region well known for not just its winemaking, but also its premium apple orchards. The product portfolio is full of award-winning, fruit-forward ciders and includes the world's original pineapple cider. This is the number one selling fruit-flavored cider in the United States. ACE is our second acquisition thus far this fiscal year. At the beginning of the quarter, we acquired Vinesse, which is off to a great start. It has measurably enhanced our DTC platform, and our marketing team is moving fast to leverage our digital capabilities to increase member average order value and grow membership. As I've noted before, we have a strong organic growth strategy that is complemented with our acquisition efforts. Our acquisition pipeline remains robust, and we expect that we are not finished with acquisitions for fiscal 2022. Turning to slide seven, we can dive further into the results for the quarter. While revenue was up over 3% in the quarter, were it not for the $7 million in delayed shipments resulting from glass shortages, revenue would have been up 16%. We will still ship that volume, but it will be spread over the last nine months of the year. We are confident we are not losing any business because of these constraints, and in fact, believe we are doing a relatively good job at staying ahead of the challenge. As Terry mentioned, we had very strong growth in our DTC segment, with revenues up 37%. This included 18% organic growth and the rest from acquisitions. Volume was up 13%. Our strong marketing programs and focus on our luxury brands drove the growth. This focus is also reflected in margins for this segment, which expanded 670 basis points to 17% operating margin. Wholesale revenue was up nearly 8% and included approximately $0.5 million of acquired revenue. Organic growth was 4%. We were encouraged with our depletion volume growth as well, which is up 1% year-over-year, but importantly, was up over 14% on our priority and focus brands. Our improved processes focus on brand management, and the benefit of a good product mix also drove 600 basis points of margin expansion for this segment to 26%. B2B was hampered by the glass shortages I mentioned that delayed about $7 million in shipments into future quarters. Were it not for that, we would have had about 20% growth in this segment as well. Margins were dampened somewhat, but still relatively strong at 31%, reflecting good product mix. While we are nimbly addressing the challenges of the supply chain, we are expecting that it will not be resolved easily or quickly, given the pervasive impact it's having throughout the world. I am impressed with what our team has been able to accomplish given the significance of these shortages. If you'll turn to slide eight, adjusted EBITDA was $11.8 million, and EBITDA margin was 21.1%. Included in that amount is about $1.2 million in non-recurring public company expenses that we expect to roll off in fiscal 2023. In fact, these expenses should decline by about $300,000 per quarter in the second half of the year. While adjusted in the EBITDA calculations, the changes will benefit net income in the future. These include certain professional fees and an unusually high D&O insurance for a company of our size. Slide nine demonstrates our financial strength, which provides us with flexibility to execute our growth plans. The timing of our capital expenditures for our warehousing and bottling capacity expansion rolled into the first quarter. We still expect our maintenance CapEx to be still relatively modest at about $2 million-$3 million for the business as it is today. On slide 10, you will see that we are upgrading our guidance by providing our expectations based on the current business, which includes Vinesse and ACE. It does not include any pro forma expectations of prospective acquisitions, although I do expect we'll execute at least one more acquisition in fiscal 2022. Given that we are in effect raising our guidance, we expect revenue will be in the range of $265 million-$275 million. At the midpoint of the range, this represents about 22% growth over fiscal 2021. Because of the seasonality that we see by quarter, we felt it would be helpful to provide the next quarter's revenue expectations. We believe that our second quarter will have revenue in the range of about $77 million-$82 million. This includes Vinesse and ACE. We have also considered supply chain constraints, but that does remain a risk factor. We expect to continue to navigate the unprecedented supply chain constraints impacting everyone as we work to identify alternative supply sources and carefully manage shipments to meet customers' demands and pull all available levers to capture price throughout the fiscal year. We expect adjusted EBITDA for the year to be in the $63 million-$65 million range, or about a 24% margin at the midpoint. If you turn to slide 11, you can see that these are really exciting times at Vintage Wine Estates. Over the last 20 years, we have executed a plan that delivered excellent growth, having a unique value proposition for our customers. As we advance our strategy, we believe we can accelerate our delivery on value with even stronger talent, a larger strategic vision, and greater financial flexibility. With that, Kyle and Deb, we can open the call for questions. Thank you. At this time, we will be conducting a Q&A session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question is from Vivien Azer with Cowen. Please proceed with your question. Hi, good afternoon. Hi, Vivien. So Pat, my first question is for you. You noted that the end of your prepared remarks that you were gonna pull the pricing lever as much and as in many places as you could- s orry, that was a terrible paraphrase, but I think that's the message you were trying to get across. I was wondering if you could just be a little bit more specific there. You're certainly not alone in leaning into pricing. I'm seeing that throughout my coverage universe- beer, distilled spirits, CPGs, salty snacks. It seems like the environment is right for pricing. How do you think about pricing in terms of rate and whether there are any nuances across your business segments? Thank you. Yeah, you bet, Vivien. We think we're not alone in the industry, and the industry is starting to signal that because of the cost increases in glass and other items, it's time probably to be looking at price increases. We'll do that strategically across each of the channels. Direct-to-consumer, we have a fair amount of control in that area. Then the wholesale segment, we're also gonna take a hard look at some of our brands after the Christmas holiday season. We fully expect that while there are no price increases baked into our revenue guidance or baked into our plans, we do expect that there will be some opportunities and some reasons to take price in the third and fourth quarter. Terrific. That makes good sense. Then maybe my second question on the cider acquisition. Congrats on announcing that. The route to market opportunity makes a lot of sense to me in terms of your own RTD portfolio. But can you talk about, please, what was specifically attractive about that asset, you know, following other operators that participate in the cider category that's been a little bit volatile, and subject to some competitive headwinds in other, kind of, you know, ready-to-drink formats. You know, I think hard seltzer is one example, has weighed on cider. Any commentary on kind of the strategic rationale beyond distribution would be very helpful. Thank you. Yes. Vivien, I think with ACE Hard Cider, which has seen, you know, 10% growth every year and the new flavor introductions, that it hasn't been as impacted by some of the other categories. As you know, we've specifically chosen to stay out of the seltzer market. We see strong potential for organic growth there. Because of our abilities to expand its production capabilities into a dual location with one out in the East Coast, we see significant opportunities for expansion of the brand in those segments. We were attracted by that- w e obviously were attracted by, you know, the distribution opportunities that we mentioned before. We have a very strong new product innovation pipeline that we believe is ideal for this category. Those are the combination of factors that led us to the acquisition. That's super helpful. Last one for me before I pass it along. There's been a lot of industry ink spilled around how tough the crush has been in Europe, particularly. I'm wondering if you can just comment on that- any direct implications for your business, I would think would be minimal given your sourcing by geography. In addition to that, can you speak to the opportunity perhaps that presents for your U.S.-based portfolio? Thank you. They did have certainly a very challenging harvest in Europe this year, and we believe that will create significant opportunities for the California and Washington, Oregon wine markets to move into certain price points, but potentially take some additional price and expand distribution and expand overall growth in the category. We think it's a strong opportunity for us. Can I add to that, Pat? Also on the sparkling front, with the shortage of sparkling coming over for this holiday, we're really, we have our Laetitia sparkling brand that is in California launching nationally. We have the Paul Cheneau sparkling brand, and we are getting every bottle we can out into the marketplace to fill the shortages that are coming from that. Thanks for that incremental color, Terry. Just one quick follow-up, and I promise I will pass it along. Do you have fewer restraints in terms of supply for the format that would satisfy sparkling relative to a standard 750 mL? Well, we do have some supply constraints. We're ramping that up down in Laetitia. We do have some on Paul Cheneau, but that is something we're really focused on, is building out our supply path on that. Understood. Thank you so much. Our next question is from Michael Baker with D.A. Davidson. Please proceed with your question. Excuse me. Thanks, guys. Yeah, I'd like to ask about the guidance and dig into that a little bit. You know, what's different in this guidance versus the previous guidance? So now it's $265-$275, including the acquisitions, I presume, since the time that you owned them. The prior guidance was $265-$275 on a pro forma basis. So it's that pro forma versus actual, I guess, which is the difference. I guess what I'm just trying to get at is what's the underlying organic guidance? Has the underlying organic guidance changed at all, or is it just that, you know, the timing of the acquisitions that you're adding? The way I calculated is that these acquisitions will maybe add $25 million-$30 million for the year if they each did about $20 million annually and based on when you own them. The underlying growth would be more like about 8%-12%, 10% at the midpoint. Is that the right way to think about it? Thanks. Yeah, Michael, so you are thinking about it correctly. We're still in line with our organic growth targets of about 10%. When we did the original numbers, we gave pro forma guidance, which actually included you know, a full 12 months of pro forma. The feedback from our friends, our analysts, was that we should be, you know, perhaps we should be looking at providing just actual guidance, which is what we're now doing. You know, we're not taking the benefit of, on a pro forma basis of having those acquisitions in for 12 months. We're now showing them based upon when they come in- it, you know, actually makes the acquisition numbers, the real numbers a little bit stronger than what it would be on a pro forma basis. Yeah. Right. And if I can- I'd agree with that presentation. Oh, sorry. Go on... Yeah. ...Terry. Okay. No, this is Deb. Sorry. I just wanted to make sure that, so it's only for the time that we've actually got the acquisitions in our portfolio, and it doesn't include any future acquisitions yet either, which previously the pro forma even had that built in. Right. Understood. I guess- j ust to cut through all that, the bottom line is there any change to your organic non-acquisition outlook in the current guidance versus the previous guidance? No, it's still at 10%, maybe a little bit of upside, but... Okay. We wanna get through our biggest quarter, which is our second quarter, before we, you know, look at changing any of that. Right. No, I agree with that. I just wanna make sure it's clear. That's what I thought. I just wanna make sure it's clear because, you know, in some respects you could say you made an acquisition here that could add $20 million on an annual basis, yet the number didn't really go up, but that's 'cause there are different ways you're presenting it, so it's a little confusing. I just wanna make sure it's clear. By the way, I think the way you're doing it now is the right way to present it, is the better way to present it. You know, it is a change. Maybe there could be a little bit of confusion. Just wanted to clear that up. Okay, thanks. I think that makes sense. Secondly, the glass shortage, I guess, you know. So I know we did some meetings after your last call, and you talked about seeing some shortages there, but when did it really start to impact the business? When did the shortage, you know, go from, you know, a little bit of an issue to actually not being able to ship on time? Was that when it started to roll downhill, if you will? Our major glass supplier was hacked basically very early in July- late June and early July. That's when they started experiencing inabilities to deliver glass. It started in the first quarter, and that's when we chose not only to, you know, we couldn't bottle enough, but we also chose to move in a couple of our retail partners programs out to make sure that they could have full inventory when they were ready to launch their programs. Okay. Okay, interesting timing. Okay. Well, one more, if I could. I think now is about the time where some of your wholesale partners start to think about their programs for next year, their resets for the spring. You know, what are you seeing from some of your big retail partners, maybe even new potential partners, about how they're looking at your product and anything, you know, that might be new in terms of doors or retailers or facings or anything like that? Thanks. Well, most of our big retailers are announcing in the next two weeks. Actually, this call's a little bit early for that. We have an idea of what they're going to be doing, but they will put it in writing the first week in December. We're expecting- Kroger's got some numbers out there. We have not heard from Walmart yet. So every week we're getting new, and those would set in in March. But we aren't in a position right now to say what we got until the ink's dried on their announcements. Okay. Understood. We'll follow up in a few weeks. Thank you. Our next question is from Luke Hannan with Canaccord Genuity. Please proceed with your question. Yeah. Thanks. Good afternoon, guys. I wanna start on the, I guess, the organic growth trends that you would've seen during the quarter, and specifically with your tasting rooms and maybe some of the traffic trends that you have seen there, throughout the quarter. Can you just talk about the cadence of this and specifically also how it's trending versus pre-COVID levels, both on the volume of customers that you're showing through there, and also how successful you've been in being able to convert those customers into Wine Club members? Thanks. Okay. Pat, maybe I'll take this one. Our traffic has doubled since last year at the same time, and we're back to the 2019 level, so excited about how the traffic is coming back into the tasting rooms. I think there was a lot of pent-up demand for people to get back out and get into the tasting rooms. We are having a few headwinds in terms of just staffing, making sure that we've got locations for people to be out and being serviced correctly, and that really has affected maybe our conversion into our Wine Clubs. You know, we ran really great conversion from traffic into our tasting room visitors into Wine Clubs. We are looking at right now over 35% conversion into Wine Club. We hope to get that back to, say, the 40% range. Still really good. We feel that's a very healthy number, but we know we can do better in that. We also see, I will say, that we're seeing the attrition in our Wine Clubs going down. In fact, the attrition is down 18%. You know, that during COVID, really putting a focus on the, what we wanna say is our white glove service, putting personal notes in the Wine Club packages, putting- w e actually put, like, small gifts, tiny things, seed packets or, you know, just notes or a corkscrew or something like that, and it sounds silly that those simple things slowed down the attrition, but we're pretty thankful for how we've curbed the attrition rate during COVID and keeping those Wine Club members happy. Got it. That's great color. Thank you. Another one, if I can, just on inflation, specifically with passing through price increases. What we've seen thus far from companies in our coverage universe is it seems like there's a very, I guess, healthy propensity for the consumer to be able to bear these price increases. I imagine that's what you're seeing as well, and probably aided by the fact that these customers are already sort of used to paying for a premium experience, premium product, so they're more willing, I guess, to be able to pass through those price increases. Have you seen anything on your end in terms of elasticity of demand where maybe you're seeing demand erosion from passing through these price increases, or is it pretty much what you would've expected? Well, I would say. Well, we Go ahead, Pat. Go ahead, Terry. No, go ahead. Well, I would just say, you know, we've done a few price increases in our direct-to-consumer. You're able to add $0.50 or $1 a bottle, which is impactful on a case. We haven't heard any pushback or seen any slowdown from that, so we have been able to start looking at primarily direct-to-consumer. We haven't taken any price increases on our wholesale side, and we don't intend to until we get, as Pat said, through the holidays, we see what competition's doing, we can see where we could go with that. But we haven't- t he small price increases we've taken in some of our direct-to-consumer, our e-commerce on our websites, we really haven't seen any kind of pushback or loss in sales from that. Okay. Excellent. Thanks. Last one for me, and then I'll pass along. Just coming back to ACE. I'm just curious, Pat, if you can share what the, I guess, maybe the current margin profile is of that business. You know, is it the multiple that you would've paid on that, is it sort of in line with what you expected? You know, do you expect to get it down to, say, 5x EBITDA in 12 months like your historical acquisitions, or should we be expecting something different there? In terms of the multiple and the margin opportunities for this, we do see some synergies. I don't expect it fully to go all the way down to 5x, but we expect rapid growth, and then that'll probably bring it closer down to that side of the multiple. You know, we are currently on an acquisition basis around at 10x to 11x multiple, and you know, we'll synergize that down fairly quickly. Excellent. Thank you very much. Our next question is from Wendy Nicholson with Citi. Please proceed with your question. Hi. First question just on the cider acquisition. Did you say what percentage of their business is on-premise versus off-premise? Is balancing that out or changing that balance part of the distribution opportunity that you see? Yeah. We see actually more opportunities in terms of geographical expansion. They're heavy into the West Coast, and we see expanding that into the East Coast a fair amount, and stronger chain distribution. Their pineapple is in a strong 30%-35% ACB, and some of their new flavors, such as guava and mango, are around 13%, but growing rapidly. We see that is a good area. The on-premise for them, their keg business as well as their bottle business is starting to improve after the pandemic. We don't see a significant shift more towards on-premise with the exception potentially of some opportunities in major national accounts that we call on that they're currently not calling on. There's perhaps more at the retail than the on-premise segment of it. Got it. Fair enough. Just in terms of it sounds like a neat fit for your portfolio, but could you characterize your sort of things you're looking at for the next acquisition to be primarily still on the wine side? Do you have a broader view you're looking at RTDs? Any change in terms of what you're looking at and what you think might fit into the portfolio from here? I think it's still largely on the wine side. That's really the vast majority of it. These are a couple of plug and plays that, you know, we'd indicated early on that we've been looking at. I don't see in the ready to drink very many more acquisitions. I see more innovation on that side of it, and then back to acquisitions on the main winery side of it. Fair enough. Then just last thing, the comment you made about the consultant you've hired to sort of look at sort of your internal processes and oversight of inventories and things like that, do you think what that person is doing could affect the timing of your acquisition sort of pipeline or how comfortable you are in terms of moving forward? I know you've got a long track record of making great acquisitions and having them integrated seamlessly, but is there any sense to, well, while that guy does his work or girl, whatever, we ought to slow things down and make sure we're crossing all the Ts and dotting all the Is? Yeah, no, we're moving forward in our acquisition strategy. We're pretty comfortable. We're pretty comfortable with that, and we're pretty comfortable with our ability to continue to make the acquisitions and continue to grow the business. So we're not intending to slow anything down. Terrific. Okay, thanks so much. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. Our next question is from Daniel Biolsi with Hedgeye. Please proceed with your question. Yes. Could you provide an update on the California harvest implication for cost and availability for grapes? The California harvest was from a quality standpoint and actually a pretty good harvest. From a quantity standpoint, it was light in certain varietals, light in Sauvignon Blanc and light in Cabernet in the premium Northern California segments. The rest of the state was pretty normal. I don't see any significant issues in terms of pricing as a result of that. Okay, great. Could you, for comparison purposes, tell us, like maybe directionally what the gross margins would have been if you had sold the $7 million in B2B? 'Cause the ASPs were much lower in that sort of delayed business, right? Yeah. We believe we mentioned that earlier in terms of that. Let me pull that back up. We didn't talk about gross margin. We talked about the [ASP], the 31% margin. Yeah, in fact, actually, the shipments that we delayed were things that then put more of the margin in the group focused on our bottling operations, which is a little bit lower margin. We would have had more overall dollar margin and percentage margin. Okay. Did you sort of choose the private label business to be short the glass? Is that how it only affected sort of that one type of business? Or was it a certain type of bottle that you were short of? It was a certain type of bottle and the timing associated with the cycle that we were in. Okay. Thank you. Our next question is from Joe Feldman with Telsey Advisory. Please proceed with your question. Hi- Hi, it's Sarang Vora for Joe Feldman. You know, I had a quick question following up on the gross margin as well. In your outlook, your EBITDA is showing a very strong improvement year-over-year in 2022. You know, with all these changes in the glass and gross margin as well as labor you highlighted. Can you share some color on the gross margin outlook for 2022? Like, could it stay north of 40%, 41%? Like around that range? I know last year it has been you know, a little bit up and down, so just curious to know how we should think about the gross margin trajectory for 2022. Yeah. The gross margin trajectory will continue to improve. I mean, it's not just the issues impacted with the glass or any price increases associated with that, but our efficiencies from our new bottling lines and the efficiencies from our new warehousing operations are items that are really gonna help. Those have been in the works for two, you know, almost two years. It's a combination of all those things, but we fully expect to hit our EBITDA margin targets for the year as well as our gross margin numbers. Okay, perfect. You know, I have one follow-up on the acquisitions too. I mean, in the past year you completed Kunde, you completed TSC, Vinesse, you have one more. Can you help us understand the past acquisitions of, you know, how they are tracking? Like, are they exceeding your expectation like Kunde? Like, you know, you are probably two quarters in, how is that performing compared to your expectation? Any major changes you did over there? Or TSC, any changes, you know, how you are tracking on, you know, the cost side? Any color you can provide on the past acquisition and, you know, how they are tracking compared to your expectation? Kunde is doing very well against our expectations. Now, of course, we have managed that winery for 10 or 11 years, so we know it fairly well. We've had a couple of quarters on that, and it's certainly operating within our expectations. The Sommelier Company that we've had now for just three months is still in transition and getting started, but it's looking like it has a lot of opportunities for good growth for us. Perfect. You know, I have one final question. On the wholesale side, you highlighted like higher case volumes internationally. Is that new or, you know, it's been, you know, it's that market is expanding as well for you? Just curious to know. Yeah. It's timing and some pandemic-related changes. Terry, you wanna expand upon that? Yeah, I would just say those markets are opening back up. We're able to ship back into China. We've had a couple of big shipments going back into, in there. The LCBO, Canada is opening back up. That was really shut down or slowed down, so we're seeing those businesses just bounce back up. I wouldn't say it's new business, I would say it's returning business. That's great. Thank you so much. We have reached the end of the question and answer session, and I will now turn the call over to Mr. Pat Roney for closing remarks. Great. Thank you very much. Well, I'd just like to thank everybody for taking the time to be on our call today, and we think that, we're making excellent progress with our strategy to be a leading producer of fine quality wines and continue to grow our business through our differentiated omni-marketing organization. Thank you for your time, and enjoy the rest of your day today. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.