Andrea Teixeira: Hi, good afternoon everyone and 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 Decoy Limited, but 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 tracked channel data? And then related to €“ and just a clarification also on your guide, I understand like Lori said, you raised a , it seems that the top line bid was about 11 million and EBITDA . So, you only raised at the end the first a year by 4 million and then 2 million respectively. So, wondering if you’re seeing €“ 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.
Alex Ryan: Andrea, I’ll take the first one. I think I’m going to pass the second one to Lori. We’re seeing really solid €“ we can all scan scanner 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. So, we’re not anticipating really any changes than continued growth in that area and resulting growth with us. And as you guys will all recall, scanner data represents about a third of our overall business. And because of the diversification theme, we’ve stressed numerous times that one-third is important, but there’s two-thirds of other areas of business that continue to perform and will kind of continue to €“ we feel confident, you know get us to where we’re guiding and continue growth in the future. So, I think we should €“ we all €“ Nielsen is a good guide, but it’s difficult in the time period. So again, it’s not our exclusive barometer.
Andrea Teixeira: I know, I get that, Alex, but €“ 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 , 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. So, 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 that you were seeing? And then €“ and sorry, Lori, I just want to make sure that I get that clarification.
Alex Ryan: 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. Then we saw, as you noted, some pull out in January and for us into February. So, 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.
Andrea Teixeira: That’s helpful. Thank you. And then just one other point on that. Overall, our results were in-line with our expectations. And I think you’ll recall in the prior year, there was some significant growth rates that we experience as on-premise was reopening in some of these things. And we see that the luxury market is really settling into a stable state with growth rates that we expect to see into the future. With that said, I think you asked about EBITDA. And so, as we’re guiding on our EBITDA, we’re not rolling through all the first half adjusted EBITDA favorability as you pointed out. And 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. So, there’s nothing unusual there, no increased spend. It just, kind of the normal cadence of our monthly and quarterly flow through and anticipation of when those things will hit.
Andrea Teixeira: No, that’s helpful. And that’s what marketing or some of increased costs?
Lori Beaudoin: It’s not €“ it’s just a wide array of things across the board, a bunch of little things that add up to bigger numbers. And it’s not increased spend necessarily as much as it’s just things that we had forecast with land in Q2, they’re probably pushing into Q3 or what have you.
Andrea Teixeira: Okay, perfect. Alright. I’ll pass it on. Thank you so much. Congrats again.
Operator: Thank you. The next question comes from with Bank of America. You may proceed.
Unidentified Analyst: Hey, everyone. You have 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? And 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.
Lori Beaudoin: Sure, yes. Thank you for your question as well. So, we anticipate modest adjusted gross margin expansion and as we’ve seen, and it’s driven mostly by, we’re seeing the benefit of the pricing strategy and the pricing increases. And then also we have some favorable brand mix in there, 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. And 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. And one of the things that we’ve done is, we’ve moved our Decoy White to a California Appalachian, 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, but 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 that we anticipated.
Unidentified Analyst: Very helpful. Thank you.
Operator: Thank you. The next question comes from Lauren Lieberman with Barclays. Your line is open.
Lauren Lieberman: Great, thanks. Hi, everyone. I want to talk a bit about gross margins and my first question was just, how much of the gross margin recovery or expansion this quarter stem from Kosta Browne and Burgundy this quarter versus other channel mix considerations in pricing?
Lori Beaudoin: Yes. 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 those €“ as we change those €“ the cadence of those shipments. So, it did have an outsized impact. We don’t really report on individual brand margins or their results, but it was a sizable impact.
Lauren Lieberman: Okay. So, if you look forward, right, the Kosta Browne dynamics in the second half, it’s just a shift from one quarter to the other. So, on a, you know half of the year should theoretically even out, but it still implies, the guidance now implies that gross margin performance really decelerates second half versus first half. And I’m not terribly clear on why? So, if you could help with that, it would be great?
Lori Beaudoin: So, 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 will be in Q4. So, in general, our end of the year margins will be €“ will not be impacted by that. And so, 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 realizing the pricing, as well as a little bit of brand mix.
