Andrew Peller Ltd (ADWPF) Q4 2025 Earnings Call Highlights: Navigating Challenges with ...

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Revenue (Q4): Decreased by $9.5 million or 11.2% year over year to $75.5 million.
Revenue (Full Year): Increased by $3.8 million or 1% year over year to $389.6 million.
Gross Margin (Q4): $39.7 million or 52.6%, up from 41.8% in the prior year.
Gross Margin (Full Year): 42.8%, up from 39.0% in fiscal '24.
EBITA (Q4): Increased to $13.5 million, up 46% from $9.6 million last year.
EBITA (Full Year): $62.9 million, up 25% from $50.3 million in the prior year.
Cash from Operations: Generated $60.2 million in fiscal '25, compared to $38.1 million in prior year.
Net Debt: Reduced from $208.5 million to $182.4 million at the end of fiscal '25.
Debt to EBITA Ratio: Decreased to just under 3 to 1 from just over 4 to 1.
Inventory: Decreased to $170 million from $192 million at the end of fiscal '24.
Selling and Administration Expenses (Q4): $26.2 million, down $9.6 million from prior year.
Selling and Administration Expenses (Full Year): $103.7 million or 26.6% of sales, compared with 28.4% in fiscal '24.
Warning! GuruFocus has detected 11 Warning Signs with ADWPF.
Release Date: June 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Andrew Peller Ltd (ADWPF) achieved record revenue levels in fiscal 2025, excluding the anomaly of the first year of COVID.
The company reported significant improvements in gross margin, EBITA, and free cash flow, while also reducing debt levels.
Andrew Peller Ltd (ADWPF) expanded its market share across all major markets, becoming one of the fastest-growing domestic wine suppliers.
The Ontario Grape Support Program contributed positively to margins, reflecting government support for the domestic wine industry.
The company successfully adapted to changes in Ontario's distribution landscape, adding 4,000 new distribution points and seeing strong demand in big box retail channels.
Sales in the fourth quarter decreased by 11.2% year over year, primarily due to changes in the timing of the Ontario VQA support program.
There was softness in estate sales and the personal winemaking business due to tightening consumer economic conditions.
The company's retail store network saw a moderate decrease in sales following the expanded distribution in Ontario.
Inflationary cost pressures and channel mix continue to impact gross margins, despite improvements.
The real estate market remains challenging, affecting the timing and pricing of the Port Moody property sale.
Q: Can you confirm the $9.8 million received during the quarter from the Ontario Grape Support Program (OGSP) and provide guidance for the year ahead? A: Yes, the $9.8 million reflects a full year allocation under the OGSP, aligning with our fiscal 2025. Moving forward, we aim to record it quarterly, with cash expected in Q2. While it's early to provide exact figures, we anticipate growing our allocation under the program as we increase domestic grape content in our products.
Q: Given the OGSP, should the long-term gross margin target be adjusted from 42%-43% to a higher range? A: Our base business performed well, with margins exceeding 40% even before the OGSP. With the program's inclusion, we expect to stabilize margins over 42.5% in the future, despite short-term headwinds.
Q: What trends have you observed in estate visits and Canadian tourism? A: National pride is high, and we are seeing positive momentum in estate visits. We have enhanced our programming and experiences, such as concert series at Tinhorn Creek and events at Trius, to attract more Canadian visitors, capitalizing on the staycation trend.
Q: How has the Gretzky brand performed recently, and what trends are you seeing? A: The Gretzky brand, a leading VQA brand, has maintained strong momentum despite some negative news cycles. It embodies Canadian values, with significant investments in the local economy, and continues to perform well alongside our other brands.
Q: What is the expected capital expenditure (CapEx) for fiscal 2026, and any updates on the Port Moody property? A: We anticipate CapEx to be in the $15 million to $17 million range, our normal run rate. Regarding Port Moody, we are actively engaged with the development community and will sell the property when the timing and price are right, despite current real estate market challenges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.