Acumen capitalFrom today's Globe
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While seeing Andrew Peller Ltd.’s (
) fourth-quarter 2024 as “mixed,” Acumen Capital analyst Nick Corcoran emphasized the winemaker’s business “continues to progress to historical levels of performance: targeted sales growth of 2-3 per cent, gross margins of 41-43 per cent, SG&A of 25-27 per cent, and EBITA margins of 15-16 per cent.”
After the bell on Tuesday, the Grimsby, Ont.-based company reported sales of $85-million for the quarter, up 9.4 per cent year-over-year and in line with the analyst’s expectation. Adjusted EBITDA of $9.3-million was up from a loss of $1.2-million a year ago and above Mr. Corcoran’s $8-million projection.
He said: “FY/25 guidance. Revenue will be flat with continued margin expansion. Weakness in premium has been partially offset by value. Margins are expected to improve from: (1) cost saving initiatives that are progressing as planned with $10-million expected to be realized in both FY/24 and FY/25, (2) SG&A reduced by $8-10-milllion from a headcount reduction, and (3) the federal Wine Sector Support Program and Ontario VQA Support Program.”
“The search for a new CEO is a top priority with ADW well through the process. We expect an announcement in the next three months.”
Pointing to “slightly more conservative margin assumptions,” Mr. Corcoran, who remains the lone analyst covering the company, lowered his full-year 2025 and 2026 earnings expectations, leading him to trim his target by $1 to $10 with a “buy” recommendation.
“ADW is trading at a discount to the alcoholic beverages peer group on both EV/EBITDA and P/E,” he said. “Despite inflationary pressures in the short- to mid-term, we continue to believe that ADW’s scalable business model, brand recognition, and significant barriers to entry will allow it to trade closer to the peer group.”