Corby Spirit and Wine Limited

Thank you very much, and good morning, everyone. So I am Nicolas Krantz, and I will be joined today by Juan Alonso, our CFO to present our Q4 and full year results that we've released yesterday.

As a matter of introduction and key highlights for the year, while we are pleased very much so to report that we had some good growth reported in Q4 and for the full year, revenue growth and earnings growth and Juan will go, of course, in more detail. Particularly, it is clear that it was a year of transformation for Corby with the positive impact of the ABG and the new acquisition, as we are, of course, striving to become a key player in the highly attractive and fast-growing ready-to-drink category.

But also when we take the overall spirits and wine portfolio that we have, we really enjoy this year solid retail value growth throughout our portfolio, consistently outpacing the overall spirit and RTD market for the second year in a row. And in fact, as I will present gaining share in all categories.

So really a very satisfactory underlying commercial and business performance for the Corby portfolio. As we do that this year, we also continued what we call to build our Corby 2.0 road map, starting to, of course, bear some positive fruit.

It's really about our digital transformation to become a more effective and impactful company. It is about the way we prioritize, of course, our portfolio investment, how we can also enhance our promotional management and our revenue growth management, which is, of course, top of mind for us.

And to support our sales team in the way they really activate in the different stores and across Canada, and the way we invest behind our brands. So really an important competitive advantage that we have built over the last two years, starting to bear very strong fruits.

And last, of course, but not least, and of course, Juan will give you more color on this. We've been able to generate strong cash flow generation with the dividend and to pay a dividend payout ratio of 76%.

We've increased the dividend this quarter and while we come back to it. And we've done that whilst managing our balance sheet.

As you know, for the acquisition, we did took some debt and we have at the end of the year and then debt to adjusted EBITDA ratio of 1.8, which is exactly where we wanted to be at the end of this financial year. So moving on a few minutes before going to the results themselves to the market context to give you a bit of color on the environment.

Well, no surprise here, the Canadian beverage market was broadly flat over the last 12 months. In value, spirit at minus 0.1, we have seen some growth in the on-premise channel, the bar, the restaurant but a slight decline in the retail environment.

So overall, the market almost flat in value, with a slight growth correction in the last quarter, which is, of course, positive. For the wine, the market has been declined by 1%.

And again, what is very noticeable and where we are very pleased to play now at scale in that category is a ready-to-drink segment is the fastest-growing category overall continue to show dynamic growth at plus 6.4%. In that context, Corby once more managed to outperform the market in value for the second year, showing some really positive results.

In the spirits segment, the overall portfolio, we were 1.9% growth in this declining market or flat market. So you can almost 2 points above the market, which is quite remarkable, reflecting this diversified portfolio and successful innovation.

And we know often I've mentioned that innovation is a key part of our growth. It represents almost 1/3 of our value growth.

So it's very, very important. And we're now the second largest player, of course, in Canada with a market share slightly below 17% and has increased this year.

3 of the top 10 spirits brand in Canada in value are in our portfolio with absolute J.P. Wiser's and Jansen.

And of course, on the ready-to-drink, we managed to deliver a double-digit growth in terms of our sell-out ensuring our very broad based portfolio with Scottish Spring and ABG, but also on the Corby Pernod Ricard portfolio. So 13% on the RTD.

So when we combine spirit, RTD and wine where we know wine was a bit more challenging, we have been able to overperform the market and grow at 2.1% in terms of retail sell-out. What was remarkable for us as well this year is that -- and it's maybe probably for the first time for many years, that we've been able to add a maintain or gain share in every single category in the spirits segment, which was really a very important objective for us.

I've often mentioned the fact that we have one of the most, if not the most complete portfolio in the market, we have a brand at every price point in every category. So we really offer standard premium, super premium and ultra premium across all categories, whether spirit, wine and RTD and this has really enabled us to play the portfolio in a smart way.

As mentioned, the digital transformation that was also helped by us being more savvy and smart in the way we are managing this portfolio and this is paying off. So that's the market context broadly in our commercial performance.

And I will now turn it on to Juan to give you properly our results for the Q4 and for the full year.

Thank you, Nicolas. Good morning, everyone.

I'm Juan Alonso, Corby's CFO, and I'm pleased to walk you through our Corby's financial results for the fourth quarter and full year FY'24. So very quickly before we talk about our financial performance, you will notice during this presentation some mentioned to adjusted metrics and organic revenue growth.

We believe that those known IFRS financial measures help better understand our underlying business performance and trends. We provided a detailed explanation for each of those elements in our just published Q4 FY'24 management's discussions and analysis, MD&A and I strongly invite you to refer to this document for any questions related to it.

So now stepping back to the quarter results. Revenue for the fourth quarter was $66.5 million, reflecting a significant reported growth of plus 50% primarily driven by the inclusion of Ace Beverage Group sales and also 1.5 months of performance from Nude Brand.

Our organic revenue, which excludes the contribution from these acquisitions, saw a modest decline of 1% in the quarter. We are growing our domestic case goods business as you will see later, but this is offset by a shipment phasing impact in export business to the U.S.

I will get back to it in the next page. Reflecting the strong revenue growth and a more modest expense growth, Corby delivered robust improvements in earnings and profitability in the fourth quarter of fiscal year 2024 with adjusted earnings from operations of $9.2 million, increasing plus 56% versus last year.

Despite increased interest charges related to the loan contracted to acquire ABG, Corby delivered adjusted net earnings per share of $0.19 increasing by 10% year-over-year. Corby also delivered cash from operating activities at $16.9 million in production of $2.1 million versus last year's quarterly mostly due to the increase of interest expenses related to the loan contracted to acquire ABG.

Finally, the Board of Directors was pleased to declare yesterday, an increase of our dividend to $0.22 per share for the fourth quarter of FY'24, an increase of 5% from the previous quarterly dividend at $0.21. Now moving to the next slide.

Let's dive into our revenue performance. Our Q4 revenue grew by $22.3 million boosted by the inclusion of ABG and new revenue of $22.7 million, while our organic revenue saw a slight decline of 1% due to the following elements: our domestic case goods revenue, excluding ABG, remained resilient with a growth of plus 3% despite the negative impact of a customer pricing dispute.

Excluding this impact, our domestic case goods revenue would have grown by 11% supported by strong momentum of our RTD portfolio and also the benefits of prebuying effects at the LCBO ahead of the labor strike that occurred in July. Our total commissions declined by 4% in the fourth quarter with Pernod Ricard's sales broadly flat versus a high base last year.

Just to give an idea, in the last quarter of last fiscal year, we grew 15% versus FY'22. And that was fully offset by the lapping of some wine brands agency sales no longer represented by Corby.

And lastly, our international case goods revenue was down minus 27%, affected by the phasing effect of strong high market product sales to the U.S in Q4 last year and also some pipeline fill to new markets in Q4 last year too. So now moving to the next slide.

To summarize our P&L results for the fourth quarter we enjoyed a significant revenue growth of plus 50%, boosted by recent acquisitions with a resilient performance of our domestic case goods. Our total operating expenses increased by 36% at a more modest rate than revenue, with diligent internal cost management compared to a high expense base last year leading to margin improvement.

As a result, our adjusted earnings from operations grew plus 56%, while reported earnings from operations were benefited from the lapping of $3 million of transaction costs incurred last year for the acquisition of ABG. Our adjusted net earnings per share was $0.19, reflecting a strong growth of plus 10% in Q4 FY'24 versus last year despite higher interest charges related to the loan to acquire ABG.

Now let's see how this translates into our full year FY'24 financial results. So in FY'24, Corby's total revenue landed at nearly $230 million at the end of fiscal year breaking the $200 million milestone for the first time in history in growth of plus 41%, bolstered by recent acquisitions.

Excluding the contribution of ABG and Nude brands, we are pleased to inform that our organic revenue remained robust with an increase of plus 4% despite the headwinds of the overall market deceleration and also the customer pricing dispute impact. I will go into more details in the next slide of our revenue.

Significant year-over-year revenue growth in addition to the realization of operating and organization efficiencies helped to drive strong earnings and profitability growth in FY'24. Indeed, full year adjusted earnings from operations achieved $44.6 million and increased by 37%.

In addition, while FY'24 included interest charges related to the loan contracted to acquire ABG, adjusted net earnings per share grew plus 13% to reach $1 per share. In FY'24, Corby generated $31.5 million of cash flow from operating activities, supported by higher reported net earnings.

Corby closed the year with a healthy balance sheet with a net debt over adjusted EBITDA ratio at 1.8 and significant financial flexibility to execute on our strategic initiatives to drive long-term shareholder value. Following the declaration of $0.22 dividend per share in Q4, our total dividends declared for the full year FY'24 was $0.85 per share.

Moving to the next slide. Let's dive into our sales performance.

So our FY'24 revenue significantly increased 41% versus last year, boosted by the inclusion of ABG performance. And our organic revenue growth, plus 4% was driven by the following elements.

So first, our domestic case goods revenue, excluding ABG saw a solid 2% growth despite some headwinds in the market. Excluding this impact, our domestic case goods revenue would have organically grew plus 4% led by J.P.

Wiser's family and Polar Ice Vodka solid performance. Our total commission is slightly decreased by 1%, mostly due to the lapping of 13 third-party wine brands no longer represented by Corby.

And lastly, we have recorded dynamic export sales up plus 16%, capitalizing on new market opportunities with the recovery of Lamb's performance in the U.K. from last year and also broad based pricing initiatives.

Moving to the next slide, I would like to add some color on our branded performance for full year FY'24. And I can highlight the solid performance of two of our flagship brands.

J.P. Wiser friendly FY'24 revenue saw a 2% growth versus last year over decline in volume fueled by pricing favorability from Wiser's Deluxe and 10 years old, although it was affected by the negative impact of the customer pricing ongoing dispute and Polar Ice Vodka recorded a strong revenue growth of plus 9%, supported by the successful innovation launches of ready-to-serve cocktails such as Polar Ice Orange Blizzard and new RTD offerings.

Ungava Spirits brands saw a solid 6% growth in value following a strong Q4 performance and the successful launch of [Bahil Cachet] whiskey in Quebec. Mix of our liquor performance lapped a high shipment comparison basis from last year pipeline but grew revenue up plus 1% versus last year through price increases and promo spend optimization.

Lamb's benefited from strong recovery in the U.K. enhanced by price increases, which led to a revenue increase of plus 2% versus last year, despite minus 6% volume decrease to underlying consumer trends in the domestic market.

One word on our newly added Scottish Springs brand performance, it remained a top-selling RTD brand in Ontario, and successfully launched new innovations such as [Dukday and punch it up] variety packs, two of the top three new innovations in Ontario. Over the last 12 months, Scottish Springs outpaced the RTD category in retail value growth.

So to summarize, now in the next slide, our P&L results for the full year FY'24, we recorded a significant revenue growth of 41%, bolstered by recent acquisitions and a solid organic revenue growth of plus 4% despite some headwinds. Our total operating expense increased by 40% with the integration of ABG Group, but also strategic investments in J.P.

Wiser's, Polar Ice vodka during the year and efficiencies realized across the organization. Corby has taken price initiatives to mitigate the inflationary pressure on cost of raw materials and finished goods.

As a result, our adjusted earnings from operations grew 37% and our adjusted net earnings per share achieved $1 reflecting a strong growth of 13% versus the prior year despite higher interest charges related to the loan to acquire ABG. Now for the year ended June 2024, Corby generated $31.5 million of cash from operating activities supported by higher net earnings bolstered by recent acquisitions and a robust commercial performance, leading to a strong cash conversion ratio of 1.3.

This operating cash flow included higher interest charges due to the loan and also higher tax payments, driven by timing difference over a year and the inclusion of ABG tax payment. On cash flow from investment activities reflected the payment of $136.3 million for the acquisition of ABG on July 4, 2023, and also the payment of $11.8 million for the acquisition of Nude assets on May 2024, while our financing activities were mostly comprised of the $23.9 million in dividend paid over the fiscal year 2024.

Our resulting net debt position was $105.8 million at the end of June with a net debt to adjusted EBITDA ratio of 1.8. Lastly, our general dividend payment drove high dividend yields over years at now plus 6.6% at the end of June, and a sustainable dividend payout ratio of 76%.

Now I would like to hand back to Nicolas to cover business strategy and to give a glimpse at FY'25 outlook.

Thank you very much, Juan. Very clear.

So effectively to finish off, we wanted just to give a bit of color on our growth strategy, which is very consistent with our previous communication. For us, the main focus is really to drive the portfolio on our spirit side and to continue to gain market share.

So really, it's about leveraging our best-in-class brand activation and excellence in commercial execution. I've mentioned many times, the fact that innovation is a key driver.

We need to continue to deliver successful innovation for our consumers. We usually target 1/3 of our annual revenue growth coming from innovation.

So it's really important. And of course, we'll continue to drive efficiency effectiveness for advertising and promotion activities.

Once we do that, we have opportunity to accelerate growth and penetration in these fast-moving categories. We definitely want to scale up in RTD.

Scottish Spring is the flagship of ABG, and we want to make sure we can scale that up outside of Ontario. And this first year of integration with has been extremely successful.

We are now ready in terms of what we call route-to-market and field commercial execution across the country. And we want to take some fair share in some growing category where we are not yet a very big like Tequila, for example, with the portfolio that will represent from [Ontario region].

Export while remaining a small part of our business remains a new opportunity for us to scale up and accelerate. So we will have a very targeted stat approach with regional activations with J.P.

Wiser and we are starting to make some very good wins in some key markets. So we want to leverage also that portfolio going also premium or super premium as well.

Growing value ahead of volume remains definitely a mantra for the company. We want to target price increase in a targeted way, and we want to protect the margin.

And that's why we will continue also to leverage our digital AI tool to make sure we can optimize our promotional efficiency going forward. And last and not least, we will, of course, continue to have road map, what we call the dynamic portfolio management, which is really about acquiring brands that could deliver fast growth, but also look at our portfolio and see if we can divest some less attractive brand in terms of growth.

So this portfolio management, we started, of course, with the last year with the RTD segment and we will continue to do so. For the year ahead, of course, we know the market is relatively flat.

We have a few headwinds, so we need to continue to be quite cautious. But really the focus for the team is very straightforward.

We will continue to target market share gain. This is definitely a key element for us in this mature market.

So that's the top one priority. We will seek to unlock the full potential of our RTD portfolio, including now the realization of ABG and Nude sales with operational synergies throughout this successful integration.

As I mentioned, revenue growth management and disciplined investment will remain a very important feature to protect our margin, and we are doing that successfully. We will, given that target in mind seek to, of course, increase our dividend payment subject to board approval, but we want to do that with a progressive improvement of our net debt to EBITDA and our earnings reward.

So we keep very much this balance in mind and returning of course, value to shareholders, while managing our balance sheet. Some of you maybe have heard about the road to market modernization in Ontario, which is really about the expansion of some alcohol beverage like RTD, wine, grocery and convenience.

So we will, of course, with agility capitalize on this opportunity, in particular for part of our portfolio. It's early days, but this, of course, is an opportunity.

And we will continue to monitor this customer pricing dispute that we have with our customers in Ontario, the right way. So just to wrap this up, I would like, of course, to finish with maybe six key points regarding why invest in Corby.

We feel very strong about the business we have built and really Corby today is the largest public beverage alcohol company in Canada. Our portfolio is the most compressive portfolio in the market and we are very proud of that and we think this is delivering value.

We have, of course, the ability to leverage our close partnerships with Panerica with a global industry leader. This is giving us a lot of competitive advantage.

I've mentioned the digital transformation we've been heavily supported by the group to implement at pace and successfully this digital transformation. We have a clear strategic priorities with the portfolio to continue gaining share across Canada and across categories, and this is really where we have to deliver.

Operational excellence execution, which is probably a big remark for the company. We are known in terms of sales and marketing execution, we are attracting talent for that matter and this is where we need to continue to deliver our excellence.

And finally, of course, the company is delivering what we call a financial consistency. We are resilient, no matter what, from revenue and a strong cash conversion and this is something that we also are very mindful.

And we will, with that continue to adapt our financial policy. We know the dividend is an important feature for our shareholders.

And of course, we will aim to continue to grow the dividend over time with earnings. So this is it for us.

I think now it's probably the time to see there is any opportunity for any questions that Juan and myself will be happy to answer.

Well, thank you very much. Thank you for attending your attention this morning.

As always, while myself remains very much available to take different meetings and calls during the month. So we will seek to do so as appropriate.

And I wish everyone, a very good day and a week. Thank you very much.