Corby Spirit and Wine Limited

Thank you very much and good morning everyone. I am Nicolas Krantz.

It’s a pleasure to connect with you today and I’m joined by Juan Alonso, our CFO, to share the results of our second quarter of the fiscal year. And with that, of course, this is our first half result for this period.

Well, we are pleased to share that Q2 has continued the good momentum and built on our solid Q1 results, delivering strong H1 results for Corby. As I often say, we are guided by our vision to be the most innovative and consumer-centric company in the industry.

And we have made substantial strides in reshaping our company’s profile and these efforts have driven Corby to outperform the market for over two years in a row now. And I will come back to that.

Juan will, of course, delve into our results in more detail, but I can start by highlighting some key areas that have led to a solid H1 performance, with a double-digit reported revenue growth and a plus 4% organic growth. Of course, the recent acquisition of ABG and Nude have pivoted in achieving our mission to be a key player in the fast-growing ready-to-drink category in this market.

This growth is further supported by the route-to-market modernization in Ontario. We have seen an inventory-by-field effect in H1, with ready-to-drink and wine now being sold in grocery and convenience stores.

It means almost 6,000 points of distribution additional, which is fantastic. And we successfully managed to capitalize on this opportunity to drive further revenue.

I have to mention, of course, that all this happened against the backdrop of the LCBO strike labor in July that has severely impacted the Ontario beverage alcohol industry, and also some supply chain disruption with the post-strike, both in the West and the East of Canada. But our roadmap continues to bear fruit, and by leveraging our portfolio effectively, we have consistently outpaced the overall spirit market as I said for two years.

Our portfolio prioritization strategy is clearly demonstrating its effectiveness, supporting our best-in-class sales execution and amplifying growth across diverse categories and many price points. And finally, for this overview, and something Juan will of course expand on, we have generated strong cash flow, ensuring Corby maintains a solid balance sheet, with a net debt to adjusted EBITDA ratio of 1.3 times, which is of course a healthy rate.

And in line with this performance and our confidence in the outlook, the Board decided to increase the quarterly dividend to $23 per share. And again, I will come back to it, but that’s an increase of nearly 5% on the back of the recent increase we have done last summer as well.

Now, before we get into the financials, let me just take a few minutes to provide a little bit of context for the market context, and move to the next slide. So as many of you will be aware, the market in general has been chasing by, of course, some challenges.

The spirit category has experienced a moderate decline over the last 12 months, with only the ready-to-drink category growing, in which we have established ourselves as a major player. So as I said, I’m proud that Corby’s strong commercial performance over the last 12 months, outperforming the total Canada market in all categories since 2023.

This slide, in fact, continues to show our value strategy. In our focus, we can see that in H1, we are also quite dynamic in our innovation pipeline.

As I mentioned, it’s an important part of our story. This included the launch of The Glenlivet Twist & Mix, for example, Old Fashioned, which was quite a fun and innovative new product.

First technology in this market. We also launched successfully the Polar Ice Cinnamon Sugar, which was an iconic partnership with BeaverTails.

And we were also delighted to announce the J.P. Wiser’s as the Official Whisky of the NHL.

It was really something that we think is a game-changer, bringing together Canada’s biggest sport, of course, with the second-biggest whisky in the market. Very proud of this partnership, and we start to see some very good positive impact of the partnership.

RTD continues to be, of course, a bright spot in this market, both in the short- and mid-term, and clearly benefiting from the Ontario route-to-market expansion, with the full-impact team to be realized. And our recent acquisition, as you can imagine, is delivering some results, because overall we are posting a plus 12% in the RTD, in the category that is green by 6.8%.

So, overall, very good performance across all categories and leading us to take share. Quickly as well, just to give you a quick flavor by categories in the next slide, and that’s also a feature of what we’re trying to do.

We’re trying to play in every category successfully. Our strategy has enabled us in this first semester to almost outpace in all categories, which is quite remarkable.

And overall, our spirits portfolio was slightly declining, almost flat, at minus 0.3% in the spirit market, which is declining by 2%. So you can see a significant positive variance to the market.

This is very much a key feature that we want to protect, maintain, and amplify. Now looking ahead to the future, of course, our goal is to focus on sustainable growth, innovation and efficiency.

That’s really where we are putting our effort. And there is, of course, all that works together, how we grow innovation and efficiency is part of the game.

So for us, first and foremost, really it’s about trying to work on this long-term sustainable growth in values. We do that really through our best-in-class brand activation and commercial execution.

For us, it’s really the heart of what we do every day with the team. I’ve mentioned innovation.

Our target for innovation is to contribute roughly to one-third of the annual revenue growth. It’s a very important feature.

I often say that, yes, Canada is a mature market, that there is pockets of growth. It’s a market where you can innovate fast and with impact, and this is really for us to be well-positioned and working with our trade partners to deliver that as well.

And by improving the efficiency, the effectiveness of every dollar we invest, I want to make sure we maximize our return and that’s something that’s the art and the science of marketing that we’re trying to, of course, to sharpen all the time. We’re also committed to accelerating growth and penetration in high categories -- high growth categories.

Of course, that’s the RTD, but it’s also the tequila, for example. So we’re really trying to position the portfolio the right way to make sure we are getting the growth and a fair share of growth in those exciting categories.

Export, while still a small part of the business, is also another focus. We mention that regularly.

We will adopt a targeted approach with original activation to invade J.P. Wiser’s in the local culture and leverage the depth of the portfolio to meet consumer needs.

That’s for the US market. That being said, we are, of course, closely monitoring the ongoing situation around U.S.

tariff threat and potential regulatory changes, and we will continue to be agile and respond with speed as new development occurs. But again, as I said, it’s a very small part of our business for now.

Growing value ahead of volume remains a key goal for Corby. Therefore, we will implement a targeted price increase approach to protect the margin, while fully leveraging our promotional capacities supported by the new AI tool we put in place.

That’s what we call revenue growth management. It’s a very important part of what we’re doing as well with the commercial team.

And of course, last, the dynamic portfolio management means for us that we are constantly looking for opportunities to sharpen our portfolio. Now, finally, before I pass on to Juan, I just want to give a bit of an update on our RTD, of course, portfolio, which is a big part of our efforts for recent history [ph].

You have heard referencing a lot to this. Listen, we know that this is really an acquisition, in fact, two acquisitions.

I would say we’ve been doubling down first with the acquisition of Ace a bit more than a year ago. Fantastic portfolio.

We are effectively acquiring not just the portfolio brand, but fundamentally the capability to innovate and to execute a point of sales with excellence. This, for us, was a key point.

And therefore, the double down by acquiring Nude in the West was a very obvious choice to simply plug in the organization that we have already with Ace, this portfolio. So today, what do we have?

We have a very specialized and efficient route-to-market with the strategic penetration, both in Ontario with ABG, but also in the West with Nude. And all that’s working very much in synergy.

We’ve been able to realize some very good and strong operational synergy for the portfolio. And the name of the game now is going to be innovation.

We are coming in terms of pipe field -- pipeline field in Q4 with a lot of great innovation across Canada, across the overall portfolio, and also on the ready-to-drink brands that we represent with Pernod Ricard on Jameson, Malibu and ABSOLUT. We’ve been accelerating a lot of performance in that space.

So, so far, integration extremely successful at all levels. By all levels, I mean commercially, marketing and operationally.

This is an acquisition that is really changing the game for us, and we are very pleased, specifically in the landscape where this is the only fast-growing category of the market right now. That’s it for this introduction.

I propose to pass on to Juan who’s going to share with you the Q2 and H1 results. Again, very good set of results.

Juan, over to you.

Thank you, Nicolas. Good morning, everyone.

I’m Juan Alonso, Corby’s CFO, and I’m very pleased to present to you today Corby’s financial results. So let’s start with Q2 results.

Very quickly, before we talk about our financial performance, you’re going to notice some mentions of adjusted metrics and organic revenue growth. We believe that these non-IFRS financial measures support a better understanding of our underlying business performance and trends.

We provided the detailed explanations for each of those elements in our Q2 FY 2025 MD&A and I invite you to refer to this document for any questions related to it. Now, stepping back to the quarter results, revenue for the second quarter was $61.7 million, reflecting a double-digit reported growth of plus 10%, benefiting from the inclusion of Nude sales of over $3 million for the second quarter.

Our organic revenue, which excludes the contribution from Nude, saw a robust increase of plus 5%. Thanks to our strong revenue growth and a more modest growth in expense, Corby delivered a strong growth in earnings and profitability in the second quarter of fiscal 2025, with adjusted EBITDA of $17.2 million, a 10% increase versus last year.

Despite increased interest charges related to the loan contracted to acquire ABG, Corby delivered adjusted net earnings per share of $0.30 and reported earnings per share of $0.28, both increasing by 8% year-over-year. Furthermore, Corby delivered cash from operating activities at $31.9 million, a remarkable plus $5.9 million improvement of prior years, driven by higher earnings and favorable working capital changes.

Lastly, the Board of Directors declared yesterday a dividend at $0.23 per share for the second quarter of FY 2025, an increase of $0.01 or plus 5% versus the previous quarter. This is the second dividend increase we have announced in the last six months after the last one in August 2024, and this reflects the recent increase in earnings from operations and cash flow generation, and also the level of debt in line with our expectations.

Now let’s dive into our revenue performance. As mentioned earlier, our Q2 revenue grew plus 10% year-over-year, boosted by the inclusion of Nude, while our organic recorded a solid plus 5% growth, broken down into the following main components.

First, our organic domestic case goods remained particularly resilient with 3% growth in a declining spirit market context, as Nicolas mentioned before. This is mostly led by our RTD portfolio, particularly Cottage Springs sales, enhanced by the route-to-market modernization in Ontario.

Total commissions grew by 15% in Q2, sustained by the sales of represented Pernod Ricard products, in particularly our Pernod Ricard wine, Stoneleigh and Jacob’s Creek, and also our Pernod Ricard ready-to-drink brands, like ABSOLUT, Jameson and Malibu, benefiting from the new channel expansion in Ontario. Lastly, our international case goods revenue was down 2%, lapping the pipeline field to new markets last year, partially offset by the recovery of shipments of J.P.

Wiser’s in the U.S. So to summarize our P&L results for the second quarter, we enjoyed significant revenue growth of 10%, total operating expenses increased by 90%, reflecting the inclusion of Nude operations, strategic investments behind key brands, and also diligent cost management, and also our investments in our people to sustain our continued ready-to-drink business expansion.

As a result, our adjusted EBITDA recorded a remarkable double-digit growth of plus 10% in the second quarter. Finally, our adjusted and reported net earnings per share were $0.30 and $0.20, respectively, both reflecting compelling growth of 8% in Q2 FY 2025 versus last year, despite higher interest charges related to the loan.

That was our performance in Q2. Now let’s shift our attention to the first half of FY 2025.

Overall, Corby recorded a strong H1 FY 2025 revenue and earnings growth, with continued share gains against a dynamic market backdrop. Starting at the topline, revenue for the first half was $126.8 million, reflecting a strong double-digit reported growth of 11%, benefiting from the inclusion of Nude sales of $8 million in the semester, and our organic revenue saw a solid increase of plus 4%, also reflecting disciplined management of its costs, Corby delivered an adjusted EBITDA of $36.7 million, a remarkable increase of 9% in the first half of FY 2025 versus last year.

Despite increasing interest charges related to the loan contracted to acquire ABG, Corby generated reported net earnings per share of $0.60 and adjusted net earnings per share of $0.66, increasing by 16% and 8% year-over-year, respectively. Furthermore, Corby delivered healthy cash from operating activities at $35.6 million, a remarkable $14.4 million improvement versus H1 cash flow from operating activities.

With the Board of Directors declaring a cash dividend of $0.23 per share in Q2, a second dividend increase over the past six months, this brings our total dividends declared to $0.45 per share in the semester. Lastly, as Nicolas said before, our net debt-to-adjusted EBITDA ratio reduced to 1.3 times reflecting Corby’s solid balance sheet.

Now I would like to dive into our topline drivers for the semester. Our H1 revenue, as I said before, grew 11% year-over-year, boosted by the inclusion of Nude, and the organic revenue growth of 4% is broken down into the following components.

Our organic domestic case goods remained resilient in the semester and saw 3% growth against a dynamic market backdrop. This is mostly led by our RTD portfolio, particularly Cottage Spring sales, that capitalized on the route-to-market modernization in Ontario.

Our total commission grew plus 16% in H1 with sales of represented Pernod Ricard products lapping the stocking patterns at Liquor Boards in the previous years. Pernod Ricard wine and RTD brands fully tapped into the new channel expansion opportunity in Ontario to spark a strong momentum.

Lastly, our international case goods revenue was down minus 9%, lapping the pipeline field to new markets last year, however, we are seeing some improvement with the recovery of shipments of J.P. Wiser’s in the U.S.

combined with a good performance of Lamb’s rum in the U.K. So to summarize our P&L results for the first half, Corby had significant revenue growth of 11%, supported by portfolio strength, channel expansion in Ontario and the Nude acquisition.

Our operating expenses increased by 7% at a lower pace than revenue, with strategic investments behind key strategic brands and disciplined expense management. As a result, Corby delivered a remarkable growth of 9% in adjusted EBITDA.

On the per share basis, our adjusted net earnings was $0.66 and reported net earnings was $0.60, reflecting compelling growth of 8% and 16%, respectively, in H1 FY 2025 versus last year. Now moving to our cash flow, in H1, Corby generated $35.6 million of cash, supported by higher net earnings, underpinned by Nude acquisition and lapping the ABG acquisition-related costs incurred last year, as well as favorable working capital changes.

These favorable working capital changes were driven primarily by the timing of spend. Our free cash flow greatly improved versus previous years, lapping the payment of $136 million for the acquisition of ABG in last year’s cash flow.

Our resulting net debt position was $84.8 million at the end of December and our net debt-to-adjusted EBITDA ratio reduced to 1.3 times, that demonstrates a healthy solvency position. Lastly, Corby has an attractive dividend payout ratio at 53% on a rolling 12-month basis, highlighting the sustainability of the company’s quarterly dividend.

Indeed, quarterly dividend increased by 5% in Q4 FY 2024, and by an additional 5% in Q2 FY 2025, to $0.23 per share, as mentioned before. Those actions drove high dividend yield over recent years at 6.9% at the end of December, a steady improvement over FY 2023 and FY 2024.

We are very pleased with our results so far in the fiscal year and remain committed to deliver on our value propositions for our stakeholders and shareholders. Before I hand over back to Nicolas, I want to finish with a final look at what’s ahead for Corby.

We know that there are a few challenges in the market context, but we believe our clear strategy and the foundations that we have discussed today leave us well-positioned for the back half of the fiscal year. The spirit market is forecasted to continue to decline in H2, but we continue to target market share gains, thanks to the strength of our portfolio.

We are closely monitoring the regulatory and trade changes, including the recent announcements regarding tariffs between the U.S. and Canada.

We believe Corby is well-positioned to navigate the challenges ahead with our diversified portfolio, strong local foothold and execution strategy. We are going to continue to unlock the full potential of our RTD portfolio, including the realization of ABG and Nude sales with operational synergies throughout a successful integration.

And also we will cater to consumer needs and keep agility in our dynamic approach to successfully capitalize on new opportunities presented like the route-to-market modernization in Ontario. And finally, as we have mentioned, revenue growth management and disciplined investment will remain a very important feature to protect our margins.

Now handing back to Nicolas to his final words.

Thank you very much, Juan. Very clear and effectively a solid H1.

As you said, some challenges ahead, but we feel well-equipped to ride what’s coming and to continue to deliver value to our shareholders. So maybe just to effectively finish before we head into the Q&A, if any, I would like to leave you with, as usual, the key reason to invest in Corby.

We’d like to really summarize that with five key points. First, of course, Corby is, at the end of the day today, the largest publicly-listed multi-beverage ad company in Canada, and we are very proud and confident with our portfolio that is the most comprehensive portfolio in the market.

And that is why we are able to deliver value playing on every category and every price point. Now coupled with our strong position here, we can leverage as well a close partnership with the Group Pernod Ricard, who’s a global industry leader that gives us a lot of competitive advantage and muscles in many respects that, of course, we are, throughout the year, leveraging.

We have operational excellence in execution. We are well-known in this market in terms of sales and marketing execution and also -- and that’s important for me, it helps us to attract the best talent.

At the end of the day, we’re winning through the talent of our team and this is something that, as a management team, we also invest a lot of time. Finally, of course, the company is delivering what I would call financial consistency.

We are resilient by nature, I would almost say, in revenue and in cash. We are delivering a strong cash flow and we will continue to adapt our financial policy to maintain this.

We know the dividend is an important feature for our shareholders, so, of course, we will aim to continue to grow the dividend over time with our earnings. That’s it from me for today.

I want to thank you again very much for joining us and to listen about the updates of our performance in the financial year. Look forward, of course, to speaking to you in the future, and as we mentioned, we can always organize a one-on-one call with Juan to make sure we can dive into some themes.

But now it’s probably time to hand over and see if there’s any opportunity for questions and Juan and myself would be happy to answer. Thank you very much.

Okay. So maybe if there is no further question, we can close the call.

Thank you very much. We’ll be posting anyway the presentation and script in our website and looking forward to connecting again with you all.