Corby Spirit and Wine Limited

Thank you very much, and good morning, everyone. I am Nicolas Krantz, and it's a pleasure to connect with you today, joined by Juan Alonso, our CFO, to share Corby's Spirit and Wine Q1 result as we kick off fiscal year 2026.

In a few minutes, Juan will walk you through the financials in more detail, but I will begin by highlighting the key drivers behind our strong start to the year in what continues to be a volatile and evolving market environment. Indeed, it's been a good start, strong start with a record high quarterly reported revenue and net earnings growing plus 16% and 9%, respectively, fueled by continued share gain in spirits and the rapid expansion of our RTD business.

This marked our third consecutive year of outperforming the overall spirit market, a testament to the strength and resilience of our strategy and diversified brand portfolio. Our RTD strategy continue to deliver, Corby is now position as one of the key players in the Canada fast-growing RTD category.

And importantly, we are outpacing category growth as well. Part of the success for the RTD portfolio and our wine portfolio has been successfully capitalizing on the Ontario route-to-market modernization, creating new opportunities for consumer engagement.

Now turning to market dynamics. The Canadian spirits landscape is evolving, and we've seen some reduced processing patterns in Ontario as a new channel expense, and we are now lapping the LCBO labor strike from July 2024.

So despite these factors, we have delivered consistent profitability margin against a dynamic backdrop, reflecting strong operational execution. Notably, our Q1 performance reflects the excellence of our sales execution with a strong share across the total portfolio and within the context of the U.S.

origin products being removed from shelves, also benefiting from favorable order phasing effects expected to normalize in Q2, but more on that to come. Beyond top line growth, we continue to actively manage our portfolio to enhance Corby's growth profile.

And during the quarter, we completed the disposal of certain noncore ABG brands, and also Juan will give a bit more detail, allowing us to sharpen our focus our priority categories and accelerate our growth. Finally, from a financial perspective, we delivered strong cash flow generation supporting by attractive capital returns to shareholders.

Our balance sheet remains healthy and the net debt to adjusted EBITDA at 1.4% is proving to show our flexibility for our balance sheet. In line with our confidence in the outlook, we maintained our quarterly dividend at $0.23 per share, consistent with our Q4 FY '25 and up 5% relative to the Q1 FY '25, signaling the sustainability of our dividend policy.

But before Juan gives a bit more in detail on our financials, let me give you a quick glimpse of the wider market context. As I mentioned, Corby saw an acceleration of our share gains across all category in Q1.

And a lot of this is possible towards the excellence of our sales execution as we plan to capture share following the U.S. origin products in removed from shelf.

In the rolling 3-month period ending -- end of September, while the Canadian spirits market declined by minus 0.9%, Corby values performance outpaced the market by 6.8 points, delivering a 5.9% growth in value. Our wine portfolio as well delivered a very strong result, achieving plus 20% growth against a fairly flat market at 0.7%.

And as I've explained previously, we can specifically highlight the RTD category that continued to be, of course, in good growth. But Corby has firmly established itself as a major player, consistently outperforming the market with 44% growth, which is, of course, an outstanding 27 points for the market.

For marques as well, if you look at the first quarter of the year, this has been, of course, a very strong result. But also if you move to the R12, it continues to be also a very resilient market.

Effectively, the broader market on the R12, we can see that the spirits market is declining by 3.8%, and we are almost flat, slightly growing. So again, with a strong performance versus the spirit.

On the RTD, the market remains in double digits, and we are outperforming as well in the category. And on the wine side, slight decline, and we are also outperforming the category.

Now deep diving a bit more on the spirits category. We can see that we continue to outpace the market in almost all spirits category over the last 12 months.

And we share gain acceleration in the last 2 quarters as we benefit from this U.S. original product being removed from shelf.

And we have, of course, a uniquely a diverse portfolio across every price point in every category across spirits, RTD and wine. And this is very much a competitive advantage of Corby right now that we are leveraging with impact.

Turning a bit more on the RTD portfolio, which is very important for us. Corby's RTD growth has accelerated over the last 12 months, with a sustained share gain driven by strong innovation and strategic execution.

In Q1, as I mentioned earlier, our RTD portfolio delivered outstanding plus 44% value growth, significantly outpacing the category nationally. And over the last 3 months, the RTD portfolio took share in every region, reinforcing the strength of our brands and the effectiveness of our strategy.

Specialized route-to-market now remain a key advantage with ABG proving strategy reached from Ontario, but also new strengthening its presence in Western Canada. In that category, innovation continues to be a core strength and our pipeline is robust.

We see now that we have a lot of new brands winning share, allowing Corby to rapidly attacking white space and capture further growth opportunity. In Ontario, we've been capitalizing on the route-to-market modernization since September 2024, leveraging the breadth and depth of our RTD portfolio.

And this has translated into growing prominence in grocery store where our brands continue to lead and benefit from the strong consumer demand. Of course, our flagship brand, Cottage Springs is at the forefront of that success and remain the #1 RTD in Ontario.

Finally, we've taken the advantage and the strategic step to enhance our RTD portfolio and growth profile. And this quarter, we have also announced that we'll increase our ownership of ABG by adding 5%, bringing our ownership to 95% subsequent to this call option being exercised.

I've mentioned before that we have also taken the opportunity to streamline the portfolio from ABG, and we dispose some noncore assets, particularly Ace Hill beer and the Liberty Village Dry Cider. So non-strategy assets has been divested to refocus the portfolio on our core strategic SKU.

Finally, before I hand over to Juan, and I don't want to dwell too long on our strategy since it was already well covered on previous pages. But I want to make clear that our goal remains to really focus on market share gain to grow sustainability and also in a profitable way so we can create value for our shareholders.

Now with that, I'll hand over to Juan to highlight our Q1 financial results.

Thank you, Nicolas, and good morning, everyone. I'm Juan Alonso, Corby's CFO.

I'm pleased to walk you through our financial results today. Very quickly before we talk about our financial performance, you are going to note that 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 detailed explanations of each of those elements in our Q1 FY '26 MD&A, and I invite you to refer to this document for any questions related to it.

So let's start with Q1 results. In the first quarter, Corby delivered strong results with record quarterly revenue and adjusted EBITDA, sustained by the expansion of our RTD business and the acceleration of our spirits market share gain.

Corby generated $75.4 million in revenue, a plus 16% increase over Q1 of fiscal 2025. This performance marks Corby's highest quarterly revenue achieved in a challenging retail environment.

I will go over the key drivers in more detail shortly. With strategic investments behind key brands and diligent control of expenses, our adjusted EBITDA also reached a record high, totaling $20.3 million up plus 4% and adjusted earnings per share were $0.39, which reported at $0.36, representing a solid plus 9% growth in reported earnings and plus 8% in adjusted earnings.

Our cash flow from operating activities totaled $5.6 million, a $1.9 million increase year-over-year. This was supported by earnings growth, disciplined management of costs and working capital favorable.

On Wednesday, the Board of Directors declared a dividend at $0.23 per share for the first quarter of FY '26, consistent with the previous quarter, which represented an increase of $0.01 or 5% compared to the first quarter of fiscal year 2025. The Board of Directors assesses the dividend on a quarterly basis.

And as a reminder, the quarterly dividend was less increased in Q2 FY '25. Now let's go to the next slide and delve deeper into our year-to-date revenue growth.

To reinforce, Corby delivered an all-time high quarterly revenue of $75.4 million in Q1, representing a 16% increase over Q1 of FY '25. And this growth can be attributed to: firstly, domestic case goods performance reached $61.3 million, reflecting a plus 15% growth.

This is highlighted by improved shelf prominence of Corby's spirit, capitalizing on the removal of U.S. origin products in key provinces.

ABG Brands grew plus 33% with continued strong momentum on new channel expansion in Ontario and Western Canada. Secondly, commission revenue rose to $8.2 million, a growth of plus 7% versus last year, driven by imported RTD staffing into routes-to-market modernization opportunities with the openings of grocery and convenience channels across Ontario.

In addition, represented brands lapped the LCBO labor strike impact last year and benefited from favorable LCBO order savings in Q1 this year which is expected to normalize in Q2. Lastly, export revenue increased to $4.9 million or plus 55% reflecting a strong recovery of shipments across all markets, also benefiting from favorable shipment phasing in the U.S.

So to summarize our P&L results for Q1, Corby saw strong 16% revenue growth, leading to a record quarterly performance, bolstered by the strength of our portfolio, specifically the accelerating RTD portfolio, tapping into new channel expansion in Ontario and the spirits gaining additional shares in the spirits market. Our total operating expenses increased by 18% to support the continued growth and expansion of our RTD business in addition to strategic investments behind key brands such as the J.P.

Wiser's NHL partnership and also disciplined people cost management. As a result, Corby delivered a record quarter adjusted EBITDA, marking 4% increase versus last year, growing at a lower pace than revenue due to an adverse portfolio market and channel mix along with lapping very low marketing spend levels last year to mitigate the business impact of the LCBO strike last year.

For the sake of clarity, when we talk about a diverse portfolio mix, it refers to RTDs, growing at a softer pace than the rest of portfolio and notably our more profitable spirits. The diverse market mix refers to a stand-out recovery of our export business across all markets, less profitable on average than our domestic market.

Lastly, the adverse channel mix deals with the increase of direct delivery sales of RTD products following the route-to-market modernization in Ontario,that is more costly than the retail channel. Finally, on a per share basis, our adjusted net earnings was $0.39 and reported net earnings was $0.36, reflecting growth of 8% and 9%, respectively, versus last year.

Moving to our cash flow performance. In Q1, Corby generated $5.6 million in cash from operating activities, supported by higher net earnings and favorable working capital movements, partially offset by higher interest and tax payments.

These working capital benefits were primarily driven by timing of spend. Our free cash flow also improved, increasing by $1.3 million compared to the prior year.

As a result, our net debt position was $93 million at the end of the quarter, representing a $16 million improvement versus Q1 FY '25. Our net debt to adjusted EBITDA ratio improved at 1.4x, down from 1.8x last year, demonstrating robust solvencing and reinforcing our financial health.

Corby maintained an attractive dividend payout ratio at 55% on a rolling 12-month basis, highlighting the sustainability of the company's quarterly distance. Notably, quarterly dividend payment increased by 5% in Q1 FY '26 compared to Q1 FY '25.

These actions have contributed to a high dividend yield over recent years at 6.6% at the end of the quarter, providing consistent returns over FY '24 and FY '25. We are proud of our performance in Q1, and we remain focused on delivering long-term value for our stakeholders and shareholders.

With a strong portfolio, disciplined execution and a clear strategy, Corby is well positioned to continue driving growth and shareholder returns. Before I finish, I want to share our outlook and priorities for the remainder of the year.

After all you've heard today, you can see that Corby is well positioned to continue outperforming the market in FY '26, even as the environment remains dynamic. Our ambition is to continue to gain market share in spirits despite the challenge of a potential slight market decline.

We are going to remain agile and respond appropriately whenever U.S. products are permitted back on shelves.

We are confident in our resilience, leveraging leading brands, local footholds, top-tier marketing and advanced tools like AI-based prioritization to stay ahead. Our RTD portfolio remains a major growth engine and we see significant potential to expand across Canada, led by strong traction of strong ABG.

In Ontario, we will continue to capitalize on routes to market modernization, meeting evolving consumer preferences with agility and breadth. From a financial perspective, we remain focused on protecting margins, driving profitable growth and generating long-term shareholder.

Finally, regarding the outlook for the next quarter and beyond, we expect Q2 results to be softer than Q1 due to the normalization of LCBO orders from Q1 and the impact of BC labor strike that elapsed over September and October. We anticipate that these FX will normalize over time and will not impact Corby's ability to execute on its market-leading strategies.

Now I hand over to Nicolas for some closing remarks.

Thank you very much, Juan. Strong financial indeed and good clarity for outlook.

Well, I want to leave you with the core reason you should invest in Corby really. And for us, it's really the backbone.

Corby remains at the end of the day, the Canada's largest publicly listed multi-beverage alcohol company in Canada with the most diversified portfolio in the market, and that's something we need to anchor. Add to that, our close partnership with Pernod Ricard gives us strategic advantages and of course, access to global brand [ assets ] and the portfolio is, of course, extremely -- the diversity of the portfolio and the strength of the portfolio is supporting us as well.

We have a clear strategy, strong execution and a proven ability to outpace the market in value growth. Our innovation pipeline, marketing strength and recent acquisitions continue to drive performance and operational excellence.

And finally, we have consistent financials. It means like we have resilient revenue, strong cash flow and a healthy balance sheet that support attractive and growing dividend.

Now as you know, we recently announced upcoming leadership changes at Corby. This means that today is my last day of stating our earnings conference call as the President and CEO of Corby.

I'm extremely proud of what we've accomplished over the past 5 years and in Corby has been an honor. I will continue to work closely with Florence Tresarrieu, the incoming President and CEO as we transition.

I know she will lead Corby with energy, strength and passion, and she is looking forward to connecting with Corby's shareholders. With that, thank you once again for joining us today and for your continued interest and support in Corby.

Juan and I, of course, are now happy to take any of your questions. Thank you.

Okay. So I think we have a question here.

Thank you very much regarding the export opportunities. So listen, the export today is a relatively small part of our business.

It's an opportunity because at the end of the day, from a small base, it's showing on the regular basis, of course, a good growth. In terms of our, I would say, battleground, we really have 2 types of battleground.

The first one, of course, mainly for whiskey business, it's the U.S. The Canadian whiskey category is actually a large category in the U.S.

and J.P. Wiser's and the rest of our COVID portfolio is relatively small.

So we are showing good trajectory from a small base but this is something which we'll continue to do. The rest is more in Europe where we export J.P.

Wiser’s and Lamb’s rum. Lamb’s rum in particularly in the U.K.

But also J.P. Wiser's is showing some good traction in a country like Sweden and Central Europe.

So that's also something that we are going to do. Now regarding the commercial opportunity for the RTD, for the moment, we think we have plenty of opportunity to scale up the business in Canada.

That has been the focus in terms of resource allocation and the team. But listen, there is no doubt that the U.S.

is, of course, a large playground as well for RTD. I think for us, it's a matter of timing of maturity and in the long run, of course, the U.S.

may also represent a good opportunity for Cottage Springs or for that matter, for any other brand or innovation, what we call new-to-market brands that could be developed for the U.S. market.

So in the short term, I would say probably not the focus for the RTD portfolio in the mid- to long term, likely to be also an opportunity for us. Maybe Juan, you're okay to take the questions on the debt and the cash flow?

Yes, yes. Thanks for that.

The question is related to the increase of the cash flow and if the company intends to prioritize debt repayments or other potential uses such as dividend increase. So our idea is continue to amortize our debt straightly -- we have 10 years to pay our intercompany debt with Pernod Ricard that was taken in 2023 for the acquisition of Ace Beverage Group for the amount of $120 million.

And we have a 10-year tend to amortize this debt, and we have been amortizing straightly across the years. At the same time, that this enables us flexibility to continue to increase dividend as our earnings from profit increase.

So that's both. So continue to repay the debt and continue to assess dividend increase as the business profit grows.

Is there any further question?

Okay. So with that, again, thank you very much for your attention.

I usually close specifically on Friday to say the best way to get to know Corby is to get to know our portfolio and enjoy our brand responsibility, specifically before the weekend. So with that, I wish you a very good day and a very good weekend.

Thank you, everyone.