Corby posts 7% revenue growth and 15% earnings growth in FY25, driven by RTD expansion and improved market share.

OPERATOR - (00:00:57)

Good Morning. Welcome to Corby Spirit and Wine fiscal year 2025 Q4 year end financial Results Conference Call for The period ended June 30, 2025 joining me on the call this morning are Nicholas Krantz, President and Chief Executive Officer and Juan Alonso, Vice President and Chief Financial Officer. Hopefully you had the opportunity to review the press release which was issued yesterday. Before we begin, I would like to inform listeners that information provided on this call may contain forward looking statements which can be subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks and uncertainties about the Company's business are more fully discussed in Corby's materials including annual and interim MD&A filed with the securities Regulatory authorities in Canada as required. At this time, all participants are in the listen only mode. Following Management's commentary, we will conduct a Q and A session. Instructions will be provided at that time for you to queue up for questions. If you have any difficulties hearing the conference, please press Star zero on your phone for operator assistance or click the Help button on your screen. Now I would like to turn the call over to Mr. Krantz.

Nicolas Krans - (00:02:13)

Thank you very much and good morning everyone. I am Nicolas Krantz and it's a pleasure to connect with you. Today I am joined by Juan Alonso, our CFO and we will share today the Corby's Q4 result and of course with that our full year FY25 results. Juan will walk through of course the financials in more detail, but I will begin our session with highlighting the key drivers behind our strong performance in what continue to be a volatile and evolving market environment. So we close FY25 with robust momentum delivering plus 7% reported revenue growth and plus 15 earning growth fueled by continued share gain in Spirit and of course the rapid expansion of our RTD business. This marked our third consecutive year of outperforming the overall Spirit market and for us a testament to the strength and resilience of our diversified brand portfolio. Our strategic acquisition of ABG and NUDE have also proven to be accretive, positioning COBI as a leading player now in the fast growing RTD category across Canada and these brands have been instrumental in accelerating our growth trajectory and reinforcing our consumer centric approach. One note I would like to make on our Q4 sales specifically, our success today notably reflected our proudly Canadian sales execution with our Commission and local brand gaining share with US Origin Spirit being removed from shelf across most provinces since March, this shift has created a meaningful opportunity for our portfolio to step up and deliver and we see that in our commercial results in a minute. Finally, and something one of course will expand on, we've continued to generate strong cash flow, enabling attractive capital returns to shareholders and further strengthening our balance sheet. With our net debt to EBITDA ratio reduced to 1.4 times. In line with this, our performance and confidence in the outlook. We maintain our quarterly dividend of $0.23 per share consistent with the Q3FY25, but up 10% relative to the Q4FY24 reflectively of the sustainability of our dividend policy. So before going to the financial, let me give you a brief overview of the market context. Again Starting with the Q4, the final quarter of the fiscal year. Very proud to share that Corby delivered a strong commercial growth and accelerate the share gain across all categories despite of course the challenging market context. So in what we call the rolling three months. So that's the Q4 our commercial execution proves to be highly effective enabling us to capture share across all categories. As I mentioned following the removal of US origin products from shelves in most provinces and you can see here the numbers very, very strong performance, we can probably qualify it as being outstanding for this Q4 because we are 8 point above the spirits market, 13 point above the RTD market and even in wine we are delivering an outstanding performance of a double digit. So this last quarter is probably again the testament of the execution of the team and has enabled us to deliver a very strong performance that is lead us to of course the full year results of this Momentum Q4 translated into a strong close of the fiscal year. Next slide please. And with Corby once again gaining share across all categories, when we look at the 12 month period that also now for the third time, third year in a row, that's our performance and that's something that we've been really really targeting and chasing to deliver this performance. So whilst the spirit market is declining and the inflation are also slightly declining, we are performing way above the market. You will notice that of course the ready to drink category continue to be a dynamic category growing by 7% so that we'll come back to it when we talk about our strategic acquisition. So while spirit and wine are declining, RTD continues to be in good growth and across those three categories we have delivered a performance significantly above the market. Now if we look a bit closer to the spirit category, very briefly, this is just want to highlight the fact that we continue to outpace the market in almost all spirit categories. Not all of them, but most of them. And that's really the advantage of Corby with our diversified portfolio we are across every price point, every consumer occasion and that for us very important. And now we are really playing across all the categories Turkey and wine meaningfully, we are leveraging that with impact. I want to highlight, for example in this quarter we had some very successful launch with the limited edition of the Canada Day bottle of Polar Ice. Of course the JP Wiser's has continued with its official whiskey partner, the NHL marked with a special stand makeup edition that honors the two Canadian icon, of course Whiskey and Hockey. So we really played across the categories and that enabled us to perform three points above the market which it's an outstanding performance. Before I hand over to Juan, I want also to take a moment to spotlight our RTD portfolio. As I mentioned, a very dynamic category and therefore very strategic for us. While overall our portfolio has continued to gain value share over the last 12 months, driven by a strong innovation pipeline and strategic execution. Our route to market strategy is a key advantage today with ABG providing strategic reach in Ontario and you'd strengthening our presence in in Western Canada and this has clearly helped accelerate growth across the overall RTD portfolio. Our innovation remains a core strength. Collingwood Spring is ranking among the top two RTD innovations in Ontario with a steady pipeline supported of course by the ABG in house Innovation Lab that we mentioned several times in the past. The integration of new has progressed extremely well supporting a more efficient and sustainable business model in the West. Expansion effort and successful launch like SPLASH in Western Canada have contributed to improved sales performance over six months. Without giving too much detail here, this has been an amazing acquisition for us with basically a payback below one year. So we bought this business and we repaid fully this business within six, seven months, which is of course very strong outcome. Lastly, in Ontario we've been able to capitalize on the route to market modernization since September, as you know, with basically the possibility to sell now in grocery and convenience. So we have been able to leverage the breadth and the depth of our RTD portfolio and this has translated into strong momentum in grocery stores where Collingwood Spring was the number one RTD in the last quarter of the fiscal year. A clear signal that our consumer demand is strong for our portfolio. So with that let me pass over now to Juan to give you more detail about these strong commercial results translating into strong financial results as well.

Juan Alonso - Vice President and Chief Financial Officer - (00:09:26)

Thank you Nicola and good morning everyone. I'm Juan Alonso, Corby's Chief Financial Officer. I'm pleased to walk you through our financial results. So very quickly before we talk about our financial performance, you are 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 Q4 FY25 MDNA and I invite you to refer to this document for any questions related to it. So let me start with our Q4 results. Corby delivered $72 million in revenue representing plus 8% reported growth and plus 6% organic growth year over year. This performance was support by the strong momentum in our RTD portfolio, capitalizing on the route to market modernization in Ontario and also the successful execution of our sales team which helped us gain share in the spirit market following the removal of US products from shelves. Thanks to revenue growth and disciplined cost management, our adjusted EBITDA reached $15.6 million up 18% versus last year and adjusted earnings per share came in at $0.26 and reported earnings per share at $0.22 reflecting remarkable growth of plus 37% and 30% respectively. We also delivered $15.5 million in cash from operating activities in Q4, underscoring the strength of our earnings and working capital discipline. Lastly, in line with our Q3 declaration, the board approved a quarterly dividend of $0.23 per share, that is a 10% increase over the same period Q4 FY24. This reflects our confidence in Corby's outlook and our ongoing commitment to shareholder returns. Now let's turn our attention to the full year performance. FY25 was a year of strategic RTD business expansion and financial resilience. In FY25, Corby generated $246.8 million in revenue, a 7% increase over FY24 with plus 2% organic growth. This performance achieved in a challenging retail environment highlights the strength of our diversified portfolio and our agility in responding to market shifts. I will further delve into details in the next slide with our top line growth as well as strategic investments behind key brands and diligent control of expenses. Our adjusted EBITDA reaches $64 million up plus 7% and adjusted earnings per share were $1.08 with reported earnings per share at $0.96 representing a robust plus 15% growth in reported earnings and plus 7% in adjusted earnings. Our cash from operating activities totaled $44.8 million in FY25 that is a $13.3 million increase year over year. This was supported by earnings growth, disciplined cost management and the lapping of acquisition related costs from ABG and NUDE. We also strengthened our balance sheet reducing our net debt to adjusted ebitda ratio to 1.4 times, down from 1.8 at the end of FY25. This reflects our strong solvency and financial discipline. Total Dividends declared for FY25 were 91 cents per share, up 7% from FY24, reinforcing our commitment to consistent and growing returns for our shareholders. Now let's go in more detail on our year to date revenue growth. Firstly, domestic case goods reached $197.3 million reflecting now 1% organic growth and 9% total growth. This is highlighted by ABG Brands growing 10% organically supported by our dynamic RTD portfolio capitalizing on the route to market modernization in Ontario and also business expansion into Western Canada. Our case goods portfolio remained resilient despite the negative impact of the LCBO strike in Q1 and also soft underlying consumer trends. Commission revenue rose to $30.6 million or plus 15% versus the prior year driven by imported RTDs and wines successfully tapping into the opening of grocery and convenience channels across Ontari. Lastly, our Export revenue totaled $14.9 million reflecting a 12% decline year over year. This decrease primarily comes from lapping the pipeline fuel to new markets last year which had seen a remarkable plus 16% increase compared to the fiscal year 23 and also some glass production issues for brands in the UK. These results highlight our ability to navigate and adapt to the evolving market brandscape and we remain committed to leveraging opportunities for growth. So to summarize our P and l results for FY25 Corby had solid revenue growth of 7% bolstered by the strength of our portfolio, the new channel expansion in Ontario and the full year effect from the acquisition of NUDE brands. Our total operating expenses increased by 6% at a lower pace comparing to the growth in our revenue with strategic investments behind key strategic brands and disciplined cost management. As a result, Corby delivered a solid growth of 7% in adjusted EBITDA, underscoring our ability to effectively manage costs while expanding our revenue base. On a per share basis, our adjusted net earnings was $1.08 and reported net earnings was $0.96 reflecting growth of 7% and 15% respectively versus last year. Now moving to the cash flow performance in FY25, Corby generated $44.8 million of cash from operating activities supported by higher net earnings as well as favorable working capital changes primarily driven by the timing of spend and favorability from interest and income tax Our free cash flow turned positive and improved significantly year over year, benefiting the lapping of last year's $148 million cash outflow related to the ABG and new acquisition. As a result, our net debt position was $91 million at end of year, a $15 million improvement compared to FY24 and our net debt to adjusted EBITDA ratio reduced to 1.4 times, demonstrating a robust solvency position and reinforce our financial health. Furthermore, Corby has an attractive dividend payout ratio at 57% on a rolling 12 months basis, highlighting the sustainability of the company's quarterly dividend. Notably, quarterly dividend payment increased by 10% in Q4FY24 compared to Q4FY 2025 compared to Q4FY24. These actions have contributed to a high dividend yield over recent years at 6.7% at the end of this fiscal year, marking a consistent improvement from FY23 and FY24. We are proud of our performance in FY25 and we remain focused on delivering long term value for our stakeholders and shareholders. With a strong diversified portfolio, disciplined execution and a clear strategy, Corby is well positioned to continue driving growth and shareholder returns. Before I hand back to Nicola, I just want to give you a glimpse of what is ahead for Corby in FY26. We know the market will remain volatile in the next fiscal year forecasted to remain in slight decline, but we believe that if we continue to leverage our diversified portfolio, leading brands, local footholds, top tier marketing activities, we are well oriented to outperform the markets. Again in FY26 we will continue unlocking the full potential of our RTD portfolio including the realization of ABG and new sales with operational synergies throughout a successful integration. Notably, we are going to address consumer NUDEs and keep agility in our dynamic approach to successfully capitalize on the route to market modernization in Ontario. Also, revenue growth, management and disciplined investment will remain a very important feature to protect our margins in a sustainable way. In addition, we are closely monitoring regulatory and trade changes including the tariff situation between the US and Canada. We believe Corby is well positioned to navigate the challenges ahead with our diversified portfolio, strong local footholds and execution strategy. I will not dwell on our strategy since it was already well covered in the previous page, but just to remind that our goal remains to focus on sustainable growth and long term value to our shareholders. So now I hand over back to Nicola for some closing remarks.

Nicolas Krans - (00:21:15)

Thank you very much Juan Alonso and effectively we are very proud of our commercial and financial results this year. Before we open the floor to possible questions, just want to close as always to what we see as being the key reason to invest in Corby. Corby remains Canada's largest publicly listed multi beverage alcohol company and we strongly believe with the most diverse portfolio in the market. With that as well, our close partnership with Pernod Ricard gave us some strategic advantages and access to the global best practices and a fantastic portfolio. We have a clear strategy with strong execution and a proven ability to outpace the market in value growth. For us. It's remained the mantra of the company. Our innovation pipeline, marketing strength and recent acquisitions continue to drive performance and operational excellence. I mentioned a lot of the innovation. It's also an obsession for us to drive growth and finally financially we remain very consistent. We are in a business where we can deliver resilient revenue. The strong cash flow, you saw the cash conversion, a healthy balance sheet that supports the attractive and growing dividend but also give us some flexibility. So with that, again, thank you very much for joining us today and for your continued support interest with Corby. And Juan and I are now happy of course to take any questions, if any. Thank you very much.

OPERATOR - (00:22:41)

Thank you. And ladies and gentlemen, we will now begin the question and answer session. To ask a question, Please press the Star 1 on your telephone keypad. You're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star followed by the number two. One moment please for your first question and I'm currently. No questions showing at this time. I would like to turn it back to Mr. Krantz for closing remarks.

Nicolas Krans - (00:23:17)

Thank you very much and again, thank you for your attention. Today we are Thursday, so as I usually say again, enjoy the rest of the week. Best way to get to know Corby is to enjoy your product responsibly. So I wish you a good weekend and to the next time, thank you very much.

OPERATOR - (00:23:36)

Thank you presenters. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.