Bubs Australia Limited

Thank you for standing by. And welcome to the Bubz Australia Limited 2026 four-year results. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the start key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Joe Coote, CEO. Please go ahead.

Thank you very much and welcome everybody to the BUBS FY26 results presentation. My name's Joe Coote. I'm joined here this morning by Chris Rowe, our CFO, and we will take you through our results. If we could tab, please. If we could tab again, please. So BUBS acknowledges the traditional custodians of the lands on which we operate. We pay our respects to elders past, present and emerging. Tab, please. So as I mentioned, my name is Joe Coote. I'm the CEO at Buzz. I've been in the role for 11 of the 12 months of the FY26 financial year, so it gives me pleasure to be here today to present our results. I am joined by our newly appointed CFO, Chris Rowe. Chris Rowe joins the business with extensive experience across the markets that we operate in, particularly most recently in the U.S., He has many years' experience in dairy and particularly in the infant formula sub-sector. So he's made a very strong start. It's been a very busy few months for Chris as we've been working on closing FY26. So great to have Chris on the team and you'll hear from him in a moment. In terms of the agenda today, I'll start with a summary of the results. I'll then hand over to Chris. He'll take us through the financial overview. Chris will then hand back to me. and I'll go through some regional performance summaries, a bit of an update on our strategy, outlook for the future, and then we will take Q&A to round things out. So thank you. If we could tab, please. Really wanted to start with our purpose this morning. It's a very simple purpose. Everybody can read it. But what I wanted to reflect on is it's something that really resonates deeply with our consumers, particularly our mums. Our mums put trust in our brand to, in some cases, provide sole source of nutrition for their new infants. So it's a very... critical time for those mums, and we at BUBS do a great job of that. So this purpose drives our team. It rallies us each day to do what we need to do to work with our farmers and get product right through onto shelf so when mums need that product for their babies, they have it. It's understood and appreciated by our retail partners, not just in Australia but around the world. Particularly our US retailers understand this and they are very passionate about supporting us in delivering this purpose. It's also respected by the regulators, particularly in the last period as we've been engaging with the FDA, something that they often reflect on. But I think for this audience this morning, in terms of our FY26 result, it is of particular relevance. As we look at the year, a lot of the numbers that we've presented come back to this purpose and I'll draw two references. Firstly, our revenue. Delivering this purpose has allowed us to grow a business from Australia that now has delivered $112 million of revenue. We have businesses outside of Australia in the US more than three times as big as the business in Australia. and then finally with FY26 it has been a year where there's been some external headwinds and so as we've looked at how we've spent our money we've been very careful to go back to purpose to think about our consumers and ensure that in the first half we maintained our presence on shelf so we did incur some additional costs to service those customers and ensure we were there for those mums and then in the second half additionally across our industry globally there's been a regulatory reset. So again, we did invest additional money to live this purpose and we believe it serves us moving forward. It grows brand equity because people trust our brand. So if we hit the tab... Okay, if we get into the numbers now, I know everyone's waiting for the numbers, so if we start on the top left there, as I mentioned, very proud to confirm that we've delivered just shy of $112 million of revenue. That's up 9% across the group, but very pleasingly up 24% in the US. I'm just going to move around and move across to the right. As I mentioned, and I'll talk more in a moment about some of the reasons we had to put some additional money into our COGS, a very disciplined execution of some challenges. But the net of that meant that our gross margin was 39.8 in the year. That then pretty much dropped through to the bottom line. So our reported EBITDA is minus 1.8, which is within the guided range. but pleasingly if you move across to the bottom left that calculates to an underlying EBITDA of 5.3 which does show very encouraging growth year over year and while we acknowledge and recognise the minus 1.8 it is significant that we do see that underlying strength in the business. So if we move across just to the bullets there's really two areas where we've needed to deploy very disciplined execution. The first one is around external disruptions. So we've had a lot of volatility in the US with tariffs. It's been widely publicised and most things you hear in the media are true. So we've spent $2.6 million on those tariffs at FY26. Secondarily, we've navigated a regulatory reset. Now this has been a global reset and that started on the 5th of January, I can remember the day, and so we have been working with the regulators, with our customers to ensure that we stay on shelf for our mums, for our consumers and for our babies, and in the second half that's cost us just under $4 million. In terms of buildings for growth, we started FY25 with a very low inventory level of just over $20 million. Now with an aspiration to sell $120 million of sales and a four to six month lead time in our supply chain, we really understood very quickly that we needed to restock our supply chain. We prioritised the US. It's our key growth market. It's our highest margin market. As Chris will talk about shortly, we exit the year at 36.3 million of inventory. That's healthy inventory. That's the targeted inventory that we've planned for. And as I said, we've had disciplined execution in taking that inventory up to that number. To do that and to protect service aligned with our purpose, as I mentioned, in the US we had to air freight some product. So that cost us $3 million predominantly in the first half. that allowed us to protect service, that allowed us to be there for our mums and their babies, and that allows us to grow our brand equity and our reputation. Additionally, as we've grown and become a little bit more sophisticated as a business, we've taken on some additional capability. We have some new folks that have joined the business. We've moved some key roles up to the US. We have a CMO based up in the US. We have a Chief Commercial Officer based up in the US for that region. Very experienced ladies who come into the business with very relevant experience and relationships into the trade and doing a great job. And then finally, our marketing. In the year, we increased our marketing 21% higher than our revenue growth, and that's to show confidence in our brand. And as we invest in marketing and we're delivering better content, we're very happy that that'll set us up for future growth as we move forward. Just to round out, we also changed the market on the 26th of March with a growth strategy. Pleased to report, and I'll talk later, some more tangible examples of how we're progressing that strategy, particularly some of the value that it's delivering. It gives us clarity and allows us to be really clear on how we execute our purpose. And then finally, I know it's something that everybody is eagerly awaiting, is the status with our FDA approval. We've progressed significantly. We are in the final review stage, and we are very confident that we will receive the FDA notification. With that said, I'll hand over to Chris to take us through the numbers.

Thanks, Joe. Good morning, everyone. It's a pleasure to be here Turning first to our income statement, a key highlight is our revenue growth, up 9.2% year-on-year to just under $112 million. And that was driven, as Joe mentioned, by increase in sales in the U.S. of 24% year-on-year. We prioritised supply to the US throughout the year. That also resulted in us incurring air freight in a program that is now finished, but it really did enable us to achieve that level of growth in our critical growth market. When you change about gross profit, while revenue was up, our gross profit was down 9.4% to $44.5 million. And that really reflected the impact of the air freight program that we talked about, regulatory challenges and changes that occurred throughout the year, and a combination of US-specific and non-AU tariffs that impacted our cost of goods as well. Our operating expenses were up 5% to $48.8 million, and that reflected an increase in our marketing spend that we incurred in order to activate our brand and drive our sales program. Overall, our OPEX revenue ratio saw a small improvement to 44% compared to 45% prior year. When we look at our underlying EBITDA, we were at $5.3 million, demonstrating strong underlying earnings, improvement and operating leverage to a degree. That was despite incurring air freight, tariffs, regulatory-related changes throughout the course of the year. And the bridge on the bottom left shows the transition from our reported $1.8 million EBITDA loss to the $5.3 million. underlying EBITDA. We move forward. Touching next on our balance sheet, we had a clear plan throughout the year to reinvest in inventory to support the growth of our business. We have a long physical supply chain, and that requires working capital support. And that's where our inventory increased $16.2 million throughout the year to $36.3 million. That inventory increase was funded by a combination of cash and debt and our operating cash flow closely reflects and matches that change in inventory level. So very much a plan that we've executed to a level that we're very happy with and have now got to a position that is about right to support our business as we go forward. We could move forward one. As I said, the inventory rebuild in our mind is largely complete and levels of inventory relative to sales are back to around about where they were two years prior. Comfortable with that level of inventory, we think it's the right level to support our growth ambitions, given the length of our supply chain, and we really only see inventory moving upwards in line with sales as we progress forward. With that, I'll hand back to Joe. Thank you, Chris. If we could tab, please.