Air Global PLC

Ladies and gentlemen, thank you for your patience and please remain on the line. Today's Air Global Conference will start in a few minutes. Again, we do thank you for your patience and ask that you please remain on the line. Today's Air Global Conference will be beginning shortly. Air Global Conference Thank you for watching! Thank you for watching! Thank you for watching! Thank you for watching! Thank you for watching! Good morning, good afternoon, and good evening, everyone, and welcome to AeroGlobal's first half 2026 results conference call. All lines will be in listen-only mode. We will start with management discussion followed by an investor Q&A. To ask a question, please press star 1. To withdraw, press star 2. I will now turn the call over to Gaurav Jain, Air Global's Head of Investor Relations and Corporate Strategy. Please go ahead.

Good morning and thank you for joining Air Global PLC OneEdge 2026 Earnings Call, our first earnings call since listing on NASDAQ on May 18, 2026. With me today are Stuart Brazier, CEO, and Bassem Lotfy, our CFO. We will take questions following the prepared remarks. Our first half earnings press release was issued this morning with all materials available on our website, ir.air.global, and on the SEC's website, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on our current expectations and information. These statements involve risks and uncertainties manning beyond the company's control. Air Global disclaims any duty to update forward-looking statements except as required by law. Please review our safe harbor statements and risk factors in today's press release and in our most recent filings of the SEC, which contain additional information and a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We will present results on both our IFRS and non-IFRS basis. Non-IFRS measures like adjusted EBITDA and their IFRS reconciliations are detailed in our press release. Non-IFRS financial measures should not be used as a substitute for our results reported in accordance with IFRS. With that, I will turn it over to Stuart.

Thank you, Gaurav, and welcome everyone. We appreciate you joining us for Air Global's first earnings call as a public company. This is an important moment for Air. We listed on NASDAQ in May and today we are reporting our first set of interim results as a listed company. Before discussing our performance, I'd like to spend a moment on the team that's driving AIR forward. One of AIR's greatest strengths is the depth and diversity of our leadership team. Across our executive team, we bring together decades of experience from global consumer goods, tobacco, innovation, technology, supply chain and regulatory organizations. Collectively, our leadership group has operated some of the world's largest consumer brands, managed complex international businesses and successfully navigated highly regulated industries. This breadth of experience has been particularly important during periods like the first half of 2026, when we faced unprecedented supply chain disruption and rapidly evolving market conditions. Importantly, many members of our leadership team have worked together for years and have successfully managed through multiple business cycles, regulatory environments and periods of industry change, As we enter our next phase as a public company, I believe AIR has the right people, the right culture, and the right capabilities to continue delivering sustainable growth and long-term value for shareholders. AIR is a global consumer brand and innovation company anchored by the world's leading flavored shisha molasses business and increasingly building a portfolio of next-generation inhalation and nicotine products. Our core business is distinctive. Through Alfaka, we are the global leader in flavoured shisha and molasses. We believe we are larger than the next four competitors combined in the markets in which we operate, with an estimated 36 to 44% global volume share, and with very strong positions in key markets, including the United States, where our market share is estimated at approximately 60 to 65%. The category is social, cultural and lifestyle led. It is consumed in homes and lounges across generations and geographies. And it's not simply a nicotine delivery occasion. That is important because it gives the category a different demand profile from many traditional tobacco categories. The category is fundamentally different from most traditional tobacco segments. While nearly every major traditional tobacco category in the US has experienced significant volume decline over the past several years, flavoured shisha has remained remarkably resilient, with stable to modestly positive volume trends for alfaca. This reflects the unique nature of the category. Consumers are not simply purchasing nicotine, They are participating in a social, cultural and lifestyle experience that is shared with friends and family, often in lounges, restaurants and social gatherings. As a result, demand has historically proven resilient across a wide range of economic and industry environments. That resilience is further underpinned by the strength of the Alfaka brand. We estimate that Alfaka reaches approximately 14 million consumers globally, putting it alongside some of the world's most recognized tobacco and nicotine brands. Despite operating in a category that is often overlooked by investors, our consumer reach is substantial and continues to expand. More importantly, we believe our leadership position creates meaningful competitive advantages. We have leading market shares across many of our key markets, deep consumer loyalty, strong flavor innovation capabilities, and a distribution network that would be difficult to replicate. Compared with many other nicotine products and everyday discretionary purchases, Shisha remains a highly affordable indulgence. Annual US consumer spend is about $110. and is significantly lower than cigarettes, where an average consumer can spend more than $2,000, pot-based vaping products where consumers can spend on average $1,000, or nicotine pouches where consumers can spend $400. For consumers, a modest increase in the retail price of flavored shisha has a relatively limited impact on overall expenditure. For AIR, however, those pricing actions can provide meaningful support to revenue growth and inflation recovery. The strong 14% price mix growth we delivered in the first half demonstrates both the strength of our brands and the affordability of the categories. Importantly, we have maintained market share despite these pricing actions, which reinforces our confidence in the long-term earnings growth potential of the business. In the first half of 2026, we faced an unprecedented supply chain disruption from the closure of the Straits of Hormuz, a route through which approximately 70% of our historical shipment volumes have moved. Despite that challenge, we grew revenue, held adjusted EBITDA broadly stable, protected end consumer demand, and entered the second half with accelerating momentum. Now, turning to 2026 guidance. For full year 2026, we expect stable shipment volumes versus 2025. This is despite an approximately 1.5% headwind from weaker global travel retail volumes resulting from the Middle East conflict and despite the impact of above normal pricing implemented to offset elevated cost inflation.