Corby Spirit and Wine Limited

Good morning. Welcome to Corby Spirit & Wine's Fiscal Year 2026 Q2 Financial Results Conference Call for the period ended December 31st, 2026. Joining me on the call this morning are Florence Trezorier, President and Chief Executive Officer, and Juan Alonso, Vice President and Chief Financial Officer. Hopefully, you have 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 today's 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 assembly mode. Following management's commentary, we will conduct Q&A session. Instruction will be provided at that time for you to queue up for questions. If at any time 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. I would now like to turn the conference over to Ms. Trésorieux. Please go ahead.

Thank you very much, and good morning, everyone. Thank you for joining us to review Corby's Spirits & Wine Q2 and first half results. I am very pleased to be here for my first earning course as a CEO. For those of you who don't know me, I'm Florence Trésorieux, and it's a privilege to lead Corby at this moment of his journey. I bring over 20 years of experience across markets, investor relations, and our personal strategy, and I will have most recently Global Senior Vice President of Investor Relations, Treasury and Cash Performance at Pernod Ricard. Over the past months, I've spent time with our people being on the road, leading our brands, our partners across the country. And what I've witnessed is an organization with very strong fundamentals, a clear strategy, very passionate people, and a proven track record to execute and deliver with discipline and agility. And actually, today's H1 results are the perfect illustrations of what I've seen. This is indeed a very strong first half for Corby, a record-breaking start to the year. We delivered the highest first half revenue in Corby's history, with reported revenue of up 12% and organic growth of 13%. Continued market share gains in spirits and the accelerating expansion of our RTV business have been at the forefront of our performance. With RTV now representing roughly one-third of Corby's top-line revenue, and being, as such, a core pillar of our strategy. These results reflect strong and consistent sales execution with significant gains across our portfolio in a volatile and highly competitive market. Performance was further supported by the removal of U.S. origin products from shelves and favorable SCBU order phasing expanding into Q2. The breadth and breadth of our portfolio continues to differentiate Corby Despite the impact of the British Columbia strike, we delivered strong statements and earning growth in Q2 and across first half. And at a return, we outperformed the stress market in value for the 13th consecutive quarter. Earning growth is slightly inside revenue growth, which is reflecting an already skewed portfolio mix, together with some less favorable spirit and channel mix effects. We are reporting a very strong cash generation, which is indeed the backbone of our long-term value creation. and attractive capital returns. Our balance sheet is strong, and this is one of our key financial strengths. Our net debt to adjusted EBITDA ratio at 1.1 times allows flexibility to invest behind a brand for future growth. Reflecting the confidence of the continued dynamism of our business, the board declared a quarterly dividend of 24 cents per share, an increase of one cent of a growth of 4% from the previous quarterly dividends. As of December 31, 2025, COBI delivers a one-year total shareholder return, TSR, of 25%, which is very much testament to our strong performance and commitment to long-term sustainable value creation for our shareholders. As a matter of fact, COBI has the right momentum and is leveraging its key strategic levers to continue outperforming the markets. So let me then briefly frame the market context and explain why Corby model continues to perform so well in an evolving and indeed volatile market. Corby achieved a clear acceleration in market share across all categories in Q2, building on strong and disciplined execution, being for instance illustrated by our ability to capture share following the removal of U.S. origin products from shelves. In the rolling three months ending December 31, While the Canadian spirits market declined 4.4%, Corby outperformed by 6.9%, delivering 2.5 value growth. Our wine portfolio performed even more strongly, growing 11.9% against a slightly declining market of minus 0.7%. As mentioned before, RTD continues to be a standout. The category delivers 27.7% growth, representing a 6.5 points of performance versus the market, which is indeed reinforcing RTD as a strategic growth engine within our portfolio. I've mentioned that before, but it's quite important. RTD represents approximately one-third of our net sales and contributes this fiscal house for almost three-quarters of our net sales growth. Barbie has consistently outperformed the Canadian market in value for 13 quarters in a row. In spirits, while the category declined, we delivered a very resilient performance with R12 at 1.9%, representing a 6.2 points outperformance versus the market. Our wine business also delivered strong growth, up 13.7% for the R12, which was 15.8 points ahead of the market. And again, we see the biggest gain in RTD, delivering 28.1% growth, which is 16.5 points above the continuously growing category. Looking closer at service performance by category, you can see that we continue to outpace the market across several categories over the 12 months ending December 31st, which is showcasing our competitive advantage and the effectiveness of our sales execution. Some highlights include our portfolio growth in the otherwise declining rum and vodka categories, benefiting from the shelf's prominence amid restrictions on U.S. origin products in some provinces. We remain the category leader in Irish whiskey and have expanded our footprint in the tequila category with double-digit growth. Although our performance in the blending scotch category was impacted by production challenges, we remain optimistic in the opportunity to gain or fair share back in this category along with the growing Canadian whiskey category, supported by our GT Wiser's NHL partnership. We have a uniquely diverse portfolio across price points for various customer locations, insurance, RTD, and wine, and we're leveraging all that with impact. Now let's dive up to discuss the growth strategy. RTD is one of Corby's most important growth engines. Over the last 12 months, our RTD business has accelerated meaningfully with substantial gains driven by strong innovation and market expansion. Our unique RTD route to market strategy continues to deliver with increased penetration and share in both Ontario and Western Canada through focused RTD dedicated self-execution. At the end of H1, Corby's RTD portfolio delivered 28% value growth over the last 12 months. significantly up-pacing the category. Over the last three months, we gained share in every single region, reinforcing the national strength of our RTD grants and the consistency of our execution. Our portfolio is well-positioned for continued growth, supported by a robust innovation pipeline, with exceptional new listing results in all major provinces set to launch in H2O426. New grants are playing an increasingly important role allowing us to move quickly into white spaces and capture emerging consumer occasions. In Ontario, for instance, we continue to capitalize on route-to-market modernization, leveraging the breadth and depth of our RTD portfolio to strengthen our presence in grocery and emerging channels where brands are gaining visibility and relevance. We also continue to actively shape the portfolio to elevate growth through the fastest growing categories And as such, we've increased the ownership of ABG to 95% while exiting non-core brands, SLBR, SLRTD, and Liberty Village Dysider, therefore streamlining the business and sharpening ABG growth profile.

I'm not going to walk through the page in detail, but you're already familiar with the Corby strategy.