Corby Spirit and Wine Limited

Good morning. Welcome to Carbyspirit and Wines Fiscal Year 2026 Third Quarter Financial Resorts Conference Call for the period ended March 31st, 2026. Joining me on the call this morning are Florence Crescero, President and Chief Executive Officer, and Juan Alonso, Vice President and Chief Financial Officer. Hopefully, you have read the opportunity to review the press release, which was issued yesterday. Before we begin, I would like to inform listeners That information provided in 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 Corbis materials, including annual and interim MD&A filed with the securities regulatory authorities in Canada as required. At this time, all participants are in listen-only mode. Following management's commentary, we will conduct a question and session. Instructions will be provided at the 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 button on your screen. Now, I would like to turn the call over to Ms. Florence Rosario. Please go ahead.

Thank you so much, and good morning, everyone. Thank you for joining us to review Corbis Grains and Wine, Q3 and Fiscal Year to date March results. For those of you who may be joining us for the first time, my name is Jean-Claude Trésorier, and it's a pleasure to speak with you again as the CEO. As I continue to spend time across the business, what remains very clear to me is the strengths of our fundamentals, the quality of our portfolio, and the disciplines with which our teams execute in a complex and evolving market. Turning to today's results, my thoughts are simple. Carby delivered a strong fiscal year-to-date performance, driven by RTD growth and continued market share gains in spirits. We've achieved record-high fiscal year-to-date revenue as of March, with a reporting growth of 15% and organic growth of 16%. This performance was driven by sustained momentum in our R2DT staff, continued share gains in spirits, and was also amplified by favorable LCU order phasing in Q3. These results reflect the continued excellence of our Excel certification, with strong share gains across our total portfolio. also benefited from the ongoing impact of UX origin products removed from the shelf. The breadth and depth of our portfolio continue to be a key competitive advantage. In Q3, we delivered, again, strong shipments and early growth. After retail, we outpaced the spirits market in value for the 14th consecutive quarter, not through resilience of any single brand or channel, but definitely through the portfolio-wide application. A notable feature this quarter is the quality of earnings delivery. Earnings growth outpaced revenue growth, reflecting purposeful investments behind priority brands and correct cost management. This was achieved despite a more RTV skewed mix, less favorable spirits and channel dynamics, and declining commission income. This very much illustrates the underlying resilience of our business model. RTD now represents approximately 38% of Corby's revenue, firmly establishing us as a leading Canada-wide player in a fast-growing category. Our focus remains very much on profitable expansion, leveraging road-to-market modernization in Ontario, while continuing to build skills in Western Canada. From a financial standpoint, we generated solid cash flow, Supporting working capital needs this quarter and reinforcing our long-term approach to value creation. Net debt to adjusted EBITDA stood at 1.4 times, reflecting our strong balance sheet. The board declared a quarterly dividend of $0.24 per share, consistent with the prior quarter, underscoring confidence in the outlook, despite a more normalized market environment. Overall, Corby continues to gain shares, strengthen earnings quality, positioning the business to perform a cross-cycle, and to adapt to market context. So let me take you through that market context just now. Barbie continued to capture incremental market share in Q3. Our team, again, translated opportunity into performance, notably benefiting from the removal of U.S. origin products on shelves. The rolling three-month trend ending 31st March highlights the continued strength of Corby's performance relative to the broader market. While the Canadian search market declined 4.2%, Corby delivered flat value performance, representing a 4.2 point up performance. In RTD, where the category grew almost 10%, Corby significantly uppaced the market with 22.4% growth, or a 12.7 points advantage. Our one portfolio also performed strongly, growing 12% against a market decline of 0.4%, translating into a 12.4 points outperformance. RTB is indeed a key contributor. Nonetheless, it's the breadth of our portfolio and the consistency of our delivery that continue to define Colby's performance this quarter. Looking now at the rolling 12-month performance, Corby has now outgrew from the Canadian market in value, what I said already, 14 consecutive quarters, which is demonstrating the quality of our execution in a softer spirits and wine environment. In spirits, while the market declined 3.6%, Corby delivered 3.1% growth, a 6.7 point outperformance. RTD continued to lead, with Scorby growing 13.6% versus 12% for the category, representing a circa 20 points high performance. Our one portfolio also delivered strong results, growing 16.2% against the market decline of 0.6%, or a 16.8 points high performance. Looking now more closely at threats by category, Corby continues to outpace the markets across most segments on the rolling 12-month basis. We are delivering growth in several categories which are declining, and this includes Bud Candram, benefiting from strong shelf presence following the removal of U.S. origin products. We also continue to lead the Irish whiskey category, while Cochina remains a key growth engine, delivering double-digit growth as we expand our footprint in this fast-growing segment. Let me now tie that to discuss our growth strategy. I've stated a few times already that RTD continues to be one of Corby's most significant growth engines and a key contributor to our overall performance. Over the last 12 months, our RTD business has delivered strong acceleration, we sustained share gains, supported by focused innovation and market expansion. Our dedicated RTD route-to-market strategy continues to drive penetration and share gains across Ontario and Western Canada, supported by RTD-focused execution. In a very short period of time, this approach has materially expanded RTD availability, increasing distribution from approximately 1,000 to more than 7,000 points of sales now. In the rolling 12-month basis, Corby RTD portfolio delivered plus 32% value growth, significantly outspacing the category. Over the last three months, we again gained share in every region, reinforcing the national strength of our RTD portfolio of brands. Our portfolio remains extremely well positioned for continued growth, supported by a strong innovation pipeline, and exceptionally listings across major provinces set to launch in the second half of the year. In Ontario, we continue to capitalize on route to market modernization, expanding our presence in grocery and emerging channel. We also continue to actively shape the portfolio to support our long-term goals. We increased our ownership of ABG to 95% and exited non-core RTB and B brands, further streamlining the business, and sharpening ABG's growth profile. I'm not going to walk through this page in detail, but our strategic priorities remain very much unchanged. We remain very focused on gaining sharing spirits, accelerating penetration in the fastest growing category, growing value over volume, and investing efficiently behind our brands and innovation, while at the same time actively managing the portfolio. What scales this water is the breadth of the opportunity across RTD through its channels and geographies, which continues to expand, and that our teams are converting that opportunity into results with increasing discipline and focus. That momentum is reinforcing our confidence in core visibility to deliver sustainable long-term value creation. So with that, I will let Juan take us over the financial results.

Thank you, Florence, and good morning, everyone. I'm Juan Alonso, Corbis CFO, and I'm pleased to walk you through our financial results. 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 a detailed explanation for each of those elements in our Q3 FY26 MD&E, and I invite you to refer to these documents for any questions related to it. So let me start with our Q3 results. I'm pleased to share that Corby closed out another strong quarter in Q3, delivering $58.3 million in revenue which represents a 21% growth in reported net sales. When we exclude the impacts from our disposed brands, organic revenue growth was slightly higher at 22% year-over-year. As Florence said, this performance was supported by the strong momentum in our R&D business expansion and continued market share gains in spirits, while we also benefited in Q3 from favorable ordering phasing from the LCBO ahead of their ERP system upgrade. Adjusted earnings from operation reached $11.6 million of 52% versus last year, while our reported earnings from operation grew 63%. This outpaced revenue growth reflecting our discipline cost management. Looking at our bottom line, adjusted earnings per share came in at $0.27 and reported earnings per share at $0.28, reflecting very robust growth, 67% and 97% respectively. In order to support the strong revenue growth in Q3, as well as continued growth going forward, a higher usage of cash was needed to bolster our working capital. mainly due to LCBO order anticipation and RTD inventory buildup ahead of summer months. As we see in our cash from operating activities, Corby has a net use of cash of $17.6 million during Q3, which is $11.3 million higher comparing to Q3 last year. Lastly, in line with our Q3 declaration, the board approved a quarterly dividend of $0.24 per share, which is consistent with our declaration for Q2, and a $0.01 or 4% increase versus dividend declared in Q3 last year. This reflects our confidence in our outlook and ongoing commitment to shareholder returns. Now, let's go to the next slide and delve deeper into our Q3 revenue rules. So, just to reinforce, Corby delivered a strong quarterly revenue of $58.3 million in Q3. That represents 21% increase over Q3 of 2025, and this growth can be attributed to, firstly, domestic case goods, which accounted for 83% of Corby's Q3 next sales performance, reaching $48.2 million, reflecting a plus 33% reported growth and plus 35% organic growth. This was driven by first ABG brands growing 51% on a reported basis with continued expansion in Ontario and Western Canada, but also due to favorable ordering patterns from the LCBO entry three and improved shelf permanence of Corbis spirit given the removal of U.S. origin products in key provinces. Total commission made up 10% of Q3 net sales and was $6 million, a decline of 11% versus the prior year, as the represented wine portfolio left a strong comparison basis last year. Lastly, export revenue, which contributed 6% to total net sales, landed at $3.3 million, a decrease of 20% versus Q3 FY25 due to unfavorable shipment phasing after a very strong H1, while also lapping pipeline fuel in the US last year due to anticipation of tariffs. Now let's turn our attention to the fiscal year-to-date performance. Coming off another strong quarter in Q3, after a record performance in H1, Both in terms of earnings and profitability, fiscal year to date, March FY26, marked another company record in top-line generation. In the first nine months of FY26, Corby generated $200.6 million in revenue, a 15% reported increase over last year, with plus 16% organic growth. This is despite operating in a challenging industry backdrop, highlighting the strength of our diversified portfolio and ability to respond to this agility to shifting market dynamics. I will further delve into the details in the next slide. Our top-line growth was driven by the fast acceleration of our RTD business, with RTD currently being the fastest-growing category in the Canadian alcohol market. While this RTD mix and channel shifts put some pressure on margins, a strong cost discipline helped offset those impacts. As a result, Corby delivered record year-to-date adjusted earnings from operation at $41.9 million, which is plus 16% year-over-year, and reported earnings from operation of $42.8 million, up 20% year over year. For the bottom line, our adjusted earnings per share was $0.97, with reported earnings per share at $0.95, representing a robust growth of plus 20% and 27% respectively. Our cash from operating activities totaled $19.4 million, which is $9.8 million lower versus last year due to the working capital addition that I mentioned for Q3. We also strengthened our balance sheet, reducing our net debt to adjust the dividend ratio to 1.4 times, down from 1.6 at the end of Q3 FY25. This reflects our strong solvency and financial discipline. Total dividends declared for the first three quarters of FY26 was 71 cents per share, up 4% from FY25, reflecting our commitment to providing consistent and predictable shareholder returns. Now let's delve deeper into our year-to-date revenue growth. Let's dive deeper into the 15% revenue growth in the first nine months of fiscal year 2026 compared to the same period the last year. Firstly, domestic case goods, which accounted for 81% of Corby's next sales performance, reached $163 million, reflecting 18% reported growth and 20% organic growth. This is driven by ongoing RTB business acceleration, by improved shelf prominence of Corby Spirits, capitalizing on the removal of U.S. origin products in key provinces, and also favorable LCBO shipment phasing in Q3. Total commission made up 11% of net sales and came in at $22 million, a slight decline of 4% versus last year, with the represented wines portfolio lapping a strong comparison basis last year. Lastly, export revenue, which contributed 6% to total net sales, increased to $13 million, up 17% year over year, largely driven by strong shipment expansion into Turkey and Eastern Europe, as well as a strong value conversion of lambs in the U.K., through the value engineering project. To summarize our P&L results, for the first nine months of FY26, Corby recorded the highest year-to-date revenue in company history, with a strong 15% revenue growth, reflecting the strength of our portfolio, specifically the accelerating RCD portfolio, capturing the new channel expansion in Ontario and Western Canada. and spirits portfolio continue to capture market share gains in key provinces. Our total operating expenses also increased by 14% to support the continuous growth and expansion of our RTV business, in addition to strategic investments behind key strategic spirits brands, such as the Weiser's NHL Partnership and the Weiser's Canada Drive Partnership. Through disciplined cost management, despite the impact by the RTD skewed portfolio, Corby delivered a strong year-to-date adjusted earnings from operations growth of 16% versus last year, while reported earnings from operations grew 20%. On a per share basis, our adjusted net earnings was 97 cents and reported net earnings was 95 cents, reflecting growth of 20% and 27% respectively versus last year. In the first nine months of FY26, Corby generated $19.4 million of cash from operating activities, a decline of $9.8 million from last year, due to higher working capital needs to support our strong top-line growth, notably due to anticipation for LCBO orders and building up RTD inventory ahead of summer's month. Despite the decreased cash flow compared to last year, Corby's cash generation ability remains strong, supported by our underlying earnings growth. This allows Corby to pay robust dividends, increase our stake in ABG to 95% in the beginning of the fiscal year, and still reduced debt to $97.8 million, a $1.4 million improvement compared to FY25 after loan repayment. As a result, our net debt-to-adjusted EBITDA ratio reduced 1.4 times from 1.6 at the end of Q3 FY25, demonstrating a robust solvency position and reinforces our financial health. Corby has an attractive dividend payout ratio at 80% of earnings on a rolling 12-month basis, highlighting the sustainability of the company's quarterly dividend. Notably, quarterly dividend payments remained consistent since our last increase during the prior quarter, which also marked a 4% increase compared to Q3 last year. These actions have contributed significantly to a high dividend yield over recent years at 6.5% at the end of Q3, marking a consistent level of return for our shareholders. We are very proud of our performance in fiscal year to date, 2026, and 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 Florence, I want to give you a glimpse at what's ahead for Corby. After all you have heard today, you can see that Corby is well positioned to continue outperforming the market in FY26, even as the environment remains dynamic. Our R2D portfolio remains a major growth engine, and we see significant potential to expand across Canada, led by strong traction from ABG brands. Our ambition is to continue gaining market share in spirit, despite the challenge of a potential market decline. We will remain agile and respond appropriately whenever U.S. products are permitted back on shelves. In Ontario, we will continue to capitalize on route-to-market modernizations 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 value. And finally, after strong performance in the first nine months of the fiscal year, Q4 is anticipated to be significantly softer as LCBO ordering patterns normalize and the spirits market decline persist. However, despite this, we remain on track to deliver high single-digit revenue growth for fiscal year 2026, reaching a record revenue level for the company, supported by the continued expansion of our RTV business and the strength in our Canadian portfolio amid ongoing provincial trade measures. Now, back to Florence for some closing remarks.

Thank you, Juan. As we close today's call, I would briefly remind you why Corby is a compelling long-term investment. Corby is Canada's largest publicly listed multi-profit alcohol company with a highly diversified portfolio that supports resilience and relevance across categories. Our partnership with Panamacar, a global leading search company, provides meaningful strategic and operational advantages. We combine a clear strategy with disciplined execution, consistently outpacing the market through innovation, strong brand activations, and active portfolio management. This is underpinned by financial consistency, resilient revenue, strong cash flow generation, and a solid balance sheet supporting attractive shareholder returns. Thank you once again for joining us today. We are now ready, Juan and I, to take your questions if you have any.

Thank you. Ladies and gentlemen, we will now conduct a question and answer session. If you have a question, please press the star key followed by one on your touch-tone phone. You will hear a prompt, but your hand has been raised. Your questions will be called in the order they are received. If you would like to decline from the calling process, please press star. Please ensure your lips be handset if you are using a speakerphone before pressing any keys. One moment, please, for your first question. Your first question comes from Robert Tattersall, private investor. Please go ahead.

Hi, good morning. Your RTD category enjoyed both in the most recent quarter, 22%, and the press release mentioned that this is a function of evolving consumer preferences and expanded distributions. Could you talk a little bit more about the evolving consumer preferences, not just for Corby's RTD, but just for the category as a whole? I have the impression that it is very much determined by marketing events and crazy names for the products, and maybe less so in terms of consumer brand loyalty and repeat purchases. So what are the big picture dynamics that drive the RTD decision for the customers?

Yeah, so thanks a lot for your question. So maybe I can start, and then, Rowan, you can comment. I think you're right. The RCD category is enjoying a very strong growth. So we observed that in Canada. I don't think Canada is the only country in North America, starting with that region where the growth is quite strong. I guess there are quite a few elements that is explaining why this is such an attractive category at the moment. I think starting with the convenience. This is very much something that we see across, I mean, consumer staples. The consumer more and more is attracted by the convenience, and RTD is exactly that, so it's a quality in the can. And I guess this is explaining part of the success of RTD. I guess the other one as well, in an environment where the consumer is, I mean, facing inflation and, I guess, stretch inflation, finances, most rich finances. I think this is an attractive proposition as well from that standpoint. And I guess it's coming as well with versatility. So we made that comment on the loyalty, but I guess what you see in RTD and it's alluding to your question is the diversity of the offerings and then the options and then the choices which are offered to the consumer. So it's exactly the question is perfectly right. So We are seeing an evolution in the way the consumer is purchasing. And I guess for RGB specifically, convenience, I guess the price points, and the versatility or the diversity of the offering is very much something which comes to mind first.

Okay. Thank you.

Thank you.

There are no further questions at this time. I will now transfer the conference over to Ms. Florence Tresor. Please go ahead.

There is a question in the Q&A box. Can you read? You cannot read? Okay, I can read.

There is a question in the Q&A box asking about the split of the domestic case goods revenue. that was up by 35% in 2003, and if we can break down how much of the revenue growth, it comes from ITD and from spirit, respectively. And if it's volume or pricing, and second, your outlook for before was quite larger than in this primarily because of other patterns or SEO. Okay. Okay. So I will answer first to the first question on the Q3. So the 35% that we have as revenue growth on domestic goods is mainly driven by RTD growing 56% in the quarter. But we also have a spirit with a very strong growth, the domestic spirit, growing 21%. and there are different drivers here. We are not only gaining market share, leveraging as well the absence of U.S. products on shelves, but there is an important phase in impact that contributes to these revenue growth in Q3 as well on the 21%. On a year-to-date basis, our growth, is basically 39%. It's still RTB growing 39%, but the domestic case goods excluding RTB grows 8%, which as well, very significant growth in a spirit market that is declining today. As Florence presented, the spirit market here today is declining minus 3%. We are growing 8% on a year-to-date basis thanks to market share gains. leveraging the absence of U.S. products on shelves, but also impacted by the phasing on LCBO orders. Going more specifically on this topic, because that led to the last question on the impact of Q4, so that created a favorable impact in Q3, because LCBO anticipated a lot of orders before the change of their ERP system, And then we are expecting a softer Q4 because of that, because orders were anticipated by in Q3. And then, hence, that is going to lead to a softer Q4. But is it still on a full year basis? As I mentioned in my final remarks, we are still considering to close the fiscal year with a high single-digit revenue growth. Today, we are growing on a year-to-date basis 16%, and we are estimating to close the year with a high single-digit growth.

So maybe, Juan, I can take the last question with the expectations from the FIFA World Cup. So, I mean, it is coming at the right season as well, which is the summer season, which is always quite a stressful season for us. But if we look back at the impact on the threats and the RCD business in the past, sporting events and then the FIFA World Cup in particular, it doesn't have a meaningful impact. So we're not expecting a meaningful impact of that event specifically. I mean, the precedence doesn't show that. So this is something that we're going to be ready for if the demand is increasing. But this is usually by standards and this is not our expectation that it's going to be representing something specifically meaningful for us this quarter.

Thank you for that. I don't know if there are any other questions.

I don't think there is any left on the chat. I don't know, Operator, if you have other questions on the line.

Right now, there are no further questions.

Okay. Do you see the opportunity to thank you all for listening to us today ahead of a long weekend? So we hope you're going to enjoy the long weekend and consume our products responsibly. Goodbye for now.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.