GURU Organic Energy Corp.

Welcome to the Guru Organic Energy Second Quarter 2026 Results Conference Call and Webcast being recorded today, June 11, 2026, at 11 a.m. Eastern Time. At this time, all participants are in listen-only mode. Following management's presentation, there will be an opportunity to ask questions with financial analysts. Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference, Please press star followed by zero for operator assistance at any time. Uber's press release and DNA financial statements are available in the investor section of its website and on Cedar Plus. During the call, the company may refer to certain non-GAAP measures. Reconciliations are available in its MDNA. Also note that all financial figures are expressed in Canadian dollars unless otherwise indicated. I would like to remind you that today's presentation may contain forward-looking statements about Guru's current and future plans, expectations, intentions, results, level of activity, performance, goals, achievements, or other future events or developments. Please take a moment to read the disclaimer or forward-looking statements on slide two of the presentation. I will now turn the call over to Carl Goyette Guru's chief financial officer.

Thank you, operator. Bonjour à tous. Good morning, everyone, and welcome to Guru's fiscal 2026 second quarter results conference call. Joining me this morning is our CFO, NG Tharaf. Let's turn to slide five. Since establishing our direct distribution model in Canada, we have invested in how we show up at shelf, how we price, and how we build the brand. That took time. Q2 is where that time is paid off. Net revenue grew 31.6%. Canada sales grew 46.8%. Gross margin expanded by nearly four percentage points. And on a trailing 12-month basis, we achieved approximately 30% revenue growth with positive adjusted EBITDA of $1.2 million. This is the second consecutive trailing 12-month period since CLU went public where we achieved positive adjusted EBITDA. This is what structural improvement looks like. What you are seeing is real and repeatable. Better pricing control, better trade investment, better retail execution, and a product lineup that consistently converts consumer demand for good energy into market share. Turning to slide six, Canada is the purest example of the benefit of controlling your own distribution in this business. Our revenue grew because we improved both our shelf presence and our margin at the same time. We did not have to trade one for the other. The home market is healthy, and the zero-sugar platform is the engine driving its growth. Subsequent to quarter-end, May Canadian retail shipments more than tripled year over year. The survey lineup specifically is outperforming our expectations across every channel. Guru Zero Dragon Fruit Cherry Survey, launched in January and activated in the market during Q2, is now a top five SKU on guruenergydrink.com. The strength of our digital execution also showed up on Amazon. During the Amazon Spring Sale, Guru is the number one bestseller in the energy drink category on Amazon Canada, and we continue to hold the number three energy drink brand in the category. In late May, we also activated a first-of-its-kind 18-pack sorbet variety format with a leading Canadian wholesale club partner. It's the first time that Guru has had this kind of large format, limited-time offer at a club retailer, and the early sales read is strong. Turning to slide seven, U.S. revenue was essentially flat in Q2 as distributor inventory levels continue to normalize. However, consumers are telling us a different story. Scan sales in the natural channel were up approximately 15% over the last 12 weeks, and we are growing roughly 1.7 times faster than the category. The brand is performing well at the consumer level. Subsequent to quarter end, May U.S. retail shipments were four times the level recorded in May of last year. Hulu set a new all-time revenue record on Amazon USA in May 2026, and June U.S. retail is already tracking two times higher than last year. In Q3, we are expanding U.S. distribution through a partnership with Sprouts Farmers Market. Sprouts operates more than 480 stores across 25 states. and Guru will be available nationwide beginning June 22nd. Sprout is exactly the retail partner that fits our strategy, a highly engaged, health-conscious shopper base that is already looking for what Guru offers. Once we earn our space there, we have a clear path to the premium conventional grocery channel in priority urban markets. Turning to slide eight, the Zero Sugar platform is the asset that keeps showing up in everything we report. Six cues in just over two years, all organic, zero sugar, no sucralose, no aspartame. There's nothing else in the category that combines these four attributes at scale. Guru Zero Orange Raspberry Survey launched in Q2 is performing ahead of internal expectations. In July, we will launch another Guru Zero Survey in Quebec and online across North America. Innovation will keep driving growth in Canada and building momentum in the U.S. I also want to address Quebec's proposed legislation to restrict energy drink sales to those 16 and older. We support it. That position isn't new. I testified publicly on this issue in 2019 and again in December 2025 and signed the coalition petition well before the current legislative momentum. Guru has never marketed to minors. Our brand, our formula, and our entire commercial strategy are built for adults. In fact, our entire zero sugar line already carries 18 plus adults only labeling on every can. This is who we sell to. Energy drinks should not be marketed to kids and should not be mixed with other powerful stimulants like ADHD drugs or alcohol. We do not expect this legislation to have meaningful impact on our business. And frankly, we're proud of our responsible marketing, our consistent public stance, and our mission to clean up the energy drink industry. I will now turn the call over to NG for a deeper look at our financial performance.

Thank you, Carl, and good morning, everyone. Let's turn to slide 10. I want to walk you through the four things that explain Q2. Not just what the numbers are, but also how they came together. First, the revenue story. Net revenue grew 31.6% to $8.5 million, our highest second quarter ever. Canada was the engine, up 46.8%. Growth was driven by continued momentum in the zero sugar innovation line, strength in retail execution under the direct distribution model, and seasonal demand acceleration entering spring. In the U.S., reported revenue was down 3% in Canadian dollars. But in U.S. dollar terms, we were essentially flat at plus 0.6%. The reported decline was entirely a function of the stronger Canadian dollar, not the underlying business performance. Second, the gross margin story. Margin expanded 390 basis points to 63.6%. This was achieved despite meaningful pressures, including tariffs and broader geopolitical factors. Despite these headwinds, we expanded our margin by nearly 400 basis points. That is a direct distribution model working. Better pricing control, more efficient trade investment, and improved promotional discipline. We believe that our gross margin is in a better place now that it is under the old distribution model, and we expect that to hold. Third, The SG&E story. Although SG&E grew 20.3% in absolute dollars, it improved as a percentage of revenue from 84.8% to 77.6%. In other words, revenue grew faster than the cost base needed to support it. This is what we mean by operating leverage. The absolute increase reflects three specific investment decisions taken during the quarter. five marketing behind the Guru Zero Orange Raspberry survey launch. Second, consumer research and strategic planning investments to support our US expansion priorities. And third, unusual professional fees related to the matters described under recent developments in our MD&E. We expect those fees to normalize once these matters are resolved. On the Pepsi matter, the litigation is progressing as expected. The details are fully disclosed in our MD&E and notes 15 and 16 of the financial statements. We do not view it as material to our long-term strategy, and we will not comment further on an active legal matter. Fourth, the trailing 12-month picture. This is the one I want you to focus on. The quarter itself showed an adjusted EBITDA loss of $0.8 million. The trailing 12-month picture tells the structural story. Over the last 12 months, we have achieved approximately 30% revenue growth and generated $1.2 million of positive adjusted EBITDA. This is now the second consecutive 12-month period since Guru Mind Public, where we have combined these two things. Quarterly results will continue to reflect seasonal patterns and the timing of marketing investment. What the trailing 12-month period shows is that the underlying engine is working. Turning to the balance sheet, We ended the quarter with $24.3 million in cash and short-term investments, no long-term debt, and a $10 million undrawn credit facility. Total available liquidity is $34.3 million. That gives us the flexibility to continue investing in growth. Back to you, Carl.

Thank you, Angie. Let's turn to slide 12. I would like to conclude with what we are focusing on for the remainder of fiscal 2026. We are entering the second half of the year in a strong position. Our gross margin has structurally improved. We have an operating model that has proven it can grow without cost growing at the same pace. We also have the most differentiated, clean label, zero sugar portfolio in the category, which is about to grow to seven products with a launch in July. On the US side, we just announced a meaningful distribution expansion. We will continue to invest selectively in brand and innovation, and we will continue to do this with the same financial discipline that has now produced two consecutive trading 12 months of positive adjusted EBITDA. Over the past year, we have asked investors to trust that the work that we were doing would show in the numbers. Today, it has. May and June shipments accelerated across both Canada and the U.S., with May U.S. retail shipments four times those of May 2025 and a new all-time revenue record on Amazon USA. We are entering the peak selling season in a strong position, and we intend to make the most out of it. Merci. Thank you. Operator will now open the call to questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

At this time, we'll pause momentarily to assemble our roster. The first question comes from Martin Landrieu of Stiefel. Please go ahead. I apologize. The first question comes from Sean McGowan with Roth Capital Partners.

Please go ahead.

Thank you. Yeah, a couple of questions. I want to start with questions about cost and implications for the margins. Pretty impressive improvement in gross margin. But what should we expect to see in terms of improvement given what we're hearing, aluminum costs, other input costs, What can you say about pricing action that can offset some of those costs?

Hi, Sean. So from a pricing action standpoint, we did not take any price increase in the last year in Canada. So that was a conscious decision that we made as we rebuilt the distribution model. And considering our gross margin at over 63%, we are in a solid position. We remain industry leading, and I believe that we're in a strong position. And it's all due not to pricing, but rather to trade investment efficiencies and, well, that's it, trade investment efficiencies. Of course, we are seeing, like you mentioned, like everyone, some cost headwinds. The way we will go about this, of course, is looking at the complete value chain and making sure that it works for everybody in the chain, not just us, but the retailer and the consumer as well. So we take this, we'll always focus on that and we take this to heart in our decisions.

Okay.

Does that answer your question?

Yes, yes. Well, I guess where I was going with it is should we expect to see further improvement or might some of these headwinds, you know, eat away at the improvement that you've made?

Well, I think we're going to continue to see a strong growth margin. that's something that we're really proud of and that we'll continue to work on. Of course, we're feeling these headwinds, so we're always making sure through our various suppliers, through our trade investment strategies, to kind of make sure it balances out. And we're kind of reconsidering that on a quarterly basis. We review that and make sure that it works. So I can't, of course, make any promises for the future, but our history and our discipline so far has really helped us, and it will continue to do so.

Okay, thanks. Carl, maybe for you, limited time offers are kind of a big part of what some other energy company is trying and other categories as well. Is this a big part of your strategy? How much does LTO kind of stuff contribute to your growth?

Yes, it's an interesting question considering how competitive this industry has become and how much innovations play a role I would say that our focus over the last few years, especially over the last two years, has really been on permanent innovations, and we've been very successful at this. So the first focus is really around completing our zero portfolio. So the zero sugar is driving the growth, and we still have some room for some permanent innovations that are driving permanent velocities day in, day out. So that's really the core of the focus. But LTOs, I really believe, can play a role. Not as good as a role as a permanent SKU, but I think they can play a role. And what we've seen, we started testing a little bit with LTOs in the multi-pack space, and I think this is where When you launch an LTO, if you're getting incremental space in a retailer, for example, if you end up in the perimeter instead of the energy drink section, if this creates an opportunity for incremental promotional activity, then I think it's really worth looking at. The Costco, I spoke about the Costco pack in my remarks as well. This is something that's driving a lot of growth for us. So we do have a limited edition pack for the summer in Costco right now in Quebec, and it's performing well. So that's exciting. But it's also in the multi-pack, right? So four packs, multi-packs is something that we are really interested in because it drives incremental sales. We want to solidify our permanent zero portfolio first, and then obviously we'll look at bringing some LTOs, but that's more to create excitement from a consumer point of view, and it gives you a great top value from a marketing perspective.

Okay, great. And my last question for now is about Sprouts. So, I mean, it's obviously a perfect fit for the brand, First question, how are you going to be merchandising in the store? Is it cold or warm or both? Second, can you kind of put Sprout in context of what portion of the energy drink market might they account for and who else is there already? Are you displacing somebody or are you sitting next to another brand? Tell a little bit about that if you can.

We're obviously very excited about this news. This is a really important retailer and they obviously saw our performance and our velocities increasing in the natural channel and this was a big gap in our natural channel strategy. So it is significant from the natural point of view. It's going to increase our distribution when we look at our total weighted distribution, our HCV in the natural channel. It's going to give us a significant bump, like something around 10% bump in the distribution gains in the distribution. So it is significant in terms of gain with 480 stores. It will become fairly rapidly one of our top retailers in the U.S. So from a From an importance point of view, it is significant and we're very excited about it. We have built a very aggressive launch plan to make sure we support and we win with them. Obviously, I can't disclose all the specifics because usually your competitors are listening on this call, but I can tell you that it's activating multiple touch points, inter-activation, digital support. So we intend to make this an outstanding success for us, but also For sprouts, by growing their category, bringing new consumers into their store, you are looking for a natural offer, but that has a conventional taste. So that's kind of the long answer on the context. We will have multiple, to your question, we'll have multiple placements in the stores, right? Cold and warm. So that's also really exciting. We will be aggressive on promotions and demos at the beginning. And I think there was another question.

Was there another question? Are they expanding their presence in energy or are they swapping someone else out? Are you replacing somebody? Who else is...

I don't know the specifics of that. I haven't seen the final planogram because this is being implemented now. My understanding is that they're not increasing the energy drink category but replacing some other lower-performing brands. That's my understanding, but I could be wrong on that. Thank you very much. Thank you.

The next question comes from Martin Landry with Stiefel. Please go ahead.

Hi, good morning, Carl and Angie.

Great performance in Canada. Your sales were up 47% year over year. I was wondering what proportion of that was sell-in versus sell-through. So can you give us your estimate of scan data at retail in both track and untracked channel during the quarter?

Yes, it's 15%. Coincidence, but the growth in scan in Canada and the U.S. has been at the same level in the U.S. and in Canada. So it's 15% in Canada. That's obviously considering tracked and untracked. And untracked is driving most of that growth. It's really coming in these channels, exactly like the same last quarter.

Okay, so is it fair to say that there's a little bit of channel fill that happened during the quarter?

Well, there's a distribution model change, if you remember, right? There was also weaker months last week, so we're comparing to lower comps. And there is spring season is the season where we are the most active with our retailers building summer displays. So I wouldn't call it summer channel fill, but I would call it heavy promotional activity in order to get ready for the summer.

Okay. Okay. And then your comments on subsequent quarter, you're saying that in May, your Canadian shipments more than tripled on a year-over-year basis. I just want to understand that clearly. Triple is a big number. Like, are we comping very weak May last year? Can you just give a little bit more code around that? Because... Yeah, just trying to understand what that means exactly.

Yes, we're comping. It's on a lower comp, but it's still a strong month, right? We were on the tail end of our previous distribution partnership. We were just starting our new distribution model last year in May. So, yes, you're comping on the lower May, but May was also a very strong month.

Okay. So, I mean, we should expect June and July shipments to revert back to normal levels, right?

We should expect to continue to see growth, but not necessarily in the same four times as you saw or two times, three times the numbers that you saw that we quoted in our remarks. Yes, we should normalize growth.

Yes. And just on your, you said your scan retail sales were up 15% year over year during the quarter. How does that compare to the industry?

It's a little bit faster than the industry. I'd say twice as fast. The industry is growing in the 7-8% in the last time I checked.

Okay. I wanted to touch a little bit on Sprout, your new listing there. You've obviously been looking at Sprout and have that retailer on your radar for several years. Can you give us a little bit of color as what triggered the listing to happen now?

Yes. Well, there's a great job from our sales team, so I want to congratulate them. The sales team did a great job in building relationships with them and making Sprouts realize that there was a gap in their portfolio, but there was also, honestly, even the greatest sales team, if you don't have the the supporting numbers to support why a retailer should carry your brand, then it's not going to work. They're seeing the same numbers that we're disclosing. They're seeing increased velocities in all of the natural retailers we are partnering with. They are seeing a brand that's actually growing their category, where they're seeing a brand that can perform not only with the natural consumer, but that offers natural ingredients with a mainstream taste. So for them, it's really an opportunity to grow their energy drink category. It's also an opportunity for them to bring new consumers in, which is critical. All natural retailers want to bring more of the conventional energy drink consumers in. because it's such a big category outside of the natural stores that the guru offers them a tool to bring artificial energy drink consumers into natural stores and sell them a better product.

Okay. And you mentioned that you're going to have a pretty active promotional campaign around the launch. Do you expect this to be margin dilutive in the near term?

Angie, what's the business case? And maybe, Angie, you want to speak about that?

Yeah. Well, of course, for the initial launch, there's a lot of investments, like you pointed out. So beyond that, however, it will be margin dilutive. We expect it to be profitable. And we do do business cases for all of them. So there's always an initial period, which we're all conscious of, and it's to make sure the brand is known. And then after that, it must be positive for us to continue, and it is.

Okay, so just to be clear, how long is the initial investment? Are we talking about Q3, or could it spill into Q4?

Yes, it could spill into Q4. Okay. Okay, Q3 and Q4. Okay, that's it for me. Best of luck.

Merci, Mathieu. Thank you. Here's a follow-up question from Sean McGowan with Ross Capital Partners.

Please go ahead.

Yeah, thank you. Appreciate it. Just wanted to kind of clarify something that Maltell is just referring to. Are you seeing anything in the May numbers that might be triggered by Prime Day being a little earlier, or is that still too far out to matter for May? Are your shipments in May affected by Prime Day being moved up two and a half weeks or something this year?

Angie, you want to take that?

Sorry, I didn't understand the question.

The question was if sales in May were impacted by Prime Day being a little bit earlier this year.

Oh, not yet. That's going to be in June. Prime Day is going to be in June, right? Yeah, there's no impact.

There's no impact, Sean.

No, no, there's no impact. No, no, it will be in June.

We hope it's going to have a big impact on June, though, but not in May. Yeah, exactly.

Not in May, no.

Okay. All right, thank you. Thank you.

This concludes our question and answer session. I would like to turn the conference back over to Carl Goyette for any closing remarks.

Well, thank you, operator, and thanks, everyone, for joining and choosing good energy.

Have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.