Corby Spirit and Wine (TSX:CSW) released third-quarter financial results and hosted an earnings call on Friday. Read the complete transcript below.

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Summary

CSW.A reported a strong fiscal year-to-date performance with a record high revenue growth of 15%, driven by RTD (Ready-to-Drink) segment growth and market share gains in spirits.

The company achieved 21% growth in reported net sales for Q3, with a 22% organic growth, supported by favorable order phasing and strategic investments in key brands.

Net debt to adjusted EBITDA stood at 1.4 times, and a quarterly dividend of $0.24 per share was declared, reflecting confidence in the company's outlook despite a challenging market environment.

CSW.A's RTD segment now represents 38% of revenue, with significant expansion across Canada, particularly in Ontario and Western Canada.

Despite the Canadian spirits market decline, the company outperformed by capturing market share, with a notable 22.4% growth in RTD compared to the market's 10% growth.

Future outlook anticipates high single-digit revenue growth for FY26, though Q4 is expected to be softer due to normalized ordering patterns and persistent market decline.

Management highlighted disciplined cost management, strategic brand investments, and a robust financial position as key strengths supporting long-term value creation.

Full Transcript

OPERATOR

Good Morning. Welcome to Corby Spirit and Wine's fiscal year 2026 third quarter financial results conference call for the period ended March 31, 2026. Joining me on the call this morning are Florence Tresarrieux, 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 Corby's materials including annual and interim MD and 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 answer 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 press the button on your screen. Now I would like to turn the call over to Ms. Florence Tresarrieux. Please go ahead. Thank you so much and good morning everyone. Thank you for joining us to review Corby spirits 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 Florence Tresarrieux 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 strength 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, message is simple. Colby 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 reported growth of 15% and organic growth of 16%. This performance was driven by sustained momentum in our RTD business, continued shockings in spirits and was also amplified by favorable LCD order phasing in Q3. These results reflect the continued excellence of our Excel's execution with strong share gains across our total portfolio. Define also benefited from the ongoing impact of US 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 earning growth at the retail. We outpaced the spirit market in value for the 14th consecutive quarter, not through resilience of any single brand or channel, but definitely through the portfolio wide execution. A notable feature this quarter is the quality of earnings delivery, earnings growth outpace revenue growth reflecting purposeful investments behind proz brands and tight cost management. This was achieved despite a more RTD skewed mix, less favorable sterile internal dynamics and declining commission income. This very much illustrates the underlying resonance of our business model. RTD now represents approximately 38% of Corby revenue, firmly establishing us as a leading Canada wide player in the south calling category. Our focus remains very much on profitable expansion, leveraging to market modernization in Ontario while continuing to build scale 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 share, strengthen earnings quality, positioning the business to perform across cycle and to adapt to market context. So let me take you through that market context. Just now Corby continued to capture incremental market share. In Q3 our team again translated opportunity into performance, notably benefiting from the removal of US origin products from shelf. The rolling three month trend ending 31 March highlights the continued strength of Corby's performance related to the broader market.

OPERATOR

While the Canadian spirits market declined 4.2%, Corby delivered flat value performance representing a 4.2 point out performance. In RTD where the category grew almost 10%, Corby significantly outpaced the markets 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 of performance. RTV is indeed a key contributor. Nonetheless, it's the breadth of our portfolio and the consistency of our delivery that continue to define Corby's performance this quarter. Looking now at the rolling 12 month performance, Corby has now outperformed the Canadian market in value for what I said already 14 consecutive quarters, which is demonstrating the quality of our execution in a softer spirit and wine environment. In spirits, while the market declined 3.6%, Corgi delivers 3.1% growth, a 6.7 point out performance. RTD continued to lead with Corby growing 13.6% versus 12 persons for the category representing a CRCA 20 points outperformance Our wine portfolio also delivers strong results growing 16.2% against a market decline of 0.6% or a 16.8 points outperformance.

OPERATOR

Looking now more closely at spirits by category, Corby continues to outpace the market across most segments on a rolling 12 month basis. We are delivering growth in several categories which are declining and this includes vodka and rum benefiting from strong shelf presence following the removal of U.S. origin products. We also continue to lead the Irish whiskey category while tequila remains a key growth engine delivering double digit growth as we expand our footprint in this fast growing segment.

OPERATOR

Let me know Pivot 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 with sustained share gains supported by focused innovation and market expansion. Our dedicated RTD route to Market strategy continue to drive penetration and share gains across Ontario and Western Canada supported by RTD focused execution.

OPERATOR

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 a 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 strong innovation pipeline and exceptional new 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 growth. We increased our ownership of ABG to 95% and exited non core RTD and BA brands, further streamlining the business and sharpening ABG's growth profile. I'm not going to walk through this page in details, but because our strategic priorities remain very much unchanged.

OPERATOR

We remain very focused on gaining share in 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's clear this quarter is the breadth of the opportunity across RTD spirits 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 Corobi's ability to deliver sustainable long term value creation. So with that I will let Juan take us over the financial results.

Florence Tresarrieux

Thank you Florence and good morning everyone. I'm Juan Alonso Corby, 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 MDNA and I invite you to refer to this document 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 impact 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 RTD 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 up 52% versus last year, while our reported earnings from operation GRE this outpaced revenue growth reflecting our disciplined 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 growth. So just to reinforce, Corby delivered a strong quarterly revenue of $58.3 million in Q3 that represents 21% increase over Q3 of FY25 and this growth can be attributed to firstly domestic case goods which accounted for 83% of Corby's Q3 net sales performance reached $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 in Q3 and improved shelf prominence of Corby Spirits given the removal of US 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 wines portfolio lapped 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 with 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, strong cost discipline helped offset those impacts. As a result, Corby delivered record year to date adjusted earnings from operations 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 adjusted ebitda ratio to 1.4 times, down from 1.6 at the end of Q3FY25. This reflects our strong solvency and financial discipline. Total dividends declared for the first 3/4 of FY26 were $0.71 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 last year. Firstly, domestic case goods which accounted for 81% of Corby's net sales performance reached $163 million reflecting 18% reported growth and 20% organic growth. This is driven by ongoing RTD business acceleration, by improved shelf prominence of Corby Spirits capitalizing on the removal of US 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 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 strong value conversion of lands in the UK through the Value Engineering project. To summarize our P and 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 RTD portfolio capturing the new channel expansion in Ontario and Western Canada and Spirit's 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 RTD business in addition to strategic investments behind key strategic Spirit brands such as the Weisers NHL Partnership and the Weisers Canada Drive Partnership through disciplined cost management. Despite being impacted by the RTD skewed portfolio, Corby delivered a strong year to date adjusted earnings from operation growth of 16% versus last year while reported earnings from operation grew 20% on a per share basis, our adjusted net earnings was and reported net earnings was 95 cents reflecting growth of 20% and 27% respectively versus last year. In the first nine months of FY26, Corbett 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 months. 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 dividend 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 Q3FY25 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 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 RTD 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 shelf in Ontario, we will continue to capitalize on routes to market modernization, 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 Spirit's market decline persists. 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 RTD business and the strength in our Canadian portfolio amid ongoing provincial trade measures. Now back to Florence for some closing remarks.

Juan Alonso (Vice President and Chief Financial Officer)

Thank you once again for joining us today. We are now ready, Juan and I to take your questions if you have any.

Robert Tatterzall (Private Investor)

Good morning. Your RTD category enjoyed both in the most recent quarter 22% and the press release mentions that this is a function of evolving consumer preferences and expanded distribution. 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 customer?

Florence Tresarrieux

Yeah, thanks a lot for your question. So maybe I can start and then Rohan, you can complement. I think you're right. The RTD category is enjoying a very strong growth. So we observed that in Canada. I don't think Canada is the any 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 not such an attractive category at the moment. I think starting with the convenience, this is very much something that we see across consumer staples. The consumer more and more is attracted by the convenience. And RTD is exactly that. So it's a quality cocktail in a 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 facing inflation and I guess stretch finances more Stretch 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 may not comment on the loyalty, but I guess what you see in RTD and is alluding to your question is the, the diversity of the offerings and then the options and then the choices which are offered to the consumer. So exactly your question is perfectly right. So we are seeing an evolution in the way the consumer is purchasing. And I guess for RTD, 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.

OPERATOR

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

Florence Tresarrieux

There is a question in the Q and A box asking about the split of the domestic case goods revenue that was up by 35% in Q3 and if we can break down how much of the revenue growth it comes from RTD and from spirits respectively, and if it's volume or pricing. And second, your outlook for Q4 was quite guarded primarily because of other patterns. 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 spirits with very strong growth. The domestic spirits growing 21%. There are different drivers here. We are not only gaining market share leveraging the absence of US products on shelves, but there is an important phasing impact that contributes to this revenue growth in Q3 as well. On the 21% on a year to date basis, our growth is basically 39% is still RTD growing 39% but the domestic case goods excluding RTD grows 8%, which is also very significant growth in a spirits market that is declining today. As Florence presented, the spirits market year to date is declining minus 2%. We are growing 8% on a year to date basis thanks to market share gains leveraging the absence of US 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 it is 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.

Juan Alonso (Vice President and Chief Financial Officer)

So maybe Juan, I can take the last questions. We see 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 strong season for us. But if we look back on the impact of the threats and then the RTD business from past 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 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. 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. Gives me the opportunity to thank you all for listening to us today ahead of a long weekend. So we hope you can enjoy the long weekend and then consume our products responsibly. Goodbye for now, ladies and gentlemen. This concludes today's conference.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.