Good morning. Welcome to Corby Spirit and Wine's FY25 Second Financial Results Conference Call for the period ended December 31, 2024. Joining me on call this morning are Nicolas Krantz, 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 risk and uncertainties that could cause actual results to differ materially from those anticipated. Risk and uncertainties about the company's business are more fully discussed in Corby's materials, including annual interim MD&A filed with the securities regulatory authorities in Canada as required. At this time, all participants are in a listen-only mode. Following management's commentary, we will conduct a question-and-answer session.
Instruction will be provided at that time for you to queue up for questions. If you have any difficulties hearing the conference, please press * on your phone for operator assistance or click the Help button on your screen. Now, I would like to turn the call over to Mr. Krantz.
Thank you very much, and good morning, everyone. I am Nicolas Krantz. It's a pleasure to connect with you today, and I'm joined by Juan Alonso, our CFO, to share the result of our second quarter of this fiscal year. With that, of course, this is our first half result for this period. We are pleased to share that Q2 has continued the good momentum and built on our solid Q1 result, delivering strong H1 result for Corby. As I often say, we are guided by our vision to be the most innovative and consumer-centric company in the industry, and we have made a substantial stride in reshaping our company's profile, and these efforts have driven Corby to outperform the market for over two years in a row now, and I will come back to that.
Juan will, of course, delve into our results in more detail, but I can start by highlighting some key areas that have led to a solid H1 performance with a double-digit reported revenue growth and a +4% organic growth. Of course, the recent acquisition of ABG and Nude have been pivotal in achieving our ambition to be a key player in the fast-growing ready-to-drink category in this market. This growth is further supported by the route-to-market modernization in Ontario. We have seen an inventory pipeline fill effect in H1, with ready-to-drink and wine now being sold in grocery and convenience stores. It means almost 6,000 points of distribution additional, which is fantastic, and we successfully managed to capitalize on these opportunities to drive further revenue.
I have to mention, of course, that all this happened against the backdrop of the LCBO strike level during July that has severely impacted the entire beverage alcohol industry and also some supply chain disruption with the post-strike, both in the West and the East of Canada, but our roadmap continued to bear fruit, and by leveraging our portfolio effectively, we have consistently outpaced the overall spirit market, as I said, for two years. Our portfolio prioritization strategy is clearly demonstrating its effectiveness, supporting our best-in-class sales execution and amplifying growth across diverse categories and many price points, and finally, for this overview, and something Juan will, of course, expand on, we've generated strong cash flow, ensuring Corby maintained a solid balance sheet with a Net Debt to Adjusted EBITDA ratio of 1.3, which is, of course, very healthy.
In line with this performance and our confidence in the outlook, the Board decided to increase the quarterly dividend to CAD 0.23 per share. And again, Juan will come back to it, but that's an increase of nearly 5% on the back of the recent increase we had done last summer as well. Now, before we dip into the financials, let me just take a few minutes to provide a little bit of context for the market context and move to the next slide. So, as many of you will be aware, the market in general has been faced by, of course, some challenges. The spirits category has experienced a moderate decline over the last 12 months, with only the ready-to-drink category growing, in which we have established, of course, ourselves as a major player.
As I said, I'm proud that Corby's strong commercial performance over the last 12 months outperformed the total Canada market in all categories since 2023. This has, in fact, continued to show our value strategy and our focus. We can see that in H1, we're also quite dynamic in our innovation pipeline. As I mentioned, it's an important part of our story. This included the launch of the The Glenlivet Twist & Mix, for example, Old Fashioned, which was quite a fun and innovative new product, a first technology in this market. We also launched successfully the Polar Ice Cinnamon Sugar, which was an iconic partnership with BeaverTails. And we were also delighted to announce the J.P. Wiser's as the official whisky of the NHL. It was really something that we think is a game-changer, bringing together Canada's biggest sports, of course, with the second biggest whisky in the market.
Very proud of this partnership, and we start to see some very good positive impact of the partnership. RTD continued to be, of course, a bright spot in this market, both in the short and mid-term, and clearly benefiting from the Ontario route-to-market expansion with the full impact still to be realized, and our recent acquisition, as you will imagine, is delivering strong results because overall, we are posting a +12% in the RTD in the category that is growing by 6.8%. Overall, very good performance across all categories, enabling us to take share. Quickly as well, just to give you a quick flavor by categories in the next slide, and that's also a feature of what we're trying to do. We're trying to play in every category successfully. Our strategy has enabled us in this first semester to almost outpace in all categories. It's quite remarkable.
Overall, our spirits portfolio was slightly declining, almost flat at -0.3% in the spirit market, which is declining by 2%. You can see a significant positive variance versus the market. This is very much a key feature that we want to protect, maintain, and amplify. Now, looking ahead to the future, of course, our goal is to focus on sustainable growth, innovation, and efficiency. That's really where we are putting our effort. There is, of course, all that works together. How we grow innovation and efficiency is part of the game. For us, first and foremost, really, it's about trying to work on this long-term sustainable growth in value. We do that really through our best-in-class brand activation and commercial execution. For us, it's really the heart of what we do every day with the team. I've mentioned innovation.
Our target for innovation is to contribute roughly to one-third of the annual revenue growth. It's a very important feature. I often say that, yes, Canada is a mature market, that there is a pocket of growth. It's a market where you can innovate fast and with impact, and this is really for us to be well-positioned and working with our trade partners to deliver that as well, and by improving the efficiency and the effectiveness of every dollar we invest, I want to make sure we maximize our return, and that's something that's the art and the science of marketing that we're trying to, of course, to sharpen all the time. We're also committed to accelerating growth and penetration in high-growth categories, of course, at the RTD, but it's also the tequila, for example.
So, really trying to position the portfolio the right way to make sure we are getting the growth and our fair share of growth in those exciting categories. Export, while still a small part of our business, is also another focus. We mentioned that regularly. We will adopt a targeted approach with a regional activation to embed J.P. Wiser's in our local culture and leverage the depth of the portfolio to meet consumer needs. That's for the U.S. market. That being said, we are, of course, closely monitoring the ongoing situation around U.S. tariff threats and potential regulatory changes, and we will continue to be agile and respond with speed as new developments occur. But again, as I said, it's a very small part of our business for now. Growing value ahead of volume remains a key goal for Corby.
Therefore, we will implement a targeted price increase approach to protect our margin while fully leveraging our promotional capacities supported by the new AI tools we put in place. That's what we call revenue growth management. It's a very important part of what we're doing as well with the commercial team. And of course, last, the dynamic portfolio management means for us that we are constantly looking for opportunities to sharpen our portfolio. Now, finally, before I pass on to Juan, I just want to give a bit of an update on our RTD, of course, portfolio, which is a big part of our effort, focus, and story. You have heard referencing a lot to this. Listen, we know that this is really an acquisition, in fact, two acquisitions, I would say, we've been doubling down first with the acquisition of Ace, a bit more than a year ago.
Fantastic portfolio. We are effectively acquiring not just the portfolio brand, but fundamentally the capability to innovate and to execute at point of sales with excellence. This, for us, was a key point, and therefore, the double down by acquiring Nude in the West was a very obvious choice to simply plug in the organization that we have already with Ace, this portfolio, so today, what do we have? We have a very specialized and efficient route-to-market with a strategic penetration, both in Ontario with ABG, but also in the West with Nude, and all that working very much in synergy. We've been able to realize some very good and strong, I would say, operational synergy for the portfolio, and the name of the game now is going to be innovation.
We are coming in terms of pipeline fill in Q4 with a lot of great innovation across Canada, across the overall portfolio, and also on the ready-to-drink brands that we represent with Pernod Ricard, Jameson, Malibu, and Absolut. We've been accelerating a lot of performance in that space. So, so far, integration extremely successful at all levels. When I mean all levels, I mean commercially, marketing, and operationally. This is an acquisition that is really changing the game for us, and we are very pleased, specifically in the landscape where this is the only fast-growing category of the market right now. That's it for this introduction. I propose to effectively pass on to Juan, who's going to share with you the Q2 and H1 results. Again, very good set of results. Juan, over to you.
Thank you, Nicolas. Good morning, everyone.
I'm Juan Alonso, Corby CFO, and I'm very pleased to present to you today Corby's financial results. So let's start with Q2 results. Very quickly, before we talk about our financial performance, you're 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 detailed explanations for each of those elements in our Q2 FY25 MD&A, and I invite you to refer to this document for any questions related to it. Now, stepping back to the quarter results, revenue for the second quarter was CAD 61.7 million, reflecting a double-digit reported growth of +10%, benefiting from the inclusion of Nude sales of over CAD 3 million for the second quarter. Our organic revenue, which excludes the contribution from Nude, saw a robust increase of +5%.
Thanks to our strong revenue growth and a more modest growth in expense, Corby delivered strong growth in earnings and profitability in the second quarter of fiscal 2025, with adjusted EBITDA of CAD 17.2 million, a 10% increase versus last year. Despite increased interest charges related to the loan contracted to acquire ABG, Corby delivered Adjusted Net Earnings per share of CAD 0.30 and reported earnings per share of CAD 0.28, both increasing by 8% year over year. Furthermore, Corby delivered cash from operating activities at CAD 31.9 million, a remarkable +5.9 million improvement of prior years, driven by higher earnings and favorable working capital changes. Lastly, the Board of Directors declared yesterday a dividend at CAD 0.23 per share for the second quarter of FY25, an increase of CAD 0.01 or +5% versus the previous quarter.
This is the second dividend increase we have announced in the last six months after the last one in August 2024, and this reflects the recent increase in earnings from operations and cash flow generation, and also the level of debt in line with our expectation. Now, let's dive into our revenue performance. As mentioned earlier, our Q2 revenue grew +10% year over year, boosted by the inclusion of Nude, while our organic recorded a solid +5% growth, broken down into the following main components. First, our organic domestic case goods remained particularly resilient, with 3% growth in a declining spirit market context, as Nicolas mentioned before. This is mostly led by our RTD portfolio, particularly Cottage Springs sales, enhanced by the route-to-market modernization in Ontario.
Total commissions grew by 15% in Q2, sustained by the sales of represented Pernod Ricard products, in particular our Pernod Ricard wines, Stoneleigh and Jacob's Creek, and also our Pernod Ricard ready-to-drink brands like Absolut, Jameson, and Malibu, benefiting from the new channel expansion in Ontario. Lastly, our international case goods revenue was down 2%, lapping the pipeline fill to new markets last year, partially offset by the recovery of shipments of J.P. Wiser's in the U.S. So, to summarize our P&L results for the second quarter, we enjoyed significant revenue growth of 10%, total operating expenses increased by 9%, reflecting the inclusion of Nude's operations, strategic investments behind key brands, and also diligent cost management, and also our investments in our people to sustain our continued ready-to-drink business expansion. As a result, our Adjusted EBITDA recorded a remarkable double-digit growth of +10% in the second quarter.
Finally, our Adjusted and reported net earnings per share were CAD 0.30 and CAD 0.20, respectively, both reflecting compelling growth of 8% in Q2 FY25 versus last year, despite higher interest charges related to the loan. That was our performance in Q2. Now, let's shift our attention to the first half of FY25. Overall, Corby recorded a strong H1 FY25 revenue and earnings growth, with continued share gains against a dynamic market backdrop. Starting at the top line, revenue for the first half was CAD 126.8 million, reflecting a strong double-digit reported growth of 11%, benefiting from the inclusion of Nude sales of CAD 8 million in the semester, and our organic revenue saw a solid increase of +4%. Also, reflecting disciplined management of its costs, Corby delivered an Adjusted EBITDA of CAD 36.7 million, a remarkable increase of 9% in the first half of FY25 versus last year.
Despite increased interest charges related to the loan contracted to acquire ABG, Corby generated a reported net earnings per share of CAD 0.60 and Adjusted Net Earnings per share of CAD 0.66, increasing by 16% and 8% year over year, respectively. Furthermore, Corby delivered healthy cash from operating activities at CAD 35.6 million, a remarkable CAD 14.4 million improvement versus H1 cash flow from operating activities. With the Board of Directors declaring a cash dividend of CAD 0.23 per share in Q2, a second dividend increase over the past six months, this brings our total dividend declared to CAD 0.45 per share in the semester. Lastly, as Nicolas said before, our Net Debt to Adjusted EBITDA ratio reduced to 1.3 times, reflecting Corby's solid balance sheet. Now, I would like to dive into our top line drivers for the semester.
Our H1 revenue, as I said before, grew 11% year over year, boosted by the inclusion of Nude, and the organic revenue growth of 4% is broken down into the following components. Our organic domestic case goods remained resilient in the semester and saw 3% growth against a dynamic market backdrop. This is mostly led by our RTD portfolio, particularly Cottage Springs sales, that capitalized on the route-to-market modernization in Ontario. Our total commission grew +16% in H1, with sales of represented Pernod Ricard products lapping the stocking patterns at liquor boards in the previous years. Pernod Ricard wine and RTD brands fully tapped into the new channel expansion opportunity in Ontario to spark a strong momentum. Lastly, our international case goods revenue was down -9%, lapping the pipeline fill to new markets last year.
However, we are seeing some improvements with the recovery of shipments of J.P. Wiser's in the U.S., combined with a good performance of Lamb's Rum in the U.K. So, to summarize our P&L results for the first half, Corby had significant revenue growth of 11%, supported by portfolio strength, channel expansion in Ontario, and the Nude acquisition. Our operating expenses increased by 7% at a lower pace than revenue, with strategic investments behind key strategic brands and disciplined spend management. As a result, Corby delivered a remarkable growth of 9% in Adjusted EBITDA. On the per share basis, our Adjusted Net Earnings was CAD 0.66, and reported net earnings was CAD 0.60, reflecting compelling growth of 8% and 16%, respectively, in H1 FY25 versus last year. Now, moving to our cash flow.
In H1, Corby generated CAD 35.6 million of cash, supported by higher net earnings, underpinned by Nude acquisition and lapping the ABG acquisition-related costs incurred last year, as well as favorable working capital changes. These favorable working capital changes were driven primarily by the timing of spend. Our free cash flow greatly improved versus previous years, lapping the payment of CAD 136 million for the acquisition of ABG in last year's cash flow. Our resulting net debt position was CAD 84.8 million at the end of December, and our Net Debt to Adjusted EBITDA ratio reduced to 1.3 times. That demonstrates a healthy solvency position. Lastly, Corby has an attractive dividend payout ratio at 53% on a rolling 12-month basis, highlighting the sustainability of the company's quarterly dividend. Indeed, quarterly dividend increased by 5% in Q4 FY24 and by an additional 5% in Q2 FY25 to CAD 0.23 per share, as mentioned before.
Those actions drove high dividend yield over recent years at 6.9% at the end of December, a steady improvement over FY23 and FY24. We are very pleased with our results so far in the fiscal year and remain committed to deliver on our value propositions for our stakeholders and shareholders. Before I hand over back to Nicolas, I want to finish with a final look at what's ahead for Corby. We know that there are a few challenges in the market context, but we believe our clear strategy and the foundations that we have discussed today leave us well-positioned for the back half of the fiscal year. The spirit market is forecasted to continue to decline in H2, but we continue to target market share gains thanks to the strength of our portfolio.
We are closely monitoring the regulatory and trade changes, including the recent announcements regarding tariffs between the U.S. and Canada. We believe Corby is well-positioned to navigate the challenges ahead with our diversified portfolio, a strong local foothold, and execution strategy. We are going to continue to unlock the full potential of our RTD portfolio, including the realization of ABG and Nude sales with operational synergies throughout a successful integration. And also, we will cater to consumer needs and keep agility in our dynamic approach to successfully capitalize on new opportunities presented like the route-to-market modernization in Ontario. And finally, as we have mentioned, revenue growth management and disciplined investment will remain a very important feature to protect our margins. Now, handing back to Nicolas to his final words.
Thank you very much, Juan. Very clear and effectively a solid H1.
As you said, some challenges ahead, but we feel well-equipped to ride what's coming and to continue to deliver value to our shareholders. So maybe just to effectively finish before we head into the Q&A, if any, I would like to leave you with, as usual, the key reason to invest in Corby. We'd like to really summarize that with five key points. First, of course, Corby is, at the end of the day today, the largest public-listed multi-beverage alcohol company in Canada, and we are very proud and confident with our portfolio that is the most comprehensive portfolio in the market. And that is why we are able to deliver value playing on every category and every price point. Now, coupled with our strong position here, we can leverage as well a close partnership with the group Pernod Ricard, who is a global industry leader.
That gives us a lot of competitive advantage and muscles in many respects that, of course, we are throughout the year leveraging. We have operational excellence in execution. We are well-known in this market in terms of sales and marketing execution, and also, and that's important for me, help us to attract the best talent. At the end of the day, we're winning through the talent of our team, and this is something that, as a management team, we also invest a lot of time. Finally, of course, the company is delivering what I would call financial consistency. We are resilient by nature, I would almost say, in revenue and in cash. We are delivering a strong cash flow, and we will continue to adapt our financial policy to maintain this. We know the dividend is an important feature for our shareholders.
So, of course, we will aim to continue to grow the dividend over time with our earnings. That's it for me for today. I want to thank you again very much for joining us and to listen about the update of our performance in the financial year. Look forward, of course, to speaking to you in the future. And as we mentioned, we can always organize a one-on-one call with Juan to make sure we can deep dive in some themes. But now it's probably time to hand over and see if there's any opportunity for questions, and Juan and myself would be happy to answer. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question via phone, please press star one on your telephone keypad.
If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If there are no questions via the phone line, please continue. Okay. Maybe if there is no further question, we can close the call. Thank you very much. We'll be posting anyway the presentation and script in our website, and looking forward to connecting again with you all. Thank you, everyone. This concludes today's conference. Thank you for participating, and you may now disconnect.