Morning. Welcome to Corby Spirit and Wine's FY25 Q3 Financial Results Conference call for the period ended March 31, 2025. Joining me on the 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 today. Before we begin, I would like to inform listeners that information provided on today's call may contain forward-looking statements, which can be subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Risks and uncertainties about the company's business are more fully discussed in Corby's materials, including annual and interim MD&A filed with the securities regulatory authorities in Canada as required. At this time, all participants are in a listen-only mode. Following management's commentary, we will conduct a Q&A session.
Instructions will be provided at that 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 Help button on your screen. Now, I would like to turn the call over to Mr. Krantz. Please go ahead, sir.
Thank you very much, and good morning, everyone. I am Nicolas Krantz, and it's a pleasure to connect with you today. As usual, I'm joined by Juan Alonso, our CFO, to share the results for the nine-month period ended March 31st. By the way, I will leave it to Juan to detail our financial results very shortly, but I would like to start by highlighting some key areas that have led to our continued performance in this period. Our resilience performance against a volatile environment, we know the environment, and we'll come back to it, despite that, has delivered a robust plus 7% reported revenue growth in the full year year-to-date March, boosted by, of course, our RTD business and, of course, the representation portfolio.
Guided by our vision to be the most innovative and consumer-centric company in the industry, clearly, this has given us some strength in diversification of portfolio, and we have made some substantial reshaping of our company profile. This effort today has meant that we have consistently outperformed the market now for the last two years in a row, showing basically the sustainable effort that we've put in. Of course, this is what we have highlighted over the previous quarters, and this is even more true. Our accuracy of acquisition of ABG has been pivotal in achieving our ambition to be a key player in Canada in this fast-growing ready-to-drink category. You will see in a minute that this is a category that is growth compared to the rest. These acquisitions have directly contributed to growth, so I'm very glad to report that.
For this year, this growth is also further amplified by what we have called the road-to-market modernization in Ontario, which has been, of course, driving some what we call stock pipeline fill for business, benefiting our ready-to-drink and our wine portfolio. For those who are a bit less familiar, since last summer, grocery channels and convenience channels in Ontario are open for the sale of ready-to-drink beer and wine, and we have taken full advantage of that for wine and RTD portfolio. Of course, this has translated as well to a degree in some reduction of some purchasing patterns at the least over the last few months, so that is a challenge. One note maybe on the Q3, I would say the discreet sales, which of course has—and Juan will explain that. First of all, it is a quarter that is usually a small quarter for us.
I think this year what is very important is that this quarter was affected by a very strong phasing effect and the lapping of a very high base comparison last year. Again, Juan will explain, but last year we were growing very, very fast, I think 50 percentage points. This year we have seen as well some destocking of the liquor board versus the previous quarter. A word as well on something that is quite important. Most recently, we know that the context of the trade war between the U.S. and Canada and the tariffs, some U.S. products have been removed from most of the provinces now. The impact on our sale has been minimal. We are not very much exposed to U.S. products.
What we are aware is that, of course, because we have a strong Canadian portfolio, this has given us some opportunity to take some space on shelves and probably to accelerate our market share gain. This has started, but of course, not yet in our shipment, and we expect therefore the. Finally, for this overview, and which is very important, of course, for us and why we'll, w e've generated some strong cash flow, so on a year-to-date basis, supporting back an attractive return for shareholders and ensuring that Corby maintained a solid balance sheet, and therefore you will see the net debt-to-EBITDA ratio remain very healthy at 1.65. To continue, v ery good. Before we move to the next slide, before going to insurance, a quick word on the commercial performance. First of all, the market.
As I mentioned, the spirits market in Canada is a bit challenging right now. It is in decline by -3.6%. I would like to mention that this decline is, in fact, a bit of a contrasted situation between the province of Ontario that has been impacted, and I think we've said that in the past, by a series of technical effects with the strike during last summer, the road-to-market expansion, which has affected this category. While the rest of Canada is, in fact, flat. You can see that in terms of consumer underlying demand, the situation is quite contrasted. The market is around 3.6%, but with the decline mainly coming from Ontario, while the rest of Canada . In that context, glad, of course, to continue to report that we've been winning this market.
Our decline has been limited to -1.9%, so we are gaining share 1.6 percentage points above the market, which is significant. On the RTD, which is, of course, a fast-growing category, also very happy to report that we are growing by +9%. It is a category that we are gaining share in. Our portfolio is starting to take some scale. That is before, I would say, the famous Q4 where we have, of course, the spring and the summer coming. The RTD season is upon us. On the year-to-date basis for the nine months, we are growing +9%. If we look now briefly at the various categories as I mentioned, we are 1.6 percentage points above the market. Most of the categories are a bit challenged for this year. Of course, the largest category, it is not new, are slightly trending or less to growth.
On the year-to-date basis, tequila and bourbon remain, I would say, the fast growing. Of course, for the bourbon, we start to see the impact of the U.S. tariffs. This is a situation very clear, but as you will notice, over there, we are not very much exposed. We remain very much exposed to the large Canadian and our whiskey portfolio, whether it is single malts, Irish, of course. Now, if we move on before giving more detail on the financial, just to anchor a little bit on our growth strategy. This has been very, very consistent, as I mentioned. The whole objective for us is to grow faster than the market on the spirit side. All portfolios now enable us to do that. Very much our competitive advantage in terms of sales and marketing and execution.
We want to grow one to two percentage points above the market, and this is what we've done over the last couple of years. We want to be also very much playing in the fast-growing category, and this is what the RTD is doing for us, but also on the tequila front, where we have invested a lot behind the Panama b rand. The third element, which for us is key in this market, is to continue to grow value ahead of volume. We do that through mix, we do that through pricing, and this is also a very important element for us to what we call revenue growth management. Promotional efficiency is top of mind for the company. The other element that we've also mentioned is the dynamic portfolio management. We have made some acquisitions.
We are also mindful of assets that maybe could be better used in other hands. We are very open to make sure our portfolio is fit for purpose, and this is what we'll do. Finally, regarding the export, which is a more marginal part of our business, it is clear that with the U.S. situation, we've been able this year to ship, I would say, ahead of the tariff. We will continue to monitor the situation. We are not very much exposed, and it remains a strategic market for us in terms of growth because EBITDA-wise there is growth, but we're doing quite well. We continue, of course, to effort in the U.K., which, o n the RTD, listen, this is very much something that we put in place about two years ago, full, I would say, foot bearing right now.
Very pleased with the integration, first of all, of S Beverage, but also of new. The New business was, of course, a business that we needed to turn around. The last recent data that we have are very, very positive, and we're starting to basically resume growth in British for this brand. Overall, the portfolio is behaving very well. The team has a buoyant pipeline of innovation to come online in the next few years. This is a category where we intend to continue to grow double digit and probably in the midterm to be one of the key players in the Canadian market. With that, I will hand over to Juan to give you a bit more detail, both on our Q3 and our year-to-date. As I mentioned, the Q3 is a bit impacted by some technical effects and comparative basis.
Very pleased with the solid result we've delivered on the year-to-date basis. Juan, over to you.
Thank you, Nicolas, and good morning, everyone. I'm Juan Alonso, Corby's CFO, and I'm pleased to walk you through our financial 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 the detailed explanations for each of those elements in our Q3 FY 2025 MD&A, and I invite you to refer to this document for any question related to it. Let's start with Q3 results. As Nicolas mentioned, Q3 was challenging for Corby, reflecting difficulties in the broader spirit market. One significant impact was the reduction in inventory levels at the LCBO and weak consumer trends. Additionally, we faced a high comparison basis as we were comparing against an exceptional Q3 performance in FY 2024.
To provide some context, let's revisit the drivers behind last year's Q3 results. In FY 2024, last year, Q3 delivered an impressive organic growth of 18%, driven by strong pipeline fills to new export markets and the recovery of our commissioned Panama Car product shipment. Additionally, excluding ABG brands, the revenue weighting for Q3 FY 2024 was higher than usual, contributing 23% of total revenue. In comparison, Q3 FY 2023, two years ago, contributed 20% to total FY 2023 revenue. Now, turning to this year's Q3 results, we observed a normalization of sales off the high basis set in FY 2024. This was further influenced by the stocking partners' patterns at the Ontario Liquor Board. As a result, it becomes increasingly important to focus on the fiscal year-to-date results to reflect Corby Spirit and Wine's true underlying performance evolution. So now that we understand a bit more about the context, we can start off with the top line.
Corby generated CAD 48 million in revenue during Q3, reflecting a 1% decrease in reported revenue. When excluding contribution from the newly acquired New Beverage brands, our organic revenue saw a 9% decline. As I explained before, it is important to remember that Q3 FY 2024 was a standout quarter with a remarkable 50% increase in reported revenue and 18% rise in organic revenue compared to FY 2023. With a softer top line and increased costs due to our expanded operation, Corby saw a 10% decrease in adjusted EBITDA for Q3. However, this needs to be viewed in the context of FY 2024, where we saw an outstanding growth of 53%. This ultimately impacts our bottom line, where we reported adjusted earnings per share of CAD 0.16 and reported earnings per share of CAD 0.14 for Q3. These figures represent a decline of 20% and 6%, respectively.
Again, this decrease is accentuated by the high comparison basis from FY 2024, where we achieved 9% growth in reported earnings per share and 44% growth in adjusted earnings per share. Despite our challenges in Q3, Corby recorded a slight improvement in cash from operating activities over Q3 FY 2024, benefiting from favorable changes in working capital as well as interest and taxes. While Q3 was softer, we remain confident and optimistic in the strengths and depths of our portfolio, as well as the effectiveness of our dynamic strategies during the year. In line with our commitment in Q2, the board declared a dividend of CAD 0.23 for Q3, marking a CAD 0.02 or 10% increase over the dividends declared in Q3 FY 2024. That was our performance in Q3. Now, let's shift our attention to the nine-month period ended March 31st, 2025, or fiscal year-to-date March.
Following a softer Q3, Corby's year-to-date earnings growth highlights the resilience of our portfolio and management, emphasizing our continued market share gains in a challenging and volatile market environment. Let's start with the top line. In fiscal year-to-date March, Corby delivered CAD 174.8 million in revenue, which represents a solid 7% growth in reported revenue. This growth is powered by the contribution from our recently acquired New Beverage RTD brands. When we exclude these brands, our organic revenue remains broadly flat comparing to year-to-date March FY 2024. We'll go deeper into our revenue growth in the next slide. Our resilient top line growth, combined with diligent cost management and operational efficiencies, enabled Corby to achieve improvements in operating income. This is reflected in our adjusted EBITDA, which reached CAD 48.4 million, a steady 4% increase compared to FY 2024.
Despite some increases in interest expenses, including those related to leased assets, loans from Pernod Ricard for the acquisition of ABG, and non-controlling interest obligations to ABG, Corby delivered CAD 0.81 in adjusted earnings per share and CAD 0.75 in reported earnings per share. These figures represent a growth of 1% and 11% over the year-to-date March 2024, respectively. In year-to-date March, Corby generated CAD 29.2 million in cash flow from operating activities, demonstrating a strong liquidity driven by an increase in earnings and also favorable changes in working capital management. Reflecting our confidence in our earnings and profitability growth and our strong commitment to our shareholders, Corby declared CAD 0.68 per share in dividends for the year-to-date March. This follows the board's declaration of CAD 0.23 per share in dividends for Q3, showcasing a solid CAD 0.05 or 8% increase over the same period in 2024.
Lastly, as of March 31st, 2025, our net debt-to-adjusted EBITDA ratio was 1.6x , reflecting a solid solvency position and a healthy balance sheet. Now, let's go to the next slides and go deeper into our year-to-date revenue growth. Let's take a moment to review Corby's fiscal year-to-date revenue for March. Firstly, our domestic case goods revenue reached CAD 138 million, with the New Beverage brands contributing to almost CAD 12 million. This resulted in a total reported domestic case goods revenue growth of 7%. Including the impact of the New Beverage brands, our organic domestic case goods revenue experienced a modest 2% decline in a further declining spirits market, clearly affected by the LCBO strike in July and a reduction of spirits purchasing patterns in Ontario. However, our dynamic RTD portfolio helped offset these challenges by effectively tapping into the grocery and convenience store retail modernization opportunities in Ontario.
Secondly, our commissioned sales rose to CAD 22.9 million, demonstrating impressive growth of 17%. This increase was driven by imported RTD and wines, which successfully capitalized on the retail modernization in Ontario. Lastly, our export revenue totaled CAD 11.2 million, reflecting a 12% decline year- over- year. This decrease comes from lapping the pipeline fill to new markets during last year. W hich had seen a remarkable 44% increase compared to year-to-date March FY 2023. Despite this, we can see an encouraging rebound of JP Wiser's performance in the US. These results highlight our ability to navigate and adapt to the evolving market landscape, and we remain committed to leveraging opportunities for growth in the next quarters. To summarize our P&L results for year-to-date March, Corby had resilient revenue growth of 7%, bolstered by the strength of our portfolio, the new channel expansion in Ontario, and the acquisition of New Beverage brands.
Our total operating expenses increased by 6% at a slower pace comparing to the growth in our revenue, with strategic investments behind key strategic brands and disciplined spend management. As a result, Corby delivered a solid growth of 4% in adjusted EBITDA, underscoring our ability to effectively manage costs while expanding our revenue base. On a per-share basis, our adjusted net earnings was CAD 0.81, and reported net earnings were CAD 0.75, reflecting growth of 1% and 11%, respectively, versus last year. Now moving to the next one. In the first three quarters, Corby generated CAD 29.2 million of cash from operating activities, supported by higher net earnings underpinned by new 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 turned positive and improved significantly year- over- year, benefiting from the lapping of last year's CAD 136 million cash outflow related to the ABG acquisition. As a result, our net debt position was CAD 99.1 million at the end of March, and our net debt-to-adjusted EBITDA ratio remained low at 1.6x , demonstrating a robust solvency position and reinforcing our financial health. Furthermore, Corby has an attractive dividend payout ratio at 54% on a rolling 12 month basis, highlighting the sustainability of the company's quarterly dividends. Notably, quarterly dividend payment increased by 10% in Q3 FY 2025 compared to Q3 F Y2024. These actions have contributed to a high dividend yield over recent years at 5.9% at the end of March, a consistent yield compared to FY 2023 and FY 2024.
We are pleased with our results so far in the fiscal year, and we remain committed to delivering on our value proposition for our stakeholders and shareholders. Before I hand back to Nicolas, I want to finish with a final look at what's ahead for Corby. We know there are a few challenges in the market context, but we believe our clear strategy and the foundations we have discussed today leave us well-positioned for the last quarter of the fiscal year. Spirit market is forecasted to continue to decline in Q4, but we continue to target market share gains thanks to the strength of our portfolio. We are closely monitoring 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 of us with our diversified portfolio, strong local footholds, and execution strategy.
We are going to continue to unlock the full potential of our RTD portfolio, including the realization of ABG and new sales, with operational synergies throughout a successful integration. We are going to address consumer needs and keep agility in our dynamic approach to capitalize on new opportunities presented, like the route to market modernization in Ontario. Finally, as we have mentioned, revenue growth management and disciplined investments will remain a very important feature to protect our margins. Now, back to Nicolas for some closing remarks.
Thank you very much, Juan. Great, Liam. Before we head into the Q&A session, just I usually do, I would like just to reiterate for us really what are the key reasons to invest in Corby. Five key points to keep in mind. Corby' s, in fact, the largest publicly listed multi-beverage alcohol company in Canada.
Our portfolio is one of the most comprehensive portfolios in the market. We are very proud of that. Of course, we know that this is delivering value. Coupled with our strong position here, we can leverage our close partnership with the Group America, which is a number two global player. That is giving us a lot of competitive advantage and a weapon to win in this market. We pride ourselves to have operational excellence in our execution. Really, our sales and marketing execution is excellent, and we are well-known for that. It helps us to attract the best talent. This is where we need to. Finally, of course, the company is delivering what I would call financial consistency. We fundamentally are resilient. I would almost say no matter what, our revenue and our strong cash generation are there.
This is, of course, continuing to adapt our financial policy to maintain our revenue. We know the dividend is an important feature for our shareholders. Of course, we will aim to continue to grow the dividend over time through earnings. With that, that's it for today. I want to thank you once again for joining us and hear a bit more detail about our year-to-date results. I look forward to sharing our full year results in the coming months. Now, if there is any question, Juan and myself will be.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone, and you will hear a prompt that your hand has been raised.
Should you wish to decline from the polling process, please press the star followed by the number two. If you use the speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question.
We see a question. I'm going to read the question. When your Canadian business is going to see the benefit from the U.S. liquors being removed from shelves, what net benefit do you expect? The situation, of course, is a bit volatile. What happened in the month of March is, of course, when the tariff threat was announced, two things happened. First, there has been some stocking of U.S. products made by licensees on-premise and consumers. We have seen for, I'd say, 10 days, a surge of those U.S. products.
At the same time where the products were removed, we have seen, of course, a lot of empty shelves. Corby, in particular, was able to come at full force and take advantage with the portfolio. As you know, we have a portfolio of strong Canadian brands with JP Wiser's Canadian Whisky, with Polar Ice Vodka, with Lamb's Rum. For example, against the bourbon, I would probably highlight that we have a small brand called Lot 40, which is one of the best rye in the world and has really been growing extremely strongly right now. Of course, the liquor board did not order new, I would say, stock during the month of March. We were, in fact, facing significant cash pressure because they were supposed to hold the inventory of those US products, and they were depleting basically what they could.
We, therefore, expect the dynamism of our Canadian portfolio to show up, of course, more in our shipment in Q4. This is what we are monitoring. We are putting in place a lot of what we have called our Canada plan in store, but also with our consumers, with our main brands. We'll be driving quite a dynamic campaign, I would say, across our portfolio during Q4. I just want also to mention that it's true for the Canadian portfolio, but it is also true for some of our large brands. We have brands like Absolut Vodka or Jameson Whiskey, which are competitors on some brands which have been removed as well from shelves. Overall, the portfolio is extremely well-positioned for. H ave to show up and, of course, purchase. We don't control that. In terms of relative strength to the market, we expect.
Once again, should you have a question, please press the star followed by the number one on your touch-tone phone, and you will hear a prompt that your hand has been raised.
Maybe just to complement the first question, there is another one, which is, in terms of maybe Canadian consumers in favor of domestic products, the answer is yes. Overall, there is definitely a move from consumers to favor domestic products, which is, by the way, not just in our industry. We have seen that across categories. In a measured way, but it is true that the liquor board has made some space, I would say, for that. This is also true for our on-premise customers who have been very happy to support. Overall, I would say, yes, there is definitely a sentiment for made in Canada right now in the market.
There are no further questions at this time. I would now like to turn the call over to Nicolas Krantz for closing remarks.
Great and t hank you very much for your time and attention. Again, we'll be looking forward to reporting a full year figure. I wish everybody a good week. As we often say when we close our call, the best way to get to know brands is to consume them with moderation. The weekend is approaching, so for us, it's also a big moment of consumption across our portfolio. Please enjoy your brand if you can respond to me. Looking forward to reconnecting very much.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.