Corby Spirit and Wine (TSE:CSW.A) reported higher adjusted earnings for its fiscal first quarter despite a decline in reported revenue, as growth in ready-to-drink beverages and commission income helped offset softness in domestic spirits.
Revenue fell 4% from a year earlier to CAD 72.5 million, reflecting the sale of the Lamb’s Rum brand on August 5. Excluding the disposed brand, organic revenue rose 1%. Adjusted earnings per share increased 18% to CAD 0.46, while reported earnings per share climbed 171% to CAD 0.97, helped by the gain on the sale.
President and CEO Florence Tresarrieu said the company remained cautious despite the quarter’s results, citing pressure in the spirits market, an evolving consumer environment and macroeconomic and geopolitical uncertainty.
RTD Growth Offsets Spirits Weakness
Domestic case goods revenue was CAD 59.4 million, down 3% on a reported basis but up 3% organically. Chief Financial Officer Juan Alonso said growth in ready-to-drink, or RTD, brands benefited from price gains related to markup changes in Ontario and Alberta. Softer domestic spirits performance partly offset that growth.
Commission revenue rose 10% to CAD 9 million, supported by the addition of KDP commissions and higher agency commissions under the Vinarchy representation agreement. Those gains more than offset weaker performance from Pernod Ricard brands, Alonso said.
Export revenue fell 35% on a reported basis to CAD 3.2 million and declined 44% organically. Alonso attributed the decrease to a transition to a new U.S. distributor and unfavorable order timing in Sweden and Turkey.
For the three months ended August 31, the spirits market declined 3.7%, while Corby’s spirits portfolio fell 6%, Tresarrieu said. She pointed to increased vodka promotions and a decline in Canadian whisky after strong growth in the prior year following the removal of U.S. products from shelves.
Over the rolling 12 months, however, Corby outperformed the market across spirits, RTDs and wine, Tresarrieu said. National RTD volume increased 3.8% over the last six months, reaching a 10% market share. Cottage Springs remained the leading RTD brand in Ontario, while Ace Beverage Group continued to build momentum in Western Canada, she said.
Tresarrieu cautioned that complete first-quarter Ontario market data was unavailable. She said some Ontario retail data was being republished to address discrepancies, with completion expected by the end of December 2026, and that the figures could change.
Margins and Cash Flow Improve
Adjusted earnings from operations rose 15% to CAD 18.9 million. Reported earnings from operations increased 118% to CAD 35.9 million, including the one-time gain on the Lamb’s sale. Total operating expenses declined 7% despite restructuring costs in the quarter, Alonso said.
Cash generated from operating activities rose CAD 1.8 million to CAD 7.4 million. The company also received CAD 37.4 million in proceeds from the Lamb’s sale, net of transaction costs.
Net debt was CAD 51.6 million, and net debt to adjusted EBITDA fell to 0.6 times from 1.3 times at the end of the prior fiscal year. Including an CAD 18.7 million upfront payment made October 1 for the Pernod Ricard representation agreement, the ratio was 0.8 times, Alonso said.
The board declared a quarterly dividend of CAD 0.25 per share, an increase of CAD 0.02, or 9%, from the dividend declared in the first quarter of fiscal 2026.
Management Expects Growth Gap to Narrow
Alonso said Corby intends to maintain the margin achieved in the first quarter, but expects the gap between earnings and revenue growth to narrow as it compares results with later quarters that already benefited from margin improvements. He noted that the prior-year first quarter was a low base for RTD margins because of technical events.
Asked about the performance of Polar Ice, Tresarrieu said management was not satisfied and was prioritizing an improvement in its volume trajectory while maintaining profit. Alonso said Corby would consider actions to protect volume on some brands as part of a broader portfolio strategy.
About Corby Spirit and Wine (TSE:CSW.A)
Corby Spirit and Wine Limited (‘Corby’) is a leading Canadian manufacturer, marketer and distributor of spirits, wines and ready-to-drink beverages. Corby’s portfolio of owned-brands includes some of the most renowned brands in Canada, including J.P. Wiser’s, Lot 40, and Pike Creek Canadian whiskies, Polar Ice vodka, Lamb’s rum, and McGuinness liqueurs, Cottage Springs and Nude ready-to-drink beverages, as well as Ungava gin, Cabot Trail maple-based liqueurs, and Foreign Affair wines. Pernod Ricard S.A. indirectly owns in excess of 50% of Corby’s issued and outstanding voting common shares and is considered to be Corby’s ultimate parent.
