Core Insights - The company has made significant progress in 2025, finishing the year above expectations despite a challenging operating environment in the spirits industry [4][5][37] - The strategic roadmap focuses on disciplined execution, organizational changes, and leveraging financial strength for long-term growth [2][3][39] Financial Performance - For Q4 2025, consolidated sales decreased by 23% year-over-year, with adjusted EBITDA at $26 million and adjusted basic EPS at $0.63 [5][28] - Full-year 2025 results included consolidated sales of $536 million, adjusted EBITDA of $116 million, and adjusted basic EPS of $2.85, with operating cash flows increasing by 19% to $122 million [5][29] - The company expects 2026 net sales in the range of $480 million to $500 million, with adjusted EBITDA between $90 million and $98 million [30] Industry Outlook - The spirits industry is anticipated to face continued challenges in 2026, with expectations of another down year for both the industry and the company [4][6][31] - Consumer sentiment and spending are under pressure, influenced by competition from online gambling, gaming, and health-focused trends [6][7] Strategic Initiatives - The Branded Spirits segment is viewed as the primary growth engine, with a focus on the Premium Plus category, particularly Penelope Bourbon, which saw an 80% increase in sales [8][10][12] - The company plans to rationalize 20% of its tail brands to streamline operations and focus on higher-velocity SKUs [11][75] - Investment in digital marketing and analytics is prioritized to enhance brand awareness and connect with consumers [13][68] Distilling Solutions Segment - The Distilling Solutions segment experienced a significant decline in sales, down 47% in 2025, with expectations of a further 35% decline in 2026 [25][31] - The company is focused on creating a differentiated value proposition and expanding its premium white goods offerings to complement its brown goods portfolio [15][16] Ingredient Solutions Segment - The Ingredient Solutions business is expected to benefit from strong consumer demand for high-protein and high-fiber products, with anticipated double-digit sales growth in 2026 [19][20] - Operational improvements and increased capital investment are being implemented to return to historical levels of operational excellence [21][79]

Financial Data and Key Metrics Changes - For Q4 2025, consolidated sales decreased by 23% year-over-year to $138 million, with adjusted EBITDA declining by 51% to $26 million and adjusted basic EPS decreasing by 60% to $0.63 [24][27] - For the full year 2025, consolidated sales were $536 million, adjusted EBITDA was $116 million, and adjusted basic EPS was $2.85, while operating cash flows increased by 19% to $122 million [8][27] - Net income for Q4 2025 was a loss of $135 million, primarily due to a non-cash adjustment of $153 million related to goodwill [27] Business Line Data and Key Metrics Changes - The Branded Spirits segment saw a 1% decline in sales for Q4 and a 3% decline for the full year, with premium plus sales growing by 10% in Q4, driven by Penelope Bourbon [24][30] - The Distilling Solutions segment experienced a 47% decline in Q4 sales, including a 53% decline in brown goods sales, with full year sales down 45% [24][30] - Ingredient Solutions sales declined by 10% in Q4 and 7% for the full year, impacted by equipment outages and higher waste disposal costs [25][30] Market Data and Key Metrics Changes - The spirits industry is expected to face continued challenges, with consumer sentiment under pressure due to competition from online gambling and health trends [9][10] - Domestic whiskey production has sharply declined, with reports indicating a 26% drop over the trailing 12 months [16] Company Strategy and Development Direction - The company is focusing on strategic clarity and prioritizing growth in the premium plus category, particularly with Penelope Bourbon [4][11] - A comprehensive portfolio management review process is being implemented to rationalize 20% of tail brands, aiming to enhance focus and efficiency [13][63] - The company plans to increase advertising and promotion spending to approximately 13.5% of segment sales in 2026, with a shift towards digital media [14][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that 2026 is likely to be another down year for the industry, but expresses optimism based on proactive actions and strategic clarity [4][35] - The company expects net sales in the range of $480 million to $500 million for 2026, with adjusted EBITDA between $90 million and $98 million [29][30] - Management emphasizes the importance of maintaining a flexible balance sheet and prioritizing cash generation [32][33] Other Important Information - The company is committed to reducing costs and managing working capital effectively, with capital expenditures expected to be approximately $20 million in 2026 [29][33] - The Penelope earnout payment is expected to impact cash flows significantly, with operating cash flow projected to be in the range of $40 million to $45 million [32][33] Q&A Session Summary Question: What are you seeing regarding pricing in the industry? - Management indicates that pricing is rational, with affordability being an issue, and they are launching smaller pack sizes to address this [39][40] Question: Does your credit facility allow limitations on how you can use it regarding the Penelope payment? - There are no limitations on the credit facility related to the Penelope earn-out, and the bank views this payment positively [42] Question: Can you speak to your visibility on 2026 being the trough for brown goods? - Management confirms good visibility for 2026, with most contracts under agreement and a focus on premium white goods to reduce costs [49][51] Question: What is the degree of rationalization in the Branded Spirits segment? - The rationalization of tail brands is not expected to impact 2026 guidance, and the company plans to recover costs from divesting certain brands [82][83]

2025 Full year results February 2026 Disclaimer This presentation contains certain statements that are, or may be deemed to be, "forward-looking statements" (including for purposes of the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements give Haleon's current expectations and projections about future events, including strategic initiatives and future financial condit ...

Financial Performance - Net sales remained flat at $758 million in Q3 2025 compared to Q3 2024[2] - Net income decreased significantly by 80% from $58 million in Q3 2024 to $12 million in Q3 2025[2] - Diluted EPS decreased by 80% from $1.62 in Q3 2024 to $0.32 in Q3 2025[2] - For the year-to-date, net sales decreased by 1% from $1,984 million in 2024 to $1,973 million in 2025[3] - Year-to-date net income decreased by 78% from $124 million in 2024 to $28 million in 2025[3] Segment Performance - U S Retail net sales increased by 3% while operating margin decreased by 490 bps to 2 8%[6,8] - U S Wholesale net sales decreased while operating margin decreased by 560 bps to 15 5%[6,10] - International net sales increased by 5% while operating margin decreased by 140 bps to 8 2%[6,13] Strategic Initiatives and Outlook - The company is planning a 15% reduction-in-force of office-based roles, expected to save approximately $35 million annually[27] - The company plans to close 150 low-margin stores to improve store portfolio productivity[28] - The company estimates a $200 million to $250 million annualized pre-tax earnings impact from additional proposed tariffs[33]