Air Global PLC Ordinary Shares 2026 H1 Earnings Call

Please go ahead. Good morning, and thank you for joining AIR Global PLC 1H 2026 earnings call, our first earnings call since listing on Nasdaq on May 18, 2026.

With me today are Stuart Brazier, CEO, and Bassem Lotfy, our CFO. We will take questions following the prepared remarks. Our first half earnings press release was issued this morning, with all materials available on our website, ir.air.global, and on the SEC's website, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on our current expectations and information. These statements involve risks and uncertainties many beyond the company's control. AIR Global disclaims any duty to update forward-looking statements except as required by law.

Please review our safe harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We will present results on both our IFRS and non-IFRS basis. Non-IFRS measures like adjusted EBITDA and their IFRS reconciliations are detailed in our press release. Non-IFRS financial measures should not be used as a substitute for our results reported in accordance with IFRS. With that, I will turn it over to Stuart.

Thank you, Gaurav, and welcome everyone. We appreciate you joining us for AIR Global's first earnings call as a public company. This is an important moment for AIR. We listed on Nasdaq in May, and today we are reporting our first set of interim results as a listed company. Before discussing our performance, I'd like to spend a moment on the team that's driving AIR forward. One of AIR's greatest strengths is the depth and diversity of our leadership team. Across our executive team, we bring together decades of experience from global consumer goods, tobacco, innovation, technology, supply chain, and regulatory organizations. Collectively, our leadership group has operated some of the world's largest consumer brands, managed complex international businesses, and successfully navigated highly regulated industries.

This breadth of experience has been particularly important during periods like the first half of 2026, when we faced unprecedented supply chain disruption and rapidly evolving market conditions. Importantly, many members of our leadership team have worked together for years and have successfully managed through multiple business cycles, regulatory environments, and periods of industry change. As we enter our next phase as a public company, I believe AIR has the right people, the right culture, and the right capabilities to continue delivering sustainable growth and long-term value for shareholders. AIR is a global consumer brand and innovation company, anchored by the world's leading flavored shisha molasses business, and increasingly building a portfolio of next-generation inhalation and nicotine products. Our core business is distinctive. Through Al Fakher, we are the global leader in flavored shisha molasses.

We believe we are larger than the next four competitors combined in the markets in which we operate, with an estimated 36%-44% global volume share, and with very strong positions in key markets, including the U.S., where our market share is estimated at approximately 60%-65%. The category is social, cultural, and lifestyle led. It is consumed in homes and lounges across generations and geographies and is not simply a nicotine delivery occasion. That is important because it gives the category a different demand profile from many traditional tobacco categories. The category is fundamentally different from most traditional tobacco segments. While nearly every major traditional tobacco category in the U.S. has experienced significant volume decline over the past several years, flavored shisha has remained remarkably resilient, with stable to modestly positive volume trends for Al Fakher. This reflects the unique nature of the category.

Consumers are not simply purchasing nicotine. They are participating in a social, cultural, and lifestyle experience that is shared with friends and family, often in lounges, restaurants, and social gatherings. As a result, demand has historically proven resilient across a wide range of economic and industry environments. That resilience is further underpinned by the strength of the Al Fakher brand. We estimate that Al Fakher reaches approximately 14 million consumers globally, putting it alongside some of the world's most recognized tobacco and nicotine brands. Despite operating in a category that is often overlooked by investors, our consumer reach is substantial and continues to expand. More importantly, we believe our leadership position creates meaningful competitive advantages. We have leading market shares across many of our key markets, deep consumer loyalty, strong flavor innovation capabilities, and a distribution network that would be difficult to replicate.

Compared with many other nicotine products and everyday discretionary purchases, shisha remains a highly affordable indulgence. Annual U.S. consumer spend is about $110 and is significantly lower than cigarettes, where an average consumer can spend more than $2,000, pod-based vaping products where consumers can spend on average $1,000, or nicotine pouches where consumers can spend $400. For consumers, a modest increase in the retail price of flavored shisha has a relatively limited impact on overall expenditure. For AIR, however, those pricing actions can provide meaningful support to revenue growth and inflation recovery. The strong 14% price mix growth we delivered in the first half demonstrates both the strength of our brands and the affordability of the categories. Importantly, we have maintained market share despite these pricing actions, which reinforces our confidence in the long-term earnings growth potential of the business.

In the first half of 2026, we faced an unprecedented supply chain disruption from the closure of the Straits of Hormuz, a route through which approximately 70% of our historical shipment volumes have moved. Despite that challenge, we grew revenue, held adjusted EBITDA broadly stable, protected end consumer demand, and entered the second half with accelerating momentum. Now, turning to 2026 guidance. For full year 2026, we expect stable shipment volumes versus 2025. This is despite an approximately 1.5% headwind from weaker global travel retail volumes resulting from the Middle East conflict and despite the impact of above normal pricing implemented to offset elevated cost inflation. We expect revenue growth of 4%-6% in USD. We expect low to mid-single-digit adjusted EBITDA growth. That is below our historical high single-digit growth trend, and there are three clear reasons for that.

First, we're absorbing incremental public company costs following the Nasdaq listing. Second, we're accelerating our factory footprint reorganization plan to reduce long-term dependence on the Straits of Hormuz. Third, we're also facing higher logistics and raw material costs associated with the Middle East conflict, even though we now have alternative supply routes in place to mitigate future disruption. These headwinds are partially offset by modest benefits in U.S. tariff refunds and excise duty drawbacks. Excluding these cost headwinds, our adjusted EBITDA growth in 2026 would be expected to be in line with AIR's historical high single-digit EBITDA growth trend. We also expect broadly stable net financing costs, an effective tax rate of approximately 15%, CapEx of $15 million-$18 million, and broadly stable net debt to adjusted EBITDA at year-end compared with 2025, reflecting the IPO-related cash outflows and the Greentank investment.

No share repurchases are incorporated into the 2026 outlook or medium-term guidance. Looking beyond 2026, our medium-term framework remains consistent. For 2027 and over the medium term, we expect low single-digit organic FSM shipment volume growth driven by continued market share gains and expansion into new markets, assuming non-disruptive excise tax increases. We expect mid-single-digit FSM revenue growth in USD and high single-digit FSM adjusted EBITDA growth in USD. We also expect continued deleveraging with a consistent reduction in net debt to adjusted EBITDA over time. Our long-term target leverage ratio remains 2.5x net debt to adjusted EBITDA. The timing and scale of new growth category revenue and adjusted EBITDA contribution will depend on FDA acceptance of our PMTA applications. We will remain disciplined. We will invest where we see technology, science, brand, and regulatory pathways that can create durable value.

With that context, I will now hand over to Bassem to walk you through the first half financials in more detail.

Thank you, Stuart, and good day to everyone on the call. I will cover group performance, segment performance, the bridge from reported to adjusted EBITDA, cash flow, leverage, and other key assumptions in our outlook. Starting with the group results. First half 2026 revenue was $206.9 million, an increase of 3.7% compared with $199.5 million in the first half of 2025. Gross profit was $116.8 million, compared with $114 million last year, up 2.4%. Adjusted EBITDA was $71.7 million, broadly flat over the year. EBITDA was a loss of $52.1 million, compared with positive EBITDA of $61 million last year. Operating loss was $63.6 million, compared with operating profit of $51.5 million in the prior year period. Net loss was $81.8 million, and basic EPS was negative $0.57.