ADENTRA Inc.

Good morning, ladies and gentlemen, and welcome to the ADENTRA third quarter 2023 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 9th, 2023. I would now like to turn the conference over to Ian Tharp. Please go ahead.

Thanks, Alan. Good morning, everyone, to those joining today as we discuss Adentra's financial results for the third quarter of 2023. With me on the call are Rob Brown, Adentra's President and CEO, and Fez Karmali, Vice President and CFO. Adentra's Q3 2023 earnings release, financial statements, and MD&A are are available on the investor section of our website at www.AdentraGroup.com. These statements have also been filed on Adentra's profile on CDARplus at www.cdarplus.ca. I want to remind listeners that management comments during this call may include forward-looking statements. These statements involve various known and unknown risks and uncertainties and are based on management's current expectations and beliefs, which may prove to be incorrect. Actual results could differ materially from those described in these forward-looking statements. Please refer to the text in the DENTRA's earnings press release and financial filings for discussion of the risks and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in U.S. dollars and less stated otherwise. I'd now like to turn the call over to Rob Brown.

Rob Brown Thanks, Ian. Good morning, everyone. agrees to share details of Edentra's financial and operating results for the third quarter of 2023. My initial comments will focus on our key financial and business highlights for the quarter, with an emphasis on sequential trends we saw between the second and third quarter of this year. Fez Carmeli, our CFO, will then provide additional details on our Q3 results, with an emphasis on comparing our third quarter results with the same period a year ago. I'll finish off our prepared remarks with our outlook. Beginning with sales activity in the third quarter, volumes were steady and similar to what we experienced in the second quarter of 2023. However, we continued to see product price deflation amongst most product categories in the third quarter, and this resulted in a decrease in sales of 5% going from Q2 to Q3 of 2023. Worth noting, there was one less selling day in the third quarter as compared to the second quarter. Adjusting for that, on a sales per day basis, we were down minus 4%. That decline attributed entirely to weaker product pricing. Our gross margin percentage in the third quarter improved sequentially from 20.4% in Q2 to 21.2% in Q3. The third quarter gross margin performance of 21.2% is consistent with what we achieved the same period in the prior year. It also marks our 10th consecutive quarter with the gross margin percentage above 20%. The stronger gross margin percentage is primarily the result of lower inventory write downs and inventory cost improvements. From an operating expense perspective, we continue to tightly manage costs excluding the impact of one-time accrued trade duties, expenses were lower compared to the same period in the prior year and also lower on a sequential basis from Q2 to Q3 of the current year. Recall that in our previous outlook statements, we noted that third quarter adjusted results were expected to be similar to what we achieved in the second quarter of 2023. Our adjusted EBITDA for the third quarter of 51.8 million came in stronger than the 46.1 million we posted in Q2. Adjusted EBITDA margin of 9.3% for the third quarter was our best quarterly performance since the third quarter of last year. With respect to adjusted earnings per share, the 93 cents of adjusted EPS we achieved in Q3 exceeded our expectations primarily driven by the stronger adjusted EBITDA as well as a tax recovery in the quarter. Our operating results again drove strong cash flows from operations and continue to demonstrate our ability to generate significant cash flows during periods of reduced economic activity. Similar to prior quarters, cash flow generation came from both the predictable conversion of adjusted EBITDA to operating cash flow before changes in working capital and from the release of working capital. The cash generated has been deployed in accordance with our plan. In Q2 of 2022, having recently acquired MidAm for $274 million using our credit facilities, we stated our objective to focus on debt reduction. Since the second quarter of last year, we've reduced debt by over $285 million. Over the same period, we've returned almost $40 million in cash to shareholders in the form of share repurchases and dividends. The business's proven ability to generate strong cash flows and pay down debt were supportive factors in our board's decision to increase the quarterly dividend by $0.01 to Canadian $0.14 per share or Canadian $0.56 per share on an annual basis. This represents an 8% increase to the dividend. As we advance through the remainder of 2023 and into 2024, we continue to monitor the impacts that changing economic conditions, such as inflation and higher interest rates, can have on our business. I'll provide more details on our business outlook before we wrap up today's call. I'll now turn the call over to Fez to review Q3 2023 financial results in more detail. Fez?