ADENTRA Inc.

Good morning, ladies and gentlemen, and welcome to the Edentra Q1 2024 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, May 9, 2024. I would now like to turn the conference over to Ian Tharp, Investor Relations. Please go ahead.

Thanks very much, Chris, and good morning to those joining today as we discuss Adentra's financial results for the first quarter of 2024. With me on the call are Rob Brown, Adentra's President and CEO, and Fez Karmali, Vice President and CFO. Adentra's Q1 2024 earnings release, financial statements, MD&A, and other quarterly filings are available on the Investors section of our website at www.adentragroup.com. These statements have also been filed on a dentist's profile on CDERplus at www.cdrplus.ca. I want to remind listeners today that management's 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 a discussion of the risks and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in U.S. dollars unless stated otherwise. I'll now turn the call over to Rob Brown. Rob?

Hey, thanks, Ian, and good morning, everyone. Thanks for joining us today as we report Adentra's financial and operating results for the first quarter of 2024. I'll start with our key financial and business highlights for the quarter. Fez Karmali, our CFO, will then provide details of our Q1 financial results. I'll then finish off our prepared remarks with our outlook for 2024. We had a strong start to the year, with first quarter sales of $535 million, adjusted EBITDA of $45.6 million, and adjusted earnings per share of $0.78. Sales activity was solid in the quarter, with volume up lightly compared to the same quarter in the prior year. Overall, sales were lower than in Q1 2023 as anticipated, and this was due to product price deflation of approximately 9% year over year. In this environment, we still increased bottom-line results with adjusted EBITDA up 6% and adjusted earnings per share increasing by 18%. We accomplished this through an improvement in gross margin percentage to 22.1% in the quarter, 190 basis points better than in Q1 of 2023, and disciplined management of operating expenses. From a gross margin percentage perspective, Q1 marks the 12th consecutive quarter with growth margins above 20%, providing a sustainable level of profitability for our business that is supported by our strategic initiatives, including higher margin product mix gained through our acquisitions of Novo and Mid-Am, our focus on higher margin ready-to-install products, the positive contributions from our global sourcing program and our efforts to leverage data analytics and our digital platforms to better manage our assets and maintain strong discipline on our product price. Regarding operating expenses, in 2023, we reduced warehouse expense and headcount. These initiatives, combined with tight management of costs, helped to limit the increase in operating expenses year over year to just 1.5%. well below the rate of inflation. During the quarter, our business model continued to generate strong cash flow with 80% of our adjusted EBITDA converting into operating cash flows before changes in working capital. We invested some of this cash in working capital, which is normal for this time of year, but contrasts with the prior year period when we were actively reducing inventory levels. Our board also declared a quarterly dividend of 14 cents per share payable to shareholders on July 26th, 2024. Our balance sheet remains strong. Our leverage ratio exiting Q1 was 2.8 times, which is in our target range. And our unused borrowing capacity is over 445 million. I'll now pass the call to Fez to provide details of our Q1 financial results I'll return to talk about our outlook before we open the call to questions.