ADENTRA Inc.

Good morning. My name is Chloe, and I will be your conference operator today. I would like to welcome everyone to the Adantra fourth quarter 2024 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask the question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star, then the number two. With me on the call are Rob Brown, Adentra's President and CEO, and Faz Karmeli, Vice President and CFO. Adentra's Q4 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 Adentra's profile on Feeder Plus at www.adentragroup.com. I want to remind listeners 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 be different materially from those described in these forward-looking statements. Please refer to the text in the dentist's earnings press release and financial filings for a discussion of the risk and uncertainties associated with these forward-looking statements. All dollar figures referred to today are in U.S. dollars unless stated otherwise. I would now like to turn the call over to Rob Brown.

Good morning, everyone, and thank you for joining us today. I'll start the call by touching on some key highlights for the 2024 year. Fez Carmeli, our CFO, will then provide some highlights of our fourth quarter performance. I will then conclude our call with some comments around current trends and outlook for 2025. Please note that all figures mentioned today are in U.S. dollars unless otherwise indicated. One of the enduring truths of the commercial landscape is its dynamic nature. fluctuating between periods of expansion and periods of adversity. In my 20 years with Adentra, one of our top priorities has been to smooth the impact of those hills and valleys by building a larger, more diversified, and resilient business so that we can navigate these changes with stability. Through thoughtful execution and strategic growth, we've positioned Adentra to weather market fluctuation, while continuing to deliver strong financial and operational performance. In 2024, we did just that, achieving stable financial results despite challenging macroeconomic conditions in our industry. We faced price pressures across several product categories, persistently high mortgage rates, and weakened demand in the building market. Despite these headwinds, we held sales volumes steady improved our gross margin percentage by 90 basis points to 21.7%, and maintained tight control over operating expenses, allowing us to deliver adjusted EBITDA and adjusted net income in line with last year's performance. Additionally, our strong cash flow generation of 142.8 million, combined with our credit facilities and an equity raise, allowed us to complete our $130 million acquisition of Wolf Distributing, while also strengthening our balance sheet and lowering our leverage 2.4 times. These results demonstrate our ability to execute on our business strategy. Taking a step back, over the past five years, we've more than doubled our pro forma annual sales to nearly $2.2 billion, while delivering an impressive 13 percent compound annual growth rate in adjusted earnings per share. We've generated almost 600 million in total operating cash flow during this time, enabling us to invest in our business, expand through acquisitions, reduce leverage, and return capital to shareholders, including annual dividend increases for 12 consecutive years. These results demonstrate our ability to execute on our growth strategy, particularly in M&A, a key strength of Edentra. Over the past 15 years, we've completed 16 acquisitions, adding $1.7 billion in sales, including Wolf Distributing in July 2024. Wolf has been a highly strategic addition, expanding our geographic presence in the U.S. Midwest strengthening our position in the pro-dealer channel, and broadening our outdoor living portfolio, including a key supplier relationship with ASEC, a global leader in premium decking and railing. Wolf aligned seamlessly with our strategy, enhancing our diversification across geographies, end markets, and products, while moving Adentra further up the value chain. Like our past acquisitions, it was accretive to adjusted EPS from day one, bringing us closer to our destination 2028 goal of 1.3 billion in new sales with 800 million targeted through acquisitions. On a full year basis, we expect Wolf to contribute approximately 165 million in pro forma sales, further strengthening our competitive position. As one of North America's largest distributors of architectural building products, we're well positioned to leverage our scale to drive growth, stability, and long-term success in a market characterized by smaller regional players. A key differentiator is our digital engagement strategy, enabling us to serve a diverse customer market from global DIY retailers managing thousands of SKUs to small, no-work businesses needing just-in-time deliveries. Yet, our true strength lies in our people. Their deep expertise, combined with advanced digital tools, ensures exceptional service. Through Edenture University, we trained over 800 employees in 2024, reinforcing our commitment to excellence. This synergy of talent and technology has built a loyal customer base of 60,000 plus and strong partnerships with leading manufacturers, many through exclusive agreements. Combined with our proprietary global sourcing program, these relationships further strengthen our market leadership. In conclusion, I'm pleased with the progress we made in 2024, demonstrating our ability to navigate a challenging market while advancing our growth strategy and strengthening our financial position. As we continue executing on our strategic priorities, we remain focused on disciplined capital allocation, operational efficiency, and delivering value to our shareholders. Now I'll turn it over to Fez to walk through our fourth quarter financial results in detail. Fez, over to you.

Thanks, Rob, and good morning, everyone. Please note that all figures are in U.S. dollars. For the quarter ended December 31st, total sales rose by $16 million to $530.8 million, primarily driven by our acquisition of Wolf, which contributed $34.3 million. This helped offset the $17.3 million, or 3.4%, decline in organic sales, reflecting an approximate 1% decrease in product prices and a 2% decrease in volumes. In the U.S., sales grew by $13.9 million to $489.9 million, driven by Wolf's contribution, partially offset by a 4.3% decline in organic sales. The organic decrease in the US was attributable to an approximate 1% decrease in product prices and a 3% decrease in volumes. In Canada, sales increased by Canadian $4.1 million to Canadian $57.1 million, supported by a temperate 0.8% volume increase, partially offset by a 3% price decrease. Gross profit for the quarter was $115.2 million, up 3.9 million, or 3.5%, from Q4 2023, with a margin of 21.7%, reflecting the positive impact of our strategic initiatives and operating efficiency. Operating expenses were increased to 94.4 million, an 8.3 million, or 9.7% increase, with 4.5 million of this related to the addition of wolf $2.5 million due to higher people costs tied to inflationary adjustments and employee benefits, and the rest from a one-time insurance accrual reversal in the fourth quarter of the previous year. Adjusted EBITDA for the quarter was $42.2 million, down 5.1% from $44.5 million in Q4 2023. primarily due to increased operating expenses, which were partly offset by higher gross profit. Our cash flow performance highlights the strength of our business model. In Q4, we converted 42.2 million in adjusted EBITDA into 34.9 million of operating cash flow, an 82% conversion rate. Additionally, Working capital reductions generated another $6.1 million. We closed the quarter with a pro forma leverage ratio of 2.4 times and over $400 million in availability on a revolving credit facility. Our capital priorities remain prudent balance sheet management, growth through acquisitions and organic investments, and shareholder returns through dividends. Overall, our results reflect strong progress against our strategic priorities with recent acquisitions and disciplined cost management helping us to offset soft market conditions experienced during Q4. With that, I'll turn it back to Rob. Rob?