ADENTRA Inc.

Morning, my name is Marissa and I will be your conference operator today. I would like to welcome everyone to the Adentra first quarter 2025 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 a 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, Adantra's President and CEO, and Seth Carmely, Vice President and CFO. Adantra's Q1 2025 earnings release, financial statements, MD&A, and other quarterly filings are available on the Investors section of our website at www.adantragroup.com. These statements have also been filed on the DENTRA's profile on CEDAR Plus at www.cedarplus.ca. 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 differ materially from those described in these forward-looking statements. please refer to the text in a dentist's earnings tax 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 otherwise stated. I would now like to turn the call over to Rob Brown.

Good morning, everyone, and thank you for joining us today.

In the first quarter of 2025, our team displayed strong operating discipline. We kept pricing stable, maintained solid gross margins, and continued to manage expenses carefully. That said, the quarter wasn't without challenges, and our volumes were impacted by tough winter weather, persistent affordability pressures, and some softness in residential construction. Residential construction conditions reflect elevated U.S. mortgage rates and growing macro uncertainty, especially around the volatile U.S. trade environment. Total sales were up modestly, supported by the contribution from Wolf Distributing. On the organic side, sales were down by 4%, primarily driven by lower volumes, resulting from the challenges noted. The good news is that product pricing held steady, a positive shift after experiencing deflationary pressure over the past two years. Gross margin was consistent with our full year performance in 2024. This speaks to the strength of our business model and the discipline we continue to apply in both procurement and pricing. On the cost side, we continue to manage things efficiently, And the increase in operating expenses was primarily attributable to operating expenses associated with Wolf. We delivered 40 million in adjusted EBITDA with a 7.4% margin and adjusted EPS of 42 cents, showing resilience despite lower volumes and some fixed cost pressure. In the first quarter, We built inventory ahead of the spring selling season as is our normal practice. We also took additional stocking positions in certain areas as a precaution against potential trade disruptions. This was a measured approach and it increased our leverage temporarily.