Andrew Peller Limited

Good morning. My name is Pam, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Andrew Peller Limited Second Quarter Fiscal 2022 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. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you. I would now like to turn the conference over to Mr. David Mills. Please go ahead.

Thank you, Pam, and good morning, everybody. Before we begin, let me remind you that during this call, we may make certain statements containing forward-looking information. This forward-looking information is based on a number of assumptions that is subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those disclosed or implied. We direct you to our earnings release, MD&A, and other securities filings for additional information about these assumptions, risks, and uncertainties. And I'll turn things over to John Peller, Chief Executive Officer.

Thank you, David, and good morning, everyone. It's good to be with you. I'm here and joined by our CFO, Steve Attridge, and reporting on the first half of our year's results, which we published last evening, you can see that our sales for the first six months have decreased by 5.5% when compared to the previous year. And having said that, we're very, very pleased with our performance. We think that we know that the company is performing very, very well. And having said that, it is most definitely challenging and difficult time one second here sorry about that noise but I got a window washer banging on my window outside here you know the bottom line is that you know when you compare the first six months of sales to last year we actually grew our business in the trade channels that were open and were doing well, but we have lost business in the trade channels that are still not open. You'll recall that last year we had some pantry loading at the start of the year that kind of artificially inflated our sales early on. And we got, if you will, an updraft from the pandemic that we wouldn't have expected and now the consumers are returning to more normal retail shopping patterns and while they're doing that the other channels that have been closed are kind of slower return to their normal volumes because of closures and restrictions. For example, in the first half of this year, the first quarter, we had many, many of our nine estate wineries. They were closed or partially closed in the first quarter. And as you know, restaurants are just coming back online now. I would submit that compared to a normal year, restaurant sales across the province are still kind of half of their normal levels. And similarly, trade and travel restrictions are still in place, and our export sales and duty-free sales have been likely affected. We've also had significant impact to our margins from supply chain disruptions. They're significant, everything that you're reading in the news in terms of the bulk wine shipments we receive from around the world, our glass and packaging is, is definitely being disrupted and, and creating some margin challenges, which we believe will impact us through, through this year and, and, and to some degree next year as well. But, um, you know, they'll eventually, uh, abate and, and, and we'll return to normal so that, you know, we feel very, very positive, uh, that the recovery is well underway, and hopefully most of it should be back next year. We're not going to make too much of a prediction there just because it's hard for us to know exactly how fast everything will return to its normal state, but we should be mostly recovered next year, and we know travel will lag a bit into the 23-24 period, fiscal years, but we expect it to fully recover as it always has in the past through these types of events. We did, as you have no doubt noticed, we sold a piece of property in Port Coquitlam, which was our former wine kit operation in Port Coquitlam. We sold it for $9 million and realized the gain of $7.2 million. It's but one of the many properties that the company owns. Pardon me, please stand by.