Andrew Peller Limited

Good morning, my name is Eric and I will be your conference operator today at this time, I would like to welcome everyone to the Andrew peller limited first quarter fiscal 2024 results conference call. All lines have been placed on mute to prevent any background noise after the speakers remarks, there will be a question and answer session, if you would like to ask a question during this time simply press star than 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 call over to David Mills. Please go ahead, Mr. Mills.

Thank you and good morning, everyone. Before we begin, this is a reminder that during this conference call, management may make statements containing forward-looking information. This forward-looking information is based on a number of assumptions and 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. Please refer to the company's earnings release, MD&A, and other securities filings for additional information about these assumptions, risks, and uncertainties. I'll turn things over to John Teller, Chief Executive Officer.

Thank you. Thank you, David. Good morning, everyone. Paul and I are here at our boardroom in Oakville, and we're delighted to be with you. You know, obviously, despite the kind of uncertainty that still hangs in the overall economy these days, Our business continues to improve overall and strengthen on all levels. We are both very, very pleased with these developments, knowing that the tough times and the worst is behind us. And we're very confident about improving our results as we go forward and addressing the very bright future that the company has. You know, our focus has really been Two-fold, as we indicated last time we spoke with you. First and foremost, we've been focused on returning our business to its normal profitability. And largely, all our issues were supply chain focused. We've discussed with you at great length the challenges we've had with freight surcharges, demurrage. you know, exorbitant increases in our glass and packaging costs so that, you know, our ambition was to improve our earnings by $20 million over the next two years. And we're making great progress against these goals as costs are coming down to their normal levels now at different rates in different places. But overall, they're coming down very, very well. And we're pleased with our progress. In addition to that being our principal focus, we renegotiated our bank agreement so that we get both more favorable lending terms and recognition for the value of the assets that we hold in our company. We're also reducing our capex to low levels, to maintenance levels until we're sure that we're out of the storm, if you will. We've reduced our SG&A savings significantly. We've restructured our headcount at all levels of the company significantly so that you'll see a focus and a maintain of lower costs. And then we're doing all of that while still painting strong market performance and revenue growth. You know, we're up 2.8% in this first quarter. We would have been up 4% over last year on an equivalent excise policy, but this year we're now paying excise tax so that we're recognizing a bit of reduction in that revenue. But we're expecting to maintain a 2% to 3% revenue growth going forward. We anticipate our EBITDA growing around 15% this year. when we look at the market, you know, the majority of our trade channels have performed very well, you know, in particular provincial liquor boards and the restaurant hospitality businesses, our export business is growing nicely. We're almost two thirds back to where we were pre pre COVID. And, um, we're actually doing better across the base business, um, We're just waiting for the benefit of Chinese travelers to return to the market, but we've done very well there. We're also stabilized and showing small growth in our kit business, which is very positive. We're having some slowdown in our estate winery business, which is interesting. We've had two significant previous years of growth, and when Canadians were kind of restricted to the home base. We've had super accelerated growth in those trade channels. Now that people are back traveling, that business has come off a little bit, but it's also still at levels significantly above pre-COVID levels. So overall it's positive, but it's interesting as I've talked, I don't know anybody in Canada who isn't visiting Italy or Greece this summer. And it's clear there was a pent-up need for people to get out and travel. So we've increased our prices around 5% this year to counteract the inflation. As I've said, we have significant cost savings programs and efficiencies that we're delivering on. Our gross margin has remained consistent with Q1 of fiscal 23. You know, I essentially took a lot of time last call to explain to you that the inventory that's on our books right now is at an all-time record high cost, and it will take several quarters for it to work its way through our supply chain. Having said that, everything we're buying now is at significantly reduced levels. Trade is almost back to its normal level. We've got some glass savings coming in right away and significant savings coming next year. so that, you know, we're comfortable with our targets. It's just a matter of how they time through our supply chain. And it's why we're very confident about getting everything back to normal within, you know, a year or two's time. So I think I've mentioned additionally that we put out a press release on Port Moody. We achieved a fourth bylaw reading approval two weeks ago. This is a very positive development for Port Moody. It essentially crystallizes the density entitlements that we were awarded, which were considerable. And we've also got a development permit approval for the first phase of that development, which is a 32-story condo tower. There are offices, retail, restaurants, a community art center and theater. There are 11 units in that first phase. I would add that it's incredible that the Vancouver market for real estate is as strong as you could imagine. Naturally, developers out there have been concerned with high interest rates and the increase in building But business is starting to turn very, very positive. Again, sales are happening. The market is active. And the future for real estate development in the area is incredibly strong. You know, in some respects, while COVID was very, very difficult on our supply chain and business in the last 18 months, There's been a silver lining in the delay in the Port Moody value. It's, in fact, now higher because of the delay and the increase in demand for the products that are in our development plan. So, you know, it points to the fact that we already have a very strong balance sheet. And on top of having a strong one, it's about to get a lot stronger. And that's very positive for us. We plan to monetize our investment, and we will use the proceeds to both pay down debt and invest in our growth initiatives, which we expect to be considerable as we exit this recessionary time. So with that, I'll turn things over to you, Paul.