Andrew Peller Limited

Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Andrew Peller Limited Third Quarter Fiscal 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. If you'd like to ask a question during this time, simply press star then the number one on your telephone keypad. If you'd like to withdraw your question, please press star, then the number 2. Thank you. I will now turn the call over to Jennifer Smith. Investor Relations, please go ahead. Thank you.

Good morning. 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 during five. Please refer to the company's earnings release, MD&A, and other security filings for additional information about these assumptions, risks, and uncertainties. I'll now turn things over to John Peller, Chief Executive Officer.

Thank you, Jennifer. Good morning, everyone. It's great to be with you. The sun is shining brightly, and... Things are looking up, I think, for Andrew Peller Limited and for people generally in Canada these days. I'd first like to point out that we had an announcement last week where we identified five new directors for our company, four of whom are independent as part of our leadership continuity and transition plan. Bruce McDonald, who's a senior executive with more than 30 years' experience in manufacturing has had extensive experience in the automotive sector, will serve as the chair of our board, and the full bios of the other board members have also been aligned in that press release. These directors bring great depth and experience in governance, finance, capital markets, logistics, and beverage alcohol to our board, and we're excited to work with all of them. We had our first board meeting yesterday, and as a team, we're all excited about our future. With respect to the CEO succession that we've referenced, that process continues to go on. We've been working at it for over a year and a half. We've engaged outside consultants to help us with the search. It's going very well. There are great candidates, and I have no doubt we'll find a great leader to carry on our vision. I think, as importantly, I'd like to acknowledge the high-quality executive management team that we have that has served us so well, taking us through the challenging last three years. So first of all, I'd just make some quick comments about our performance year to date and how we see the year finishing. I've had a couple calls from people this morning because the third quarter results that were published are a little confusing. They're showing a decline in gross margin performance, and that's largely because of, I'll call it noise, from having had the WSSP program downloaded in the third quarter last year, as opposed to being spread out over throughout the year. so that when you adjust for that, in fact, the third quarter performance is strong both from an earnings level and from a revenue perspective. I'll talk to that first. You know, it's best if I refer to our third quarter year-to-date revenue performance as it's coming in at $301 million in revenue versus $304 million last year. But last year's number needs to be adjusted to take out excise tax, which is no longer, in other words, we're paying the excise tax now, so that on an equivalent basis, apples to apples were up over last year, even though we're showing a slight decrease to this year. The reality is that the beverage alcohol market in North America is quite soft these days. It would be expected to be soft with the pressures that are put on consumer spending and discretionary spending these days. You know, beer, spirit, wine volumes in North America are all down in the kind of 3% to 5% range from volume. People have taken pricing to try to offset that. The volumes are kind of still in line with where we were pre-COVID so that it's not a long-term challenging perspective in my view. And I do expect as we come out of next year and return to more normal economic times that volume growth will be restored. But that aside, you know, year to date, as I said, we've had a strong revenue performance better than last year. Our EBITDA for three quarters was $41 million, which is a 5% increase over last year. We've achieved this, as we've highlighted at our AGM, through a four-point focus around cost reduction, cash management, monetizing our assets, and growing our revenue. And from a cost reduction standpoint, we've been able to take almost $25 million out of our costs, mostly freight, bulk wine, transportation, and warehouse and logistics costs. You know, we've had at least another $8 to $10 million taken out of our SG&A savings, which you'll note are down significantly from last year. We've had an 18% headcount reduction at the corporate level. And actually, our margins have now significantly been improved by tax reductions, both the excise tax relief through the WSSP program And now a new program that we're receiving in Ontario, which is called the QEP, Quality Enhancement Margin Improvement, it's effectively a reduction in taxation and it puts us on par with how we're treated in British Columbia. So these factors all bode very, very well for our short-term results and even better for our long-term results. And as we look headed to finishing the year in just over a month's time, we'll have revenue consistent with what we've reported this year, which should show a slight increase over last year when we adjust for the excise tax. We've indicated that our target was to hit $45 million in EBITDA, which would be an 18% increase over last year. And we will... definitely achieve that number and now we will significantly outperform that number when we get the margin enhancement tax reduction program implemented in Ontario, which starts in the year that we're in. So it will be kind of like the WSSP last year, kind of heavily downloaded in one quarter. We've received those assurances from government in the finance department and they're just crossing the I's and T's on administration of that, but this is a critical program for our company and for our industry. It reflects the Ontario government's positive outlook and confidence in the economic contribution of our industry and the benefits we provide to not just the Niagara region, but Prince Edward County and the growing wine regions of Ontario. You know, we've worked hard to build economic policy that will support increased investment going forward. And we're grateful to the government to support our initiatives so that we have tax policies that are competitive with best-in-class practices in the rest of Canada and around the world. I'd add that things continue to go well in Port Moody in terms of our monetizing the value of our Port Moody asset. Our development has been well received by the development community. We're talking to many senior groups in the Vancouver market, and we're confident that we'll have very positive news within the year on how we plan to monetize that investment. We have had a bit of a weather event in British Columbia. We had some very, very cold weather in January. It was minus 32 for three days, and we expect some significant damage to vines as a result of those cold temperatures. We do have business continuity plans to mitigate the impact when we have a significant crop loss like we will have there. And You know, we've had those issues come up previously. The last times were 06 and 02, 2002, 2006 in Ontario, where we had significant cold weather damage, and we were able to manage our way through that, you know, those challenges without any impact statements. We are talking already with government and industry to ensure that we get through this crisis impact as well. So I'm happy to turn things over to Paul now to provide more context on our financial statements. Over to you, Paul.