Andrew Peller Limited

Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Andrew Peller Limited Q4 and Year End 2024 Financial 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 would like to ask a question during that 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 will now turn the call over to Jennifer Smith, Investor Relations. Please go ahead.

Thank you and 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 or implied. 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, and good morning, everyone. Great to be with you. I'm joined by our CFO, Paul Dubkowski, and You know, we're happy to discuss the results of our fourth quarter and our year ending March 31st. You know, we've followed for the last two, three years the journey that our company has made through the COVID pandemic and the inflationary supply chain disruption that followed it and taken many steps through that process to improve cost savings initiatives and are operating our business model. And it's really proud for me to acknowledge that our company has performed admirably. And we're now returning to historical levels of sales. We're actually hitting an all-time sales level at the close of business this year. We're back to improved margins and an improved EBITDA performance. So Overall, we're pleased, and now having seen that the Bank of Canada has lowered the interest rate for the first time, I think it kind of signals the end of one era and the beginning of another. We reported a solid, solid fourth quarter to close out our year, and we delivered meaningful margin expansion as well as significant growth in our EBITDA. Our gross margin for the year was up 200 basis points to 39%, still below our target of 41%, 42%, which we expect to achieve over the next two years. We also delivered EBITDA of just over $50 million, which was up 32% or $12 million above the previous year. And I know Paul will have lots to say to provide some more color on that. Importantly, I just want to acknowledge it took a great deal of work and effort from our team to navigate through this period, and I want to thank them for their commitment and execution. There's no doubt we are moving forward on a stronger platform and with a stronger company. From just the top-line sales revenue, I said we've achieved a high watermark in revenue. Our sales revenue was slightly up just over between 1% to 2%. And, um, you know, this is definitely top quartile performance in, in not just Canada, but in North America, I know in Canada, eight of the top 10 wine companies had sales declines. You know, I index for people, the reality that, um, Canadian tires sales just reported are down 10% for the year. And they are very, very good proxy for how consumers are feeling and spending in our country. I noted as well recently that LVMH, which is the world's leading CPG firm, their revenue is down 16% for the year, and obviously they skew very heavily to the ultra-premium discretionary segments. And while we serve that market as well, we are equally balanced with premium and value and economy products in our wine kits so that part of our resiliency is being able to meet consumers at all price levels, and as there has been pressure on premium and ultra-premium price points, we've actually picked up business and strengthened in the value-value premium. So our sales performance was really solid across all our segments and trade channels. We saw our global vendors, which is our consumer wine kit division have a great bounce back year in revenue. Our sales were strong at liquor stores and in the grocery stores out west. And here in Ontario, our restaurants and hospitality locations did well. And while there is some slowing down in global travel these days, our export to channel had a very, very strong year. And we're very, very pleased with that. The real only softness we saw this year was kind of visitation to our state wineries, and we just think that reflects consumers being a little more cost-conscious with some of their discretionary spending. So, all in all, it was a very successful fourth quarter and fiscal year. I did want to comment, people have asked about our crop this year in British Columbia. We have indicated to people that as a result of very, very cold temperatures in January, it went down to minus 34 for four days, which is the coldest temperatures they've recorded in British Columbia in 50 years, that there was widespread bud damage and we will be picking less than a 5% crop this year. As a result, we have been working hard with the British Columbia Ministry of Agriculture, Minister of Finance, and with the Premier, and we've put in policies that will allow us to bring in replacement products that will receive the same access to market and support that our locally grown products would have received so that effectively we can get through the year with the same amount of wine we would normally have, receiving the same privileges, and without any financial disruption. We've experienced this twice before in our life. In 2002 and 2006, we implemented the same government policies. They're temporary until the crops are returned to normal health, and we got through that process relatively unscathed, and we expect to do that again. Naturally, we're focused on some significant planting that will occur over the next two years in the Okanagan Valley. We receive both insurance and government support to help us with the capital costs of that replant program. And like I said, I think we're going to manage through it very, very well. It's happened to us before, it'll happen to us again and it's a sign of the resiliency of our industry that we can manage these challenges without any financial hardship. As far as Port Moody goes, our real estate in Port Moody, we're actively engaged on this file and I remain confident and optimistic that we're going to achieve a very positive result. We're in discussions with several groups right now. I think I mentioned to you that we are making some amendments to the approvals that we have, not to change anything around densification, but there was an office component in our development that we are going back to convert to housing, rather, which is what, in fact, the city wants. So really everything that is happening on that file is positive. It remains a priority, and we are actively engaged in monetizing our position there. A lot of people have noticed the news around Ontario retail modernization. It's a very active file that we have. We're very, very pleased that the government is committed to helping strengthen and grow the Ontario wine industry and investment in the Niagara region. We expect to receive support. We know that the addition of retail stores are an opportunity for us, but that also we're pleased that there's a commitment to ensure that our retail licenses are an integral part of any retail modernization strategy. So we expect to grow our business significantly in the Ontario market over the next five to 10 years. And not only in the grocery retail environment, but in the LCBO environment and through direct-to-consumer and e-commerce trade channels as well. So with that, I'm happy to turn things over to you, Paul.