Goodfood Market Corp.

Good morning, ladies and gentlemen, and welcome to the Good Food first quarter fiscal year 2026 earnings call and webcast. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to get up for questions. Please note that questions will be taken from financial analysts only. If anyone has any difficulties hearing the conference, please press star followed by zero for operator assistance at any time. I would like to remind everyone that this conference call is being recorded today, January 20th at 8 a.m. Eastern Time. Furthermore, I would like to remind you that today's presentation may contain forward-looking statements about Goodfood's current and future plans, expectations and intentions, results, level of activity, performance, goals or achievements, or other future events or developments. As such, please take a moment to read the disclaimer on forward-looking statements on slide two of the presentation. Please be aware that during the call, presenters will refer to certain metrics and non-IFRS measures. Where possible, these measures are identified and reconciled to the most comparable IFRS measures in our MD&A. Finally, let me remind you that all figures expressed on today's call are in Canadian dollars, unless otherwise stated. I would now like to turn the meeting over to your host for today's call, Céline Boussoul. Mr. Boussoul, you may proceed.

Thank you. Bonjour tout le monde. Bienvenue à l'appel conférence de marché Good Food pour présenter nos résultats financiers du premier trimestre de l'exercice 2026 qui s'éclot le 6 décembre 2025. Good morning, everyone. Welcome to our Good Food Earnings Call, in which we'll present our results for the first quarter of fiscal 2026, ended December 6, 2025. Ross Auermer, our Chief Financial Officer, is with me today. You can find our press release and other filings on our website, and SIDAR Plus, and all figures on these calls are in Canadian dollars, unless otherwise noted. Before we begin, this is my first earnings call as Executive Chairman, and I joined Goodfood with a clear mandate. Stabilize the business, protect cash, and rebuild discipline. That work is underway. I also want to acknowledge a recent announcement by the Canadian Food Inspection Agency regarding the suspension of a license at our Montreal facility. Food safety and regulatory compliance are non-negotiable for us. We worked constructively with the CFIA, addressed the identified issues, and the license has now been reinstated We continue to work with the CFIA to close all pending issues and ensure we have all required licenses at all times. Let's begin our review of the quarter with slide three. Q1 went mostly as we expected and highlighted during the last call in late November. The meal kit category remains under pressure. Cash-turned-demand is muted, and we are not assuming a near-term recovery. In that environment, our focus is straightforward. Protect margins, generate cash, and run the business with discipline at the current volumes. Against that backdrop, we delivered positive adjusted EBITDA and positive adjusted free cash flow in the quarter. These outcomes are the product of tighter cost controls, improved execution, and a deliberate focus on cash and margins. That matters because it's confirmed that this business can generate cash even at lower volumes when run with discipline. Gross margin increased by 270 basis points year over year. driven primarily by higher average order value and lower incentives as a percentage of sales. This is important because it demonstrates that even as volumes are lower, the operating model can remain resilient when we stay focused on unit economics and cost discipline. At the same time, we are clear-eyed about the top line. Net sales were down 21%, year over year, largely reflecting fewer active customers and lower order rates. We intentionally reduce marketing and incentive intensity, and we are prioritizing profitable demand rather than chasing volume for its own sake. Two initiatives are helping us stabilize the business at today's demand levels. First, eat and eat. continues to build relevance by addressing convenience and value for customers. Second, Genuine Tea is performing well and is contributing to the diversification of our top line. These initiatives are not a return to growth story. They are tools to improve revenue quality, basket economics, and cash generation while the category remains under pressure. With that, I will turn it over to Ross to walk us through the financials in more detail.

Thank you, Salim, and good morning, everyone. I will begin on slide four with net sales and active customers. Net sales for the first quarter were $27.5 million compared to $34.7 million in the prior year period, a decrease of 21%. The decline was driven by fewer active customers and lower order rates. partially offset by higher average order value and the performance of genuine tea. Active customers ended the quarter at approximately 66,000. As Salim noted, we have been deliberate in reducing marketing and incentives. While this impacts customer count in the near term, it supports improved unit economics and margin protection. Importantly, as a result of that focus on quality cohorts and economics, Net sales per active customers increased meaningfully year over year, reflecting record basket values in recent quarters and lower discounts. This is consistent with our strategy to prioritize profitable demand and deepen wallet share among higher quality cohorts. I will now turn to slide five to discuss margins and profitability. Gross profit was $11.6 million in Q1, on the back of gross margin improving to 42.3% from 39.6% a year ago. The improvement was primarily driven by a higher average order value and lower incentives as a percentage of sales, partially offset by higher fulfillment and shipping costs and lower fixed cost absorption on lower volumes. Adjusted EBITDA was $1 million compared to $1.6 billion in the prior year. The year-over-year decrease reflects lower net sales and lower scale, partially offset by gross margin improvement and disciplined SGMA spending. Net loss for the quarter was $2.6 million compared to $1.7 million a year ago, reflecting the same top line and scale dynamic. Moving now to slide six, cash flows from operating activities were positive at $1.4 million. Capital expenditures remained low at approximately $160,000, and adjusted free cash flow was $1.2 million for the quarter. We continued to focus on cash generation, working capital discipline, and maintaining a conservative approach to investments. Overall, we generated positive adjusted free cash flow for seven of the past nine quarters, reinforcing a more stable financial foundation even as we adjust to current market dynamics driving a lower customer base. With that said, we have seen net leverage increase, and our focus will continue to be protecting the balance sheets and liquidity as we prudently evolve the business. Turning to slide seven, which summarizes our key financial metrics this quarter. Growing gross margin year over year has given our business the resilience needed to continue generating positive EBITDA and cash flows. With increased discipline in execution, This resilience provides the basis for consistent market and cash flow protection in the current demand environment. At quarter end, cash and cash equivalents were $11.8 million and marketable securities were $2.7 million for a total of approximately $14.5 million. As Salim mentioned, our priority is maintaining adequate liquidity and applying disciplined capital allocation to support operations and strengthen the business and balance sheets over time. With that, I will pass it back to Celine, who will talk about our outlook.