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spk_0: good morning ladies and gentlemen thank you for setting by welcome to call a bar fourth quarter of fiscal year twenty nineteen roof of conference call at this time of purchase them earn a list of only mode following the presentation will conduct a question and answer session open to analysts only obstruction will be provide the at that time for you to queue up for question if anyone has any difficulty hearing the conference play for a star followed by zero for of herder assistance at any time before turning coming over to management i would like to remind listener at this conference call content looking forward looking statements within the me thirty for card looking information within the meaning of advocated canadian securities love and subject for number of risk and uncertainty becker cause actual results to differ materially from both of the faded i refer the odeon with afford looking statements as he fell in the presentation supporting the conference call available on the company's website and have a third section on the events and presentation up triple w that calabar that com furthermore risk or the skiff throughout the empty and a for the sixteenth and to two week period ended december twenty eight twenty nine feel under the heading of rid of a like come on everyone that this conference call is being recorded for a fiver twenty seven twenty plenty of offender conference over to get gardening senior vice president and feel fearful please go ahead
spk_1: been through mature good morning everyone the last month we release earnings press release which can be found along with or annual financial statements and and me on our website or triple w c guard dot com
spk_2: i'm going to do with the lucrative
spk_1: was appointed president and chief executive officer of color more effective november twenty three two thousand and nineteen louis is an impressive track record in the food and consumer products industry he was most recently president and ceo button on a canada border of north america and then on canada i will melt turned the corner over to be or his introductory comments and review of a great result movie and qpr want to have to been good morning everyone and pleased to be hero back with you today to review the key i like the fiscal two thousand and thing that got our latest operational result and are refund programme with the summit food division in ontario
spk_3: when they're joining a company at the end of november i had the chance to sit down with our team at all major location
spk_1: they're very constructive meeting with our major customers distributor's and suppliers here in quebec and ontario throughout the the initial meeting bike on that call about brand is strong in quebec and that we enjoy long lasting relationship with most of our customers and suppliers and although we are operating in a competitive and guthrie we have strong foundation on which to build and the of fortune cookies for us
spk_4: to grow in quebec
spk_3: to this effect we just made some simple structural changes to our failed being too speculative cross domain and grow our customers share of wallet particulary in our broad nine distribution business
spk_4: in quebec
spk_3: cancer since i come from the suppliers side of the business many years
spk_1: i can also see many quick actionable i am that we can implement to continue the my thing or activities and offering while building constructed and they're mutually beneficial relationship with their our suppliers for instance we recently tart started working on improving our category management which will lead to a lower number of whiskey use and improve inventory management
spk_3: a lot of work still remains to be done to further our transformation and rate profitability
spk_1: we are dedicated to make this happen and bill shareholder value we are currently developing a more detailed action plan that will be presenting
spk_3: at our upcoming shareholder meeting which is scheduled for april thirtieth
spk_1: in two thousand and nineteen think about successfully implemented and demented various initiative that drove and them prove men up seventeen percent of our breeding profitability and reduce our level of depth these measures include the implementation of the two point nine million dollars recent rationalization plan which started with target demonstrating result in early two thousand and nineteen
spk_3: the seeping out that non profitable activity or activities including the early termination of the recipe unlimited supply agreement in ontario the selling of that the on the katie a non core asset deploying various optimization measure measures and refocusing the company effort on our core broad line distribution activities in quebec where we have a clearer competitive advantage in the fourth quarter of two thousand and nineteen and into the first quarter
spk_1: of twenty twenty our management team continue to work tirelessly to complete the optimization of our business in ontario
spk_3: on january eight we announced that we can hear that we work to dating all distribution activity in ontario and our mississauga distribution center resulting in the closing of the ottawa and london high the transition is brugger progressing well and we retain our key customer relationship there's still some work to be done but we are on track on right sizing give this on another note on february twenty third the option to acquire the baby was led expired
spk_1: option was originally acquired in two thousand and sixteen along with be recapitalisation transaction
spk_3: the company decided not to exercise the option under the terms and conditions that for set forth in the original agreement
spk_1: we remain dedicated to strategically grow and abroad nine distribution market and quebec and continue looking at all opportunity to profitably grow our offering and reach we believe that this is the best back or to building lasting shareholder value
spk_3: i would like now to turn to call back to over to care for a review of the financial result of the last quarter and that that fiscal year
spk_1: thankyou louis and of you about financial results for and sixteen and fifty two week period and the december twenty eight two thousand and nineteen our results for the fourth quarter two thousand and nineteen the progresses plan from to continue implementation of color board transformation plan come from dayton sales were down six point nine percent to three hundred and twelve million
spk_5: chilton the distribution segment decrease by six point four
spk_1: the results from a six point one million lots of a volume in ontario and a decrease in abroad line distribution sales and quebec mainly related to the decision to see serving some non profitable regions in quebec and the maritime
spk_6: and other non profitable contract
spk_1: this was mitigated by an increase in in volume from other clients sales and the wholesale segment decrease by one and buying nine point one percent mainly from lower said it meant sales the none renewal of unprofitable agreements and by the timing of orders
spk_5: adjusted ebitda was stable and five point four million as a percentage of sales adjusted ebitda represented one point seven percent of sale for the fourth quarter against one point six percent last year so it's a small improvement this improvement them from the deployment of the operational optimization measures and implementation of the rationalization plan as explained by louis
spk_1: literally from continuing operations to that six hundred thousand again said last last year of one point nine million for the court order this improvement is from lower to a more diverse asian depreciation expands and improvement of one point seven million and cause not related to current up duration and lower financial expenses for fiscal two thousand and nine p council dated sales were down three point three percent to one billion sixty million the sales and distribution segment decrease by three point three christian and this is the prime this is primary primary layering attributable to lower sales volume in ontario in an amount of twenty six point nine million of which thirteen point two million is from the law the recipes supply agreement as well as other customer a decrease in the end abroad line distribution sales in quebec mainly related to the decision to see serving number credible region and of other non profitable contract agreement that's what mitigated by an increase in specialty distribution sales mainly from a retailer to let promotion sales and a wholesale segment decrease by five point three percent this reduction it is from a decrease of five point four million in intersegment sales and as well as the none renewal of non profitable contract and some timing of orders adjusted ebitda as we mentioned was up by seventeen percent reaching ninety million for the year the an omelet percentage as a percentage of sales and just a the the represented the one point eight percent in two thousand and nineteen against one point five percent in two thousand and eighteen this improvement stems from the deployment of the operational optimization measures and implement a one of the rationalization plan to out two thousand and nineteen net earnings from continuing operations reach seven hundred thousand dollars and per share compared to a lot of four point nine million all types of are lots of five cents per share in fiscal two thousand and eighteen that improvement is from lower amortisation them depreciation expenses more impairment of two point seven million and decrease cause not related to current operation for three hundred thousand dollars
spk_5: now turning our attention to free cash flow that leverage at that level sorry and leverage cash flow from operating activities amounted to twenty two million in fiscal two thousand and nine p
spk_1: up from fourteen million and two thousand eight pp it's increase is mainly due to a lower use of are working capital lower financial expense and i are adjusted ebitda on december twenty eight two thousand and eight nineteen sorry the company's ned depth including convertible debentures and bank indebtedness amounted to seventy two million compared to a hundred and two million at the same period a year before the amount received nearly the eight million coming from the sales of the assets of good young decay division as well as hired cash flows from current operations allowed the ten million dollars to reclaim the numbers subordinated debt and a reduction of thirty two million dollars on the credit facility our financial leverage rachel now stands at three point eight time which is down sequentially from the third quarter of two thousand and nineteen when the ratios to that four point three town and down significantly from the end of that fiscal two thousand and eighteen when leverage to him at six point three times if we exclude the convertible debenture this ratio would stand at one point two times vs three point five times last year
spk_2: now won't turn to call to over to the operator for the question and answer period
spk_0: thank half after mind i feel like ask a question has of on on a phone keypad to wear try your question has the funky a hard topic on how the china roster your first question i find that the heckler a heavy security is go ahead
spk_7: yeah morning and i am i talking you add louie louie i know it's it's earlier and and cheer tenure i'm just wondering where you are in and terms of up your wrap up ah and and learning curve
spk_3: they thank their direct and there and thanks for the question ban the have been here at for ninety day
spk_8: had a chance to
spk_3: yeah almost all of our employee here in quebec and ontario i haven't finished yet but most of our our customers also distributor's ah
spk_8: i am restaurant found some of our
spk_3: retail customers than their i'm impressed with via their their their reception from their from our customers that i know that that we have a strong brown much stronger in quebec and ontario and i knew that business from my previous life ah and the and apparently in quebec care i shall we have a competitive advantage and are branded stronger oh we have that to work to do like the plan i was put in place where
spk_1: to to improve the efficiency and there were more thing that team did a very good job and very important decisions were made and fill their other decision
spk_9: we'll have to be to be make yeah
spk_3: to continue our progression so at a good business there's a market and the customers ip my employees that ab are ip with the result their ip with the the plan so it's pretty good
spk_7: okay so i guess maybe back to that that klein it seems like there's there's there wasn't a lot of changes are there's not a lot of changes to the original plan that you i guess you see a need going forward so it it just a question of of fine fine tuning it and if so can you may be just had some color to some of the areas that you think of need that fine tuning
spk_10: while we made their that the plan was that a very good plan and their exactly fine tuning in the world and the so we made some good important decision been out to eat a cute
spk_3: the rationalization they're out there were offices and ontario they're specially that was the at that they curse thing and that securing and explaining to are important customers the biggest one in ontario that were not clothing and after the recipe yeah
spk_1: termination of the contract that is there now in a week usually goes very well so i was important to secure our at our customers and and our employees also most important thing so some fine tuning air and other activity yeah
spk_11: aka ah
spk_12: s met him
spk_7: maybe i should i can the decision to not renew the edge be to what has option
spk_1: so that decision what what's the question directly and i just the i was just wondering what what the i guess what the
spk_7: as the idea or the thoughts were behind not renewing it
spk_5: he got up you mean nothing sizing in the options yep yep
spk_3: okay well i heard you been what they're there is a great company with the excellent employees and great ownership and we decided not to go ahead with the exercising the option because of that terms and conditions that were agreed in two thousand and sixteen that's it
spk_13: they are and important customer of our and we have plants to grow the business and there
spk_14: like we do with other distributor's but
spk_3: it doesn't doesn't pay that we don't want to grow our god my business so we're looking at all
spk_15: at all i'd alternative to go abroad lang distribution in quebec organic the or not or again
spk_7: i have that makes sense i just and you pointed and your your and in hs taught to marketing an outfit that you guys didn't and twenty nine pain he could get some color to to where you to do he grows and and and maybe just yeah i'll just add just maybe i get some clarification of of what you mean by repositioning
spk_1: your your private branson and strategic categories
spk_16: sure
spk_3: a very good on the marketing out it was made their last year
spk_9: if while you're looking at our brand on private brand
spk_17: the market the competition and
spk_3: what could be done
spk_18: so
spk_3: so many of those other than my career guy was a good one it and
spk_1: need some fine tuning and will that
spk_4: we'll we'll we'll prioritize you think so i can that evolves what will do like gap competitors in also or and
spk_3: but they're they're the end up watching the the menu brand as the it's our our brand privately bowl or whatever
spk_4: as well appreciated by air
spk_3: my our client and so i had the chance to ask them so would be like about it would be don't like but the audit
spk_7: was the quantitative versus my perception which is qualitative and
spk_19: the that that plan is interesting and we have action plans for with difficult will tell you more the at a gm will be able to show you a bit more okay so any thought and when you say well appreciated
spk_3: so will appreciate it but under penetrated is that
spk_20: get busy at a fair
spk_3: a again it the decision to differentiate ourselves but share of our business we want to have on there are private label versus sir that the to vegas
spk_7: competitors saying we we have the plan and we will when i can tell you is that we need to grow it but not go crazy with it because i have a point of the differentiation and we were very well with our suppliers national suppliers and some other our customers prefer national brand and some of the people in the market they're pushing and they're pushing their private ran at and sometimes it's that the right decision so i will bounce back
spk_21: but the basis the base and the foundation is very good so it's us to decide exactly how to execute it
spk_2: or it that's that's a fairly ah
spk_1: how much you the improvement or i get the decline in operating expenses was due to ah to improve cost controls from from irrational a rationalization clients or says
spk_22: duquette vs just a a strict drop and and sales
spk_23: oh
spk_1: look you you want to you we will not the divulging that specifically but most of it relates to to to gab as well as we've
spk_24: during the year
spk_5: with our new bp operation that started the mid year
spk_25: i started to reduce costs in our operation in quebec
spk_1: and and more will come in twenty twenty strictly by be becoming more efficient within the operation
spk_26: so the the we have the and
spk_27: as series of the initiatives related to their
spk_5: in quebec in ontario of course is with the rationalization
spk_28: going from three plans to one they will be a first phase that the should be completed sometime during march and posts to that of course we go along with find good the teams already looking at finding ways to become
spk_1: more efficient so whether it's related to transport logistics
spk_15: or within the warehouse itself so
spk_7: but that the direct will will will the he is a becoming are if you want or moto internally to the to work on continuous improvement the of our results are operating costs as we go along but i would say to answer your question most of it comes from
spk_29: a combination of what happened in late twenty two together with
spk_1: twenty nine team so with you you can have to look at if you want the whole year or order it's improving a quarter on quarter so yeah we have to keep that in mind when we look at our results so there's more coming year first quarter second and so on so foreign twenty twenty
spk_5: thanks that that care
spk_1: as a all day on a departure from
spk_30: ave as at the senior vp of up some it has he has he been replaced
spk_5: well currently
spk_1: in a the know what to answer your question we're looking at the of you were looking at the people
spk_5: what we want to find for the size of the organization that will laugh we'll we'll we'll find
spk_7: look at to find somebody now that being said currently in the person responsible for that is our head of finance because were in a few months in in education process as we go along with the next few months so
spk_1: i think it gives us time to find the appropriate person
spk_3: the to manage and to says that been on the next phase of wrote so at this stage i think it's survey the appropriate to have that we we felt the team felt that the the was the appropriate person or the time being and gives us enough time to find the right and or right person
spk_8: and then just maybe a couple more for me i guess i just want to get your your view on
spk_3: the competitive activity out there have there been any changes it increased than in terms of farm intensity and and second maybe you know a guy that just a painter
spk_13: any or have you seen i guess any indication or you don't drop in a catchall restaurant sales are or what have you are due to the am i guess some some corona fears that that might be out there
spk_31: k
spk_13: on and on your first question on the competitive by know the answer is no no big changes are buddy fighting fighting to increase their share of wallet with the with their customers but
spk_3: the no breakthroughs or breakdowns regarding a competition
spk_1: regarding the coroner virus the situation where concern and
spk_5: year we haven't been affected yeah but if we get here
spk_1: that
spk_32: customers will be on more and more so that
spk_20: the market
spk_21: weekly the the that the
spk_3: the canadians would see that and the air but there could be
spk_9: and effect if i may add to what louise saying is the
spk_13: it's always normal in the first quarter that it's to lower season so can we we we said it dinner
spk_7: public communication that to ones always a a low elo monthly fee or look quarter
spk_0: well we're we're on the lookout for the koran
spk_1: i guess have you i know it's too early to say and i'm not expecting our like an affirmative by have you get started to think about ah contingency plan in any event that it does get worse sir an hour risk management there for internal procedure this is on the target so yes we were drafting yeah what what were the age of would have parted drafted the the graph from their ability to an action plan to or
spk_5: a that again the that situation but
spk_1: and there's more work to do aka that's hard a gentleman that's that's all for me thanks for the ganga a question
spk_3: good eric
spk_1: again if like ask a question press down on on a telephone keypad
spk_33: fair enough had a question at this time of kinda call back over to the presenter have fucking remarks
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