Colabor Group Inc.

Good morning, ladies and gentlemen, and welcome to the Collabore's third quarter 2024 results, résultat du troisième trimestre 2024 de Collabore conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call has been recorded on Friday, October 18, 2024. I would now like to turn the conference over to Louis Frenette, President and Chief Executive Officer. Please go ahead.

Thank you. Good morning, everyone, and welcome to Calabas Group's third quarter of fiscal 2024 results conference call. This is Louis Frenette, President and Chief Executive Officer. Last evening, we released our earnings results for the 12th and 36th week period ended September 7th. The press release and disclosure documents can be found on our website at sidarplus.ca. The accompanying presentation, including our statement on forward-looking information and non-IFRS performance measure can also be accessed online in the investors section at colabar.com. Joining me today on this call is Pierre Blanchet, our Chief Financial Officer who following my initial remarks will provide an overview of our financial results. Considering ongoing headwinds in the restaurants and retail channels that have resulted in a flat to no growth across the restaurant industry, our ability to grow our distribution business with new customers and growing purchasing volume among certain distribution customers demonstrated that we can still win in a challenging macroeconomic market. According to Restaurant Canada, last available data point, commercial food service sales in Quebec in July were up 2.2% on a nominal basis, and when adjusting for menu inflation, real sales were down 0.8%. During the third quarter of 2024, Color balance distribution sales grew 1.5%. This growth contributed to market share gains of 6.8% year-over-year, bringing our market share to 11.1%, up from 10.3% in the equivalent quarter of last year. I believe this once again demonstrates the resiliency of our business and unique value proposition, which continues to position us well in organic and non-organic market share gains. Our focus on growing our distribution platform allowed us to mitigate a reduction of 10.1% in wholesale revenue in second quarter of 2024. Our wholesale customers are more exposed to restaurant industry than we are and to the effect of a weaker consumer backdrop. Higher cash flows from operation allows us to reduce our net debt. This demonstrates the cash generation capabilities of our platform, even as lower volumes weighted on our operating profitability. Let's keep in mind that we are just starting to prudently scale our recently complex growth CapEx, which contributes to operating efficiencies as we grow ourselves. It has now been three quarters since we moved into the new hybrid distribution facility in Saint-Bruno-de-Montarville, and five months since we completed the transition of our existing customer to the new facility. We continue to work on many fronts to further improve our productivity and operational efficiency, and we are achieving good service levels. We started onboarding new customers, mainly smaller independent restaurants. We remain confident in our ability to continue gaining market share, compensating for the effect of the reduction in spending in the restaurant industry. Just this morning, we received confirmation that the agreement between Calabar and the institutional customer, which was subject to a public bid solicitation process, was renewed. The press release just hit the wire. The two-year agreement effective December 2024 includes two six-month renewal options at the customer's direction. This agreement represents approximately 11% of our expected revenues for the fiscal year 2024. This contract was awarded based upon a prevailing economic condition in the markets with significantly lower margins than currently enforced. In order to proactively manage the situation, Carabao has already identified several opportunities and measures in order to reduce the impact on future earnings. This demonstrates that we can win in a competitive market against large players. Please turn to slide number six of the document to see how our 2020 and 2025 plan is evolving. Efficiently managing our customer mix and product portfolio has allowed us to raise our gross margin in the past few years. As we onboard new clients with varying profitability profile, our job will be to pull on these levers to raise the lifetime value of a diversified customer base within the HRI and retail market. We can do this by increasing the share of private label We sell to our customers by improving our routes and field capacity. We also remain focused on growing our distribution platform both organically and with accretive acquisitions. New customer acquisition in and around Montreal in a slower market demonstrate that we are still in a very good competitive position. Our pipeline of M&A opportunities is also filled with accretive targets of varying size, so we are confident in our ability to improve efficiencies as we gain new customers organically and non-organically in the medium and long term. The new facility, along with continued improvement to our employer brand and better communication practices, are helping us keep our employees motivated and engaged. Our focus on quality and locally sourced offering is serving us well. and is becoming a hallmark of our differentiated offerings. It is helping us keep and win new business and it is key pillar of our success. Our private label sales are also doing well and they contribute to our competitiveness with a well-priced and differentiated quality offering. We are just wrapping up a very busy summer season. Our team dedicated to improving the efficiency of our new distribution activities and working to grow our presence in our territories.

Pierre, on this, I will turn the call over to you, please. Thank you, Louis, and good morning, everyone.