Metro Inc.

good afternoon ladies and gentlemen and welcome to Metro Inc 2024 first quarter results conference call at this time note that all lines are in a listen-only mode but following the presentation we will conduct a question-and-answer session and if at any time during this call you require immediate assistance please press star 0 for the operator also note that the call is being recorded Tuesday January 30th 2024 and I would like to turn the conference over to Sharon Kadosh Manager-Investor Relations, and Treasury. Please go ahead.

Merci, Céline. Good afternoon, everyone, and thank you for joining us today. Our comments will focus on the financial results of our first quarter, which ended on December 23rd. With me today is Mr. Éric Lafleche, President and CEO, and François Thibault, Executive VP and CFO. During the call, we will present our first quarter results and comment on its highlights. We will then be happy to take your questions. Before we begin, I would like to remind you that we will use in today's discussion different statements that could be construed as forward-looking information. In general, any statement which does not constitute a historical fact may be deemed a forward-looking statement. Words or expressions such as expect, intend, are confident that, will, and other similar words or expressions are generally indicative of forward-looking statements. The forward-looking statements are based upon certain assumptions regarding the Canadian food and pharmaceutical industries, the general economy, and our annual budget and our 2024-2025 action plan. These forward-looking statements do not provide any guarantees as to the future performance of the company and are subject to potential risks known and unknown as well as uncertainties that could cause the outcome to differ materially. Risk factors that could cause actual results or events to differ materially from our expectations as expressed in or implied by our forward-looking statements are described under the risk management section in our 2023 annual report. We believe these forward-looking statements to be reasonable and pertinent at this time and represent our expectations. The company does not intend to update any forward-looking statements except as required by applicable law. I will now turn the call over to Francois.

Thank you, Sharon, and good afternoon, everyone. For the quarter, total sales reached $4.974 billion, an increase of 6.5% versus the same period last year. Food same-store sales were up 6.1%, and sales were positively impacted as the week preceding Christmas fell in the first quarter, whereas last year it fell in the second quarter. When we adjust for the Christmas shift, that is, when we compare same-store sales For the 12-week period ending December 23, 2023, with the one ending December 24, 2022, full same-store sales increased by 3.4%. We will have the reverse effect in the second quarter. Armour same-store sales were up 3.9% when comparing the 12-week period ending December 23, 2023, with the one ending December 24, 2022. Our gross margin stood at 19.6% of sales, same as in the first quarter last year. Operating expenses amounted to $506.4 million, up 10.5% versus last year. Operating expenses as a percent of sales was 10.2% versus 9.8% in the same quarter last year. As expected, the higher ratio is mainly due to the commissioning of our new automated DC for fresh and frozen products in Tabun, as we incur temporary duplication of costs and learning curve inefficiencies. We also have higher third-party e-comm fees than last year. EBITDA for the quarter totaled $468.1 million, up 1.3% year-over-year, and up 2% when removing the gains on disposal of assets. Total depreciation and amortization expense for the quarter was $131.1 million, up $11 million versus last year. A significant portion of the increase is due to our new Telbon, D.C. Net financial costs for the first quarter were $32.4 million, compared with $27.1 million for the corresponding quarter of 2023, and the increase is mainly due to an increase in debt, higher interest rates, and low capitalized interest related to our distribution-centered automation projects. Our effective tax rate stood at 25% versus 26.5% last year, reflecting a favorable tax adjustment in respect of prior years. Adjusted net earnings were $235 million compared to $237.6 million last year, a 1.1% decrease, and our adjusted net earnings per share amounted to $1.2, up 2% versus last year adjusted EPS of $1. After 12 weeks in fiscal 24, capital expenditures amounted to $117.3 million versus $129.3 million last year. On the retail side, during the first quarter, we opened three Super C stores, and carried out major expansions and renovations of four stores for a net increase of 88,400 square feet or 0.4% of our food retail network. Turning to in-store technology, we ended the quarter with 502 food stores and 63 pharmacies equipped with self-checkout technology. As for electronic shelf labels, at the end of Q1, we had 345 food stores and 46 pharmacies equipped with that technology. Under our normal course issue program, as of January 19th of this year, we have repurchased 1.675 million shares for a total consideration of 113.7 million, representing an average share price of $68.89. The Board of Directors yesterday declared a quarterly dividend of 33.5 cents a share, or $1.34 on an annual basis, an increase of 10.7% versus last year. This is the 30th consecutive year of dividend growth and represents a payout of about 30% of last year's adjusted net earnings in line with our policy. In closing, our first quarter results are tracking well to the guidance we provided in November for fiscal 24, that is EBITDA to grow by less than 2% versus the level reported in fiscal 23, and adjusted net earnings to share to be flat to down 10 cents versus the level reported in fiscal 23. That's it for me. I'll now turn it over to Eric.