Metro Inc.

Good afternoon, ladies and gentlemen, and welcome to the Metro Inc. 2025 First Quarter Results Conference Call. At this time, all participant lines are in a 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 $0 for the operator. Also note that this call is being recorded on Tuesday, January 28, 2025. And I would like to turn the conference over to Mr. Sharon Kadosh, Director, Investor Relations and Corporate Finance. Please go ahead.

Merci, Sylvie. 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 21st. With me today is Mr. Eric Lafleche, President and CEO, François Thibault, Executive VP and CFO, Marc Giroux, Chief Operating Officer, and Jean-Michel Couture, President of the Pharmacy Division. 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, our annual budget, and our 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 2024 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, Sharan, and good afternoon, everyone. I'll start by going over the key income tax highlights for the quarter. First, we had a resolution of an income tax position related to prior years, which had a favorable impact of 20.6 million, and we adjusted our net earnings for this gain. Resolution of this tax file also had an impact on operating expenses and interest expense, which I will go over shortly. Secondly, We also benefited from a provincial tax holiday of 6.1 million related to the commissioning of our new automated distribution center for fresh and frozen products in Taban, which is an eligible large investment project in Quebec. The total tax holiday represents approximately 66 million, and we estimate it will be recognized over a period of three years. The tax benefits are cash in nature and are part of the original business case for Taban. Turning to our results, Total sales in the first quarter reached $5.12 billion, an increase of 2.9% versus the same period last year. Food same-store sales were up 1%, while sales were negatively impacted by the transfer of two significant pre-Christmas shopping days to the second quarter this year. When we adjusted this calendar shift, same-store sales for food were up 2.4%. In pharmacy, we recorded same-store sales of 5.1%. Our gross margins stood at 19.7% of sales, versus 19.6% in the same quarter last year. Operating expenses amounted to 528.5 million, up 4.4% versus our Q1 last year. And operating expenses as a percentage of sales was 10.2% versus 10.2% in the same quarter last year. The increase in operating expenses is mainly due to the launch of the Mois Rewards Program in Ontario and the recording of professional fees regarding the resolution of the 20.6 million tax gain I described at the beginning. If not for these two items, operating expenses as a percent of sales would have been similar to Q1 last year, and when we consider Christmas shift, that ratio is slightly lower than last year. EBITDA for the quarter totaled $481.5 million, representing 9.4% of sales, same as in our first quarter last year, and was up 2.9% year over year. Total depreciation and amortization expense for the quarter was $133.6 million, up $2.5 million, or 1.9%. Net financial costs for the first quarter were $30.7 million, compared to $32.4 million last year, down $1.7 million year-over-year. And the decrease is mainly due to the recording of interest receivable regarding the resolution of the tax file I described at the beginning. and that's partly offset by the fact that we no longer capitalize interest related to the big automation projects as we did last year. Our effective tax rate of 18.2% is lower than the effective tax rate of 25% in the first quarter last year, as a result of the 20.6 million tax gain and the Tubbond tax holiday. Adjusted net earnings were 245.4 million compared to 235 million last year, a 4.4% increase, and adjusted net earnings per share amount to $1.10, versus $1.02 last year, and that's up 7.8% year-over-year. On the food retail side, after 12 weeks, we converted two stores and carried out major expansions and renovations at eight stores for a net increase of 18.3 thousand square feet, or 0.1% of our food retail network. Under our normal course issue of the program as of January 17th of this year, we have repurchased 1.425 million shares for a total consideration of 129.6 million, representing an average share price of $90.95. The board of directors yesterday declared a quarterly dividend of $0.37 a share, or $1.48 on an annual basis, and that's an increase of 10.4% versus last year. This is the 31st consecutive year of dividend growth and represents a payout of about 33% of last year's adjusted net earnings, well in line with our policy. That's it for me. I'll turn it over to Eric.