Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Andrew Peller Limited second quarter fiscal 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Thank you. I will now turn the call over to David Mills. Please go ahead, Mr. Mills. Hi. Good morning. Thank you, Joelle. Before we begin, this is a reminder that during this conference call, management may make statements containing forward-looking information. This forward-looking information is based on a number of assumptions and is subject to a number of known and unknown risks and uncertainties that can cause actual results to differ materially from those disclosed or implied. Please refer to the company's earnings release, MD&A, and other securities filings for additional information about these assumptions, risks, and uncertainties. I'll now turn things over to Mr. John Peller, Chief Executive Officer. Good morning, everyone. Lovely to be with all of you. We have a beautiful day here in the Niagara Peninsula. Certainly reminiscent of the lovely fall and autumn that we've enjoyed. We just finished our harvest on Friday. You know, I can say without reservation that the quality we'll get from the beautiful fruit that we have will be at the highest level possible. Having said that, our yields are a little soft and down from normal levels in Ontario. In the Okanagan, we had quite a scare in the start of the year. We had a very cool spring and a very late start to summer. Having said that, summer did arrive, and we've had a phenomenal fall so that we have delivered a crop that, if anything, is slightly above what we've expected, and the quality is, you know, off the charts, so that we're incredibly pleased with all of that. Looking to our second quarter and the completion of the first half of the year, it has kind of followed as we have predicted from the start of the year. You know, our revenues are recovering, and our growth in the second quarter revenue was 2.6%. We're 4.1% for the first six months. It's accurate to say that those numbers would have been more improved, higher, but we've dealt with shortages in supply, and we've had considerable stockouts, and we've been working hard to work around these issues. We've been able to expedite and procure more wine for the back half so that we've eliminated a lot of those problems going forward. I think the market in beverage alcohol overall has been a little flat, both in Canada and the U.S. Having said that, we've grown very nicely, and we've grown particularly well in our premium end. Our spirits are doing well. Our cider has grown as well, and we've increased our position as one of the leading brands now in the country with our labels. On the whole, we've done very, very well. We've had a bit of a softness in the consumer wine making business, and we feel maybe there was some inventory loading going on through COVID, and we're expecting a bounce back here in that business this year. You know, we have talked a lot about the logistical challenges and the pressures of inflation that we dealt with on our cost structure, which, you know, is up at least 30% on our costs, where we've never seen an increase in our cost of goods more than 2% or 3%. Our team has worked incredibly diligently to manage. It's our principal focus. You know, we've had over 20 project cost savings projects that we've been focused on. We started up several more. We've lowered our CapEx and preserved cash, you know, from a CAD 30 million level down to about CAD 17 million. Having said that, you know, we're still making investments for our future. We have over CAD 3.5 million planting program in ultra-premium reds in the Okanagan. That's beginning as we speak. Our asset base maintains a great deal of strength. You know, I noticed with interest that there were significant vineyard transactions both in the Niagara region and in the Okanagan last week with the crisis. That. You know, I think it speaks to the fact that people in our industry invest for the long term. That's how we've managed our entire life, and our long term looks very, very positive, and we feel very, very good about that. I'm generally pleased with everything that's happening. It's as we've predicted. We know that the cost pressures will stay with us for the remainder of the year. We're prepared for that. We know things are already starting to come down. Transportation costs are starting to come down, but it takes a while for them to work its way through our system. You know, we know next year will be another challenging year, but the future looks bright in that regard. With that, I'll turn it over to Paul and look forward to having some closing comments. Turning to our results, we continue to be encouraged by our sales growth so far this year. Sales in the second quarter of fiscal 2023 increased 2.6% to CAD 101.8 million. In the first half of fiscal 2023 increased 4.1% to CAD 199.5 million. Consistent with the first quarter, the increases were driven by a number of positive factors, including price increases implemented at the start of fiscal 2023 to help offset ongoing inflation and supply chain pressures, increased sales of our premium higher-margin VQA products through our Ontario retail network at our estate wineries and through our direct-to-consumer wine clubs. We are also experiencing stronger performance across our hospitality and export business as consumers exhibit a renewed desire to travel and spend on experiences. As John mentioned, sales growth was muted by ongoing supply chain issues related to the pandemic. We continue to closely manage the timely delivery of wines from international producers and the sourcing of glass bottles and other input components from our suppliers. Additionally, revenues for our personal winemaking business were lower than the first half of last year, a period when we were experiencing higher sales during the onset in midst of the pandemic. In terms of our margins, we're pleased to see margins continue to stabilize, landing at CAD 39.5 million, down CAD 2.9 million or 6.9% to the prior year for the quarter, and at CAD 77.5 million, down CAD 2.1 million or 2.7% to the prior year for the six months ended September 30th. Margin as a percentage of sales for the first half of fiscal 2023 decreased to 38.9% compared to 41.6% in the prior year due to the current inflationary cost pressures. 38.8% in the current quarter is up from the third and fourth quarter of fiscal 2022 as we continue to actively manage the inflationary pressures. Consistent with the second half of fiscal 2022, we are still experiencing higher than normal costs of raw materials, particularly glass bottles and packaging, and international freight, shipping charges, and fuel charge surcharges remain well above historical levels. In response to these cost pressures, our price increases are helping, as is the increase in sales of our higher-margin VQA products. In addition, we have been implementing a number of cost reduction programs this year, including optimizing certain warehouses and distribution networks to enhance efficiency, rationalizing our SKUs, and looking to alternative lower-cost sourcing for our imported wine and glass bottles. Sales and admin expenses landed at CAD 27.8 million for the quarter, up CAD 1.2 million or 4.6% to the prior year, and at CAD 53.9 million, up CAD 2 million or 3.8% to the prior year for the six months ended September 30th. Sales and admin expenses have increased this year as we return to full operations following the pandemic, and we have also experienced an increase in Ontario's minimum wage. Despite the increase in expenses, sales and admin expenses were consistent with last year at 27% as a percentage of sales. With the lower margin and increased sales and admin expenses, EBITDA reduced to CAD 11.7 million and CAD 23.6 million for the three and six months ended September 30th, compared to CAD 15.8 million and CAD 27.7 million, respectively, last year. For the second quarter of fiscal 2023, we incurred a net loss of CAD 0.1 million or CAD 0.00 per Class A share. For the six months ended September 30, 2022, net earnings were CAD 2.8 million or CAD 0.07 per share. This compares to earnings of CAD 13.1 million or CAD 0.31 per Class A share in last year's second quarter and CAD 16.4 million or CAD 0.39 per share for the first six months of fiscal 2022. In last year's second quarter, we recognized a realized gain of CAD 7.5 million or CAD 0.21 per share on the sale of our Port Coquitlam, BC property and assets. Turning to our balance sheet, total debt decreased to CAD 187.7 million from CAD 192.1 million at the end of fiscal 2022. At quarter end, we had capacity on our revolving credit facility of approximately CAD 162 million, with shareholders' equity standing at CAD 6.11 per class A share. Thank you for your time this morning. I'll now pass it back to John to wrap up. Thank you, Paul. You know, just to, you know, follow up on a lot of Paul's comments. You know, we're having a good year despite the challenges of COVID, and we feel good about all the investments we've made in the last five years, at least CAD 200 million. We spent CAD 100 million on three estate wineries in the Okanagan alone and an ERP system that will digitally transform our business going forward and our facilities and our people so that we have made these investments with confidence in our bright future. You know, we have a lot of new products coming to market this year. They're focused in the premium wine segments. They're focused in the value price segments. We have several imported wines we're launching in the below CAD 15 a segment. We have a product called VIVO, which is an Argentinian red that's the number one product in Eastern Canada that we're taking across Canada. We have an Italian bag-in-the-box and an Australian bag-in-the-box products that we're launching out west. You know, we've just launched our 1599 vodka, Ice Storm Vodka. It's done very, very well. It was the number one selling product at our estate this summer. We've also launched a Double Oaked premium whiskey. We have new entries in our No Boats cider and some other innovative refreshment products. We're much more focused in that business now and feeling good about the positions that we've had. You know, we expect it to continue on at the same pace and with the same success that we're currently having. We finished a tough year, and we know next year. It will be a challenging year with stability coming in the following year. We're encouraged. You know, our business is built to last, and it's built to endure difficult times. It's proving that right now, and it's built to grow. We're anxious to have you come and visit us. We know a lot of investors have been asking if they can come down. We've been particularly busy, and we've been through a blackout period for the last six weeks, so we'll be following up with a lot of you to come down and, you know, walk the region with us and see what we're up to. It always has a very significant impact on people, you know, seeing firsthand is believing. I'm anxious to take any questions, if there are any. Thank you. Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touchtone phone. You'll hear a three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Nick Corcoran with Acumen Capital. Please go ahead. Hey, guys. Thanks for taking my questions. Morning, Nick. Just a question on the growth. I think it was a little over 4% in the first quarter and about 2.5% in the second quarter. Can you maybe explain what the trend is being and dig into it a little bit deeper, what you're seeing in each of the segments between your VQA business and Wine Kitz? Yeah, I mean, Wine Kitz to handle that one, as I said, Paul and I both mentioned that the sales are below last year. They're soft, and there's been some heavy factory loading in the previous year in COVID. Right across North America, wine is a little soft. Flat, flattish, if you will. I think that's very accurate. We go through spells like that 'cause, you know, there was significant growth in some periods in the last two years that we didn't expect. We see the trend of, you know, the growth that has been here for a very long time will continue. This was a bit of a flatter year. You know, I think our premium, you know, VQA business was very strong this year. We've taken some significant growth in the East and the West. In the value price segments, you know, we were a little softer than we'd hoped, but part of that was our supply chain disruption. We had wine that was supposed to arrive in the West Coast and the ports were closed, and it's caused a significant delay. We've had to, as I said, expedite wine, you know, from California to replace it at significantly higher costs. We were out of stock significantly, and we didn't want that burden for the rest of the year, so we've made those necessary adjustments. You know, I feel good about how we've performed in the marketplace, and we've taken some pricing, significant pricing in, you know, over CAD 15. You know, we probably took up to 5%, 6%, 7% in our channels. I read a funny, not funny, but an editorial on the European wine industry, where the Italians were claiming that their costs were up between 40% and 50% for the year. I've noticed they've taken very little price increases in our market. You know, we took significant prices above CAD 15. By the way, our estate wineries were oversubscribed all summer long. We've been turning people away just because the tours are full. Our restaurants have been full. We have a very strong positive summer, and now we're actually seeing a lot of the corporate business returning. You know, it used to be as much as 3% of our revenue, and it went to zero, and we were beating our numbers notwithstanding that. Now that business is coming back, so, you know, I'm happy to tell you that I keynoted earlier this week at the Niagara Economic Summit, you know, and I was proud to be able to tell people that the economic future for the Niagara Peninsula is incredibly positive. You know, people are wanting to move to be living in the wine industry. There are significant hospitality, new hospitality investments coming in. There were some good wine vineyard trades in the last few months at high prices. There's a great deal of support for an industry that is just going from crawl to walk in my perspective, and it has a very great future. I don't know if that helps, Nick, but if you have anything else specifically, I'm happy to comment. Yeah, that's good color. Maybe just about the growth year-over-year. Can you help us understand how much of that was value versus volume? I think I can tell you that it was probably, you know, more 70% premium, 20%-30%, 'cause we're kind of flattish on the low end right now. We would've been up if we had the supply. You know, we still did well. You know, I'm confident that we're gonna have, you know, we're gonna have growth in both value and premium, mid-premium and, you know, in the ultra-premium levels as well. Great. Just thinking about margins for the back half of the year, is there anything you can provide to kind of give some color on what to expect? I think the best way to describe it is that most of our costs are locked in for this year. You know, they're at the lowest margins, kind of gross margins that we've had in 10 or 15 years because of that cost inflation that we've talked about. You know, I think that it's already clear to us that the transportation and energy surcharges have already started to come down, and we'll start to benefit from those going forward. Similarly, we're out, you know, around the world now talking to people about wine purchases. The prices are starting to come down. I'm sure you're familiar that when oil companies take prices up, they go up fast and they come down slow. The exact same circumstances we're dealing with now. People have taken them up to, like, faster levels. They're, you know, take their sweet time letting them come down, but they'll come down. You know, we've mentioned this before, they'll come down, you know, whether it takes, you know, the most of next year as well is what we predict. Then we predict the sun will shine brightly after that. You know, we probably will have another year and a half of this headwind to deal with. Even though next year will be challenging, it won't be quite as bad as this year's, and we'll expect to, you know, grow both revenue and earnings per share on improved margins. You know, we stayed focused and are staying focused in the short term on cost, full stop. There's lots of investments we'd like to be making right now. We're holding back a bit just to keep our powder dry to make sure things play out the way we expect them to. That's just being prudent. We're still making other investments, though, like I told you about planning those ultra-premium in Red Southwest, because we need that volume for the medium to long term. You know, we feel we're in a strong position. You know, our team's working incredibly hard, and doing very, very well. You guys have done it. Just thinking about CapEx for the back half of the year, what are you expecting there? Yeah, I think we, you know, in years past, we've kind of been investing in the kind of CAD 25 million-CAD 28 million. We've gone up to CAD 35 million in years where we've had heavy investment. This year, you know, we've held back on some equipment and purchases that we've made and some improvements to the wineries that can wait. We've prioritized the CapEx, you know, around areas critical to our growth going forward. You know, we probably should come into the high mid-teens or so. Just the last question, when you think about the inventory levels, I think you mentioned on the first quarter call that there might be an opportunity to slowly draw them down over time. Have you made any progress on that? No, we unfortunately have not, because in fact, we've had to, you know, go out and expedite inventories. I think we're in a reasonably good spot, but balancing inventories has been a challenge to say the least. You know, we were short on the things that we really needed and we had to bring in some extra volumes. I can tell you that next year will be a much better year for us to balance our inventories and that going forward, we know we will operate at lower inventory levels. We're looking forward to that. Right now we're just ensuring that we avoid large stockouts in the back half of the year and get ready for a better year next year. That's all. Thanks. That's my questions. Thanks, Nick. Your next question comes from the line of John Sartz with Viking Capital. Please go ahead. Good morning. Good morning. Actually, my question is about the interest expense in the second quarter. It was over CAD 6 million, more than twice the level of last year and almost twice the level of Q1. I found the commentary somewhat vague, and perhaps you can shed some more light on the dramatic increase. I'll let Paul handle it. Yeah. Thanks, John. Interest expense in Q2 had a catch up adjustment in there, just an accounting adjustment which represented about CAD 1.1 million. So ongoing interest we expect to land currently at current interest rates in around the CAD 4.8 million range. That's strictly related to the increase in interest rates that we've experienced. Okay. That's a number that I can reasonably expect for Q3 as well or are we? Yes. I mean, subject to obviously. Yeah, subject to obviously. Market conditions. Yes. Okay. All right. Thanks. Thank you. Your next question comes from the line of Douglas Smith, Private Investor. Morning. Good morning. Thank you. Hi. Thank you for taking my calls. In fact, talking about the interest expense again, in your MD&A, you mentioned your sensitivity to rising interest rates. I think you mentioned for every 100 basis points they go up, your sensitivity is about CAD 1.4 million. My question is, are you taking any steps or what steps do you anticipate to try to mitigate that expense? Yes, we are. I mean, obviously, in our disclosure, we disclose that our swaps expired in September, and we're in the process of evaluating our options and look to make a decision in Q3. Okay. Some good progress. You've also mentioned that you did not do any stock buybacks this quarter. What does Q3 look like? I mean, we have our NCIB in place. You know, we're mindful of the price of our shares trading below book value. At the same time, we're mindful of, as I told you, our short-term focus on ensuring our margins get where they wanna get to. Put our money in to grow our business in the future. You know, we think that's a significant investment so that we're keeping options open, doing things to manage our business in the short term that we need to, but still making investments in our long term. Okay. On September 22nd, you announced your intent on selling about 569,000 A shares. Could you give us an update on where you stand on that program? Yeah. I mean, those shares, if you follow up you'll see that those shares were sold. They were from the estate of my youngest brother who passed away last year. Okay. They have been sold. My last question is around the disclosure in your proxy statement. You noted that the new director, David Mongeau, has joined the board. Is David have any responsibilities beyond his board responsibilities for the company, and what might they be? You know, David, you know, he's a former lawyer with Goodmans in Toronto. He ran CIBC's investment bank for eight years, he worked with him for eight years at Four Seasons in their formative years when developed a model that is now the foundation for their success. He started investment bank in London, England, so that bank is the premium banker for the luxury hotel chain, Lee. You know, he's been advisor over the years. We've never had any containers with him. You know, we've looked at various investments over the years. He has significant connections into the wine business throughout Europe, as I said, in the hospitality industry. You know, he brings a great deal to the table. If your question is, do we have any current business between us? The answer is no. Okay. Thank you. Those are my questions. There are no further questions at this time. I would now like to turn the conference call back over to Mr. Peller. Thank you very much, everyone, for questions and interest. I wanna thank many shareholders who have called me in the last several months, offering their support and confidence in what we're doing. As I said, we're anxious to follow up with any of you who are prepared to come and meet with us either by Zoom or in person. We'll look forward to connecting with you. If all you wanna do is jump on the phone and give us a call, don't hesitate. Thank you. Thank you very much for your time, and we will follow up with you soon. Cheers. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.