Good morning, and welcome to Dentalcorp's Third Quarter 2023 Results Conference Call. Please note that 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 that time, simply press the star, then the number 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by the 2. At this time, I would like to turn the call over to Mr. Nate Tchaplia, Chief Financial Officer of Dentalcorp. Please go ahead, sir. Thank you, operator, and good morning, everyone. Welcome to the Dentalcorp Third Quarter 2023 Results Conference Call. I'm joined here by Graham Rosenberg, our CEO, and Guy Amini, our president. Before we start, we would like to remind you all that amounts discussed on this call are denominated in Canadian dollars, unless otherwise indicated. Please note that statements made during this call may include forward-looking statements and information, and future-oriented financial information regarding Dentalcorp and its business, and disclosure regarding possible events, conditions, or results that are based on information currently available to management, which indicate management's expectation of future growth, results of operations, business performance, business prospects, and opportunities. Such statements are made as of the date hereof, and Dentalcorp assumes no obligation to update or revise them to reflect events, disclosures, or circumstances, except as required by applicable securities law. Such statements involve significant risks and uncertainties and are not a guarantee of future performance or results. A number of these risks and uncertainties could cause results to differ materially from results discussed today. Given these risks and uncertainties, one should not place undue reliance on these statements and information. Please refer to the forward-looking statements and information in our future-oriented financial information section of our public filings. Without limitations, our MD&A and our earnings press release issued today for additional information. For those of you who have dialed into the call, the company has prepared a series of slides to complement our prepared remarks. These slides are available on the investor relations section of our website in the Events and Presentation section. I will now turn the call over to our Chief Executive Officer, Graham Rosenberg, for opening remarks. Graham? Thanks, Nate, and good morning, everyone. We're pleased to be here with you today to review Dentalcorp's recent developments, as well as our financial and operating results for the three and nine months ended September 30, 2023. For today's call, I'm going to share a number of those developments with you, and I'll then hand the call back over to Nate, who will discuss our financial results in more detail. After which I will provide forward-looking remarks about how our business is trending. As a reminder, Dentalcorp operates in a highly recurring essential healthcare industry that is cash pay, resilient through economic cycles, insulated from disintermediation by technologies, and more importantly, Dentalcorp expenditures - sorry, dental expenditures have experienced strong relative growth during periods of higher-than-average inflation. Accordingly, in the context of the current macro environment, we believe that Dentalcorp's favorable cost structure, high margins, low commodity risk, and negligible capital expenditures provide support for the company's continued delivery of balanced double-digit growth in the CAD 20 billion Canadian dental industry. Our confidence in the business is supported by our third quarter and year-to-date results, which met our expectations and provide a constructive outlook for the remainder of the year. I'm pleased with this quarter's results, for which our base business results were in line with our expectations and included strong practice-level performance, underpinned by strong patient volumes, with acquisitions on track to meet our expectations for the second half of 2023. On slide 3, you will see that this performance has been made possible by our deep and diverse network of nearly 10,000 healthcare professionals from coast to coast, and our teams continued to deliver the highest standards of care during the reporting period, supporting more than 2.1 million active patients and managing more than 5.1 patient visits annually. You'll see that we completed our third quarter into September 30th, with approximately CAD 1.4 billion of LTM pro forma revenue and CAD 263 million of pro forma Adjusted EBITDA. You'll see on slide 4 that we continued with our balanced approach to growth, and we intend to continue growing our business organically through accretive M&A and driving overall business efficiencies and operating leverage over the medium to long term. This is a program we have meticulously built over the past decade, and we believe we are able to thrive in any economic climate. With respect to M&A, we acquired three practices in the quarter for a total consideration of CAD 8 million. These practices are expected to generate CAD 1.4 million in pro forma Adjusted EBITDA after rent. For the second quarter in a row, our acquisitions were self-funded. During the third quarter, as part of Dentalcorp's program to rationalize certain non-core standalone specialty practices, we completed the sale of another standalone orthodontic and specialty practice, bringing the total to 17 so far in 2023. We are also encouraged to see that in the third quarter, practice valuations are declining in Canada as access to financing opportunities tighten for many buyers across the industry. We remain the best positioned and capitalized, and as the partner of choice for independent dentists, and will continue to be disciplined about the practices we acquire. On slide five, you can see that our business continues to convert a high percentage of EBITDA into free cash flow, and without acquisitions, our business has the potential to drive our leverage down by a quarter to a half turn per annum to the mid to high ones over the medium term. Turning to slide six, I am pleased to report that our business generated revenues of CAD 336.9 million in the third quarter of 2023, up 7.9% over the same period in 2022, and Adjusted EBITDA of CAD 60.9 million. With adjusted EBITDA margins coming in at 18.1%. We are also encouraged that same-practice revenue growth was approximately 5.2% for the quarter and 6.3% on a year-to-date basis, and same-practice EBITDA growth was 10% for the quarter and 6.5% on a year-to-date basis, driven by strong patient visits. During the quarter, we also delivered 12% growth in the EBITDA of our 2022 acquisitions over their comparable performance, driven by our purchasing efficiencies and the effectiveness of our integration programs. In addition, we have completed the vast majority of our planned corporate investments, which has helped to drive strong practice-level performance in both the base business and our recent acquisition cohorts. The outcome of all this was a strong Adjusted Free Cash Flow for the quarter of approximately CAD 26.3 million, compared to CAD 26.5 million in the third quarter of 2022, despite increased financing costs driven by the historical interest rate increases we have experienced over the last 18 months. As we look ahead to the fourth quarter of this year, we anticipate continued growth, with revenues estimated to increase by 9%-10%, Adjusted EBITDA margins consistent with our year-to-date 2023 results, and Same-Practice Revenue Growth of 5%-6%. We are also expecting to complete acquisitions representing Pro Forma Adjusted EBITDA after rent of approximately CAD 8.5 million in the fourth quarter, in line with the expectations that we set for the second half of 2023. I will now pass the call over to Nate, who will walk us through the details of our financial results, and then I will share some closing remarks before we open the call to questions. Nate? Thank you, Graham. During our third quarter of 2023, the company hosted its first partner conference since 2019, bringing together our dentists and strategic industry partners from across the country. This year marked the first time since before the pandemic that Dentalcorp was able to host its dental partner conference. It's a momentous event that galvanizes our relationships and creates strategic alignment with our dentists and partners. The diversity in our dentist base allowed us to substantially deliver on our quarterly results and demonstrates the strength and predictability of our business. Turning to slide 7, revenue for the 3-month period ended September 30, 2023, as Graham mentioned, was CAD 337 million, compared to CAD 312 million for the corresponding period last year, representing an increase of 8%. The increase is attributable to our strong acquisitive and organic growth, including a positive contribution from continued strong patient demand. As you can see, we reported third quarter Adjusted EBITDA of approximately CAD 61 million, compared to CAD 59.5 million in the same quarter last year, and reported third quarter Adjusted EBITDA margins of 18.1%. Same-practice revenue growth was 5.2% over the same period in 2022, and 6.3% on a year-to-date basis. Looking forward, we continue to be confident about our ability to grow the business through both acquisitions as well as organically. Turning to slide 8, you can see our net leverage and liquidity as of September 30th, 2023. On a net debt basis, we were approximately at 4.4 times levered at the end of the third quarter, consistent with Q2 2023. We ended the third quarter 2023 with liquidity of CAD 776 million, comprised of CAD 103 million in cash and CAD 674 million in undrawn debt capacity under our senior debt facilities. Third quarter and last twelve months, adjusted free cash flow was CAD 26 million and CAD 125 million, respectively, which support our strong balance sheet position. On the debt side of the ledger, approximately 75% of our bank debt exposure, or CAD 800 million, is carrying a fixed CDOR rate plus margin for an all-in cost of approximately 6.4%. The remaining quarter of our senior debt facilities remain on a variable rate. As a reminder, every 100 basis points of rate increase on our credit facilities is expected to result in less than a 3% impact on adjusted free cash flow. Overall, we are pleased with our third quarter 2023 results. We delivered organic growth, in part due to our insourcing efforts, created ongoing operating efficiencies, closed accretive acquisitions, and continued to develop our pipeline. With that, I will turn the call over to Graham to provide some closing remarks. Graham? Thanks, Nate. Turning to slide 9, we remain highly confident about our opportunities going forward. Fiscal 2023 continues to be a strong year for Dentalcorp, due to our continued strong same-practice revenue growth and disciplined approach to acquisitions. We believe that this disciplined approach will continue to drive sustained double-digit growth and deleveraging in the fourth quarter and beyond. I'd like to thank you all for taking the time to join our call today. That concludes the formal part of our presentation, and I would like to open the call to questions. Operator? Thank you. At this time, I would like to remind everyone, in order to ask a question, please press star one. We kindly ask that you limit to one question and one follow-up question. Your first question comes from Brian Tanquilut with Jefferies. Please go ahead. Good morning. You have Taji on for Brian. Thank you for taking my question. So first, to get into the same practice sales growth, obviously very strong in the quarter and just has been for the year. My question really relates to the sustainability of the strong same-store growth. So I know that you guys usually guide that a third of it's from price, volume, and from, you know, menu mix. Looking in your seat now, we are aware of, like, where rate is trending, but is there anything on the volume side and on the mix side that would sustain this same-store growth above where you typically guide for next year? ... Hey, it's Guy here. Sorry, just repeat that last part of your question. Are you saying, is there anything that we see that was sustained above where we guided for this year? Yeah, exactly. Or we- So or above just your long-term guidance for same store, right? And it's particularly in volume and mix, cause I think we're aware of what's going on in rate currently. Yeah. So, I, like, I don't think the underpinnings of what we've indicated for same practice revenue growth are changing in terms of their composition or how much they contribute to the overall number. We haven't issued, obviously, long-term guidance in that regard, but it's always fair to say about a third price, a third volume, and a third sort of that continued optimization of the types of treatments we're delivering to our patients. A couple of things to note, and we mentioned this during Graham's comments. The vast majority of our business is probably general dentistry, so it's non-elective. It's non-elective, it's nondiscretionary, it's very highly recurring, and viewed as essential healthcare. And so that'll always underpin sustained demand, and we've seen that in dentistry for decades through all manners of economic cycle. And so, again, as we indicated, despite economic headwinds, we see continued strength in volumes. We don't have a lot of exposure to overly elective or very discretionary nature of spending in healthcare, as some other disciplines do. So we continue to take, you know, confidence in that from a long-term perspective on volume. You know, if again you're looking at our long-term indication of 4%+, given where we continue to see pricing coinciding with CPI from prior years, we continue to see volume consistent with prior years, and the modest growth therefrom. We've got nothing to indicate that we should see any softness in what we viewed as sustainable same-practice revenue growth. Thank you. That's really helpful. And then just looking at just consolidated revenue, I mean, I'm very impressed that that you were able to hold the margin relative to what it was in the first half. Just curious, I mean, as you've called out in your prepared remarks and in the press release, obviously, we're still weathering, you know, labor expenses and inflationary costs, right? You know, I think what are the offsets that you have in your business or, you know, can you call out areas where there's cost initiatives and where we can see margin upside moving forward? Yeah, absolutely. So, it's Nate here. We've, of course, been operating in an environment of inflation for the last number of years, and giving the pricing dynamics that Guy just went through. As we continue to come down to inflationary levels, which are consistent with kinda historical rates, we're gonna see the impact or the positive impact on margin really coming from two main places. One is at the practice level, we're gonna see recovery and increase in margin over call it the medium term, as well as through the last two years, we've had some increased investments and planned investments on the corporate end of things, which are coming to an end by the end of this year. We're gonna start seeing the operating leverage overall from the business and the operating leverage on the corporate infrastructure that has been built, significantly come through. So do expect to see margin expansion in 2024 both at the practice level as well as through leverage on our corporate infrastructure. Thank you. Your next question comes from Allen Lutz with Bank of America. Please go ahead. Good morning, and thanks for taking the questions. Nate, you mentioned that practice valuations are coming down. Is there any way to frame how much these valuations are changing? And then does that impact the overall strategy around M&A in the near term? Thanks. The valuations have come down quite significantly from the same period last year. This quarter, we were down over 30% from a total valuation perspective, albeit on a smaller sample of acquisitions. We do believe that valuations will continue to be in and around where we'll end the year and where we've spoken to, call it, in the low- to mid-7 range, sustainably, both in, call it, the medium term here. As far as our strategy through 2023 continues to be a balanced approach, feel very good about our pipeline as well as our closings here on the back half of the year. Of course, a little bit more back-ended to Q4, just given the seasonality in the summer months, that we just passed. But as far as our total capital allocation here, very, very balanced approach between continuing to drive organic growth, using our share buybacks opportunistically, as well as continuing to complete our acquisitions of CAD 10 million in EBITDA for the back half of the year. That's great. And then, my follow-up one for Graham. In the U.S., we've seen a pretty big step function change in patient volumes over the past 8 weeks or so. Curious if you're seeing anything similar to the business. I know that Nate mentioned that, you know, a lot of the services are routine and recurring, but just curious if there's anything to call out there. Thanks. Yeah, I mean, I'll let Guy dive into more detail here, but suffice it to say that our business is primarily general dentistry. We're obviously looking to continue to provide more comprehensive care to our patients, but the base still remains. ... highly recurring, you know, preventative care driven through hygiene, and obviously general dentistry at its core. And so, you know, we continue to see decent volumes, and modest volume growth as we've moved through this year and into next year. Guy? Yeah. There's sort of two things that underpin what I'd say you shouldn't be surprised by divergence between Canadian dental consumers or patients and Americans. One, if you just look fundamentally, utilization of dental services in Canada is just at a higher level. More Canadians routinely see the dentist, more Canadians, you know, recognize the importance of preventative dental care on overall health and well-being. And so everything from higher rates of seeing a dentist for children to more coverage for the average Canadian versus the average American, to greater frequency from a behavioral perspective. So all those things underpin a stronger, call it a stronger demand base for patients in Canada versus the U.S. And two, if you look at the nature of coverage, obviously, various degrees of coverage, in the U.S. for dental services, depending on which part of the country you're in or what portion of the economy you're referring to, you've got much more stability and just pure coverage rates. Employer-sponsored dental benefits plan cover about 75% of Canadians. There's government programs in every province to cover those who fall out of certain socioeconomic status. And so access to care has always been a strength, that's given, again, Canadians the opportunity to go see dentists to a greater degree, and, that's it from our perspective. We're not shocked to see to see a sort of a worse scenario in the U.S., relative to where we are here. Really helpful. Thank you. Our next question comes from Stephen MacLeod with BMO Capital Markets. Please go ahead. Thank you. Good morning, guys. Just wanted to circle around on a couple of things. Just first question on the Same-Practice Revenue Growth. Can you just talk a little bit about sort of what drivers are in play that would cause you to be at sort of the high or low end of that 5%-6% range? We're really just talking about, you know, dynamics within the quarter. You know, as Nate mentioned, you know, we did have a partner conference where a lot of our dentists were away from practices for a portion of time, you know, spending time with the organization. And, you know, that does have an effect on sort of in that week or in that month, or frankly, in that quarter, productivity, just given that they're away from the chair. So, you know, the biggest driver we see, and we saw this last year, if you recall, during Q1 of Omicron, where you had 30%+ of our providers, who, you know, at various times during the quarter were at home sick with COVID in the Omicron wave. Those things tend to have swings within the quarter, and they tend to neutralize over the course of a year, but you'll see some modest swings between that 5%-6% range within those periods of time as a result of primarily providers and to a certain degree, patient availability. If there's, you know, significant weather events in a portion of the country, you'll see deferral of visits, so you may get them in the next quarter, or in the next month. If you've got, like we had last year, a pretty bad flu season in the winter, you ended up seeing them more in January than you would have seen them in December. And so those things just have sort of swings between quarters. But again, over the course of a 12-month or extended period of time, you see much more stability in the overall number. Right. Okay. That's helpful. Thanks, Guy. And then just, you know, you gave a little bit of color around sort of margin expectations into 2024. But just wondering if you could give a little color on sort of how you're seeing things evolve or what your expectation would be for other parts of the model, like Same-Practice Revenue Growth and your acquisition pipeline heading into next year? A lot there, so I'll try, I'll try and cover it all here. If we look to specifically from a margin perspective, Q3 from a seasonality perspective is one of the lowest revenue quarters. And as a result, despite dentistry benefiting from a highly variable cost structure, there's less leverage call it on our fixed infrastructure and fixed spend, obviously in a lower revenue quarter, which does affect margin. So as we look forward into the end of 2023, expect margins again to be consistent with where we are at a year-to-date level in 2023. And as we enter 2024, do expect modest margin expansion from the two areas that we discussed earlier. One, again, as the inflationary pressures do subside, and we are seeing them subside, as well as greater efficiencies around labor management, we're gonna see expansion at the practice level, as well as the completion of our spend at the corporate level now, providing further operating leverage on the totality of the business. As we look to our pipeline and the volume of acquisitions, it's a very, very robust pipeline. Our business development team in every corner of the country continues to maintain a consistent volume and frankly a growing volume of conversations and interest. We're highly focused today on being very selective and judicious in our acquisitive plan. We're focused on completing what we've spoke to as approximately CAD 8.5 million of acquired EBITDA through the balance of Q4 and enter 2024 with a very robust pipeline, allowing us to continue on that path of double-digit growth. Great. Our next question comes from Doug Miehm with RBC Capital Markets. Please go ahead. Mr. Miehm, your line is live. Yeah, good morning. When we look at the pacing of acquisitions, we saw what happened in Q3 and your expectation for CAD 8.5 million in EBITDA in Q4. I'm just curious, in terms of, are these going to be back-ended loaded so that, you know, you're closing in the last couple of weeks of December to give the opportunity for the dentist to work? And then as we think about the competitive market, have you noticed anything different that's occurring? You know, we've been seeing lower multiples on your part. Maybe you could just talk to us a little bit about what you're seeing from a competitive standpoint. Thank you. Sure. So from a timing of acquisition perspective, as much as we'd like to not have to complete transactions in and around the holiday period, oftentimes that is the case. So I'd say it's probably a 70/30 split, as far as timing of acquisitions, call it through December versus the earlier parts of the quarter. As it relates to the competitive environment, again, we continue to be the largest acquirer of dental practices by volume, albeit the individual dentist continues to remain the largest buyer as a group. And given the interest rate environment, the availability of capital, we're seeing a demand side on the individual dentist ability to acquire or participate in a partnership in a practice to be constrained. As it relates to the other players in the industry, I think the largest number two player there continues to be focused on integration of the merger that's taken place just over a year ago. And from a capital structure perspective, again, we continue to remain and be the lowest leverage with the highest availability of capital to allow us to continue to execute on our M&A agenda. So as far as competition goes and as far as demand, we are seeing that subside, continue to subside on a consecutive quarterly basis, which provides us with a great opportunity before us and still, and still what is still a very highly fragmented industry. Thank you. Your next question comes from Tania Armstrong-Whitworth with Canaccord. Please go ahead. Thank you. Just firstly, on the divestiture of specialty and orthodontic practices, I'm wondering if you're also selling, closing, or merging non-specialty practices. I know you mentioned one was sold in the quarter, but it doesn't quite add up as there were three that you acquired. So were there other practices that you're selling, and can you provide any reasoning for this? No. Hey, Tanya. It's no, no other practices that are being sold. It's just the 17 that were all predominantly standalone orthodontics. There was one specialty practice in that group. No other general practice dentists, dental practices have ever been sold, nor have been sold in this period. There are consistently, as you've seen, even prior to the sale of the orthodontic practices, mergers that do take place. These are planned mergers and part of our acquisitive strategy that we look to acquire practices that are near to our existing locations that may not have the real estate footprint or the practice build-out that would meet our standard from a standalone operation perspective, but we look to move their patients and relevant team members into our standalone practice and really drive efficiency from that collective operation. Okay, excellent. That's very helpful. And then just secondly, on the EBITDA acquired, I think you usually provide a number for what that 1.4 translates into in terms of IFRS. Are you able to give us that again for Q3? Yeah, sure. Not a problem. It's roughly, it's roughly 1.5-1.6. It's... Perfect. Thank you so much. That's it. Your next question comes from Scott Fletcher with CIBC. Please go ahead. Hi, good morning. I wanted to ask, again, a question on the pacing of M&A again. Obviously, fewer deals in the quarter than we've seen in the past. Wondering if you could provide some color on whether that's more on your end or on the seller end, and sort of frame that in terms of the bid-ask spread. Like, is it pretty wide for some of these deals? Yeah. So it's the discussion that we provided at the end of Q2 with the second half guidance as to our acquisitive pacing being CAD 10 million was very deliberate. These were acquisitions that we understood the timing of closing, and we're very very confident in that continued pacing. So no difference, no change in pacing from where we thought we would be at the end of Q2. We're very pleased with where we are at, and from a valuation perspective consistent again with what we speak to from a full year basis again in the low-to-mid 7s. Okay, thanks. And then- Scott, just to reiterate- Yeah. Scott, so just to reiterate, okay? Deliberate pacing in the second half of the year, and again, we will come in consistent with expectations. ... Okay, thanks. And then you mentioned sort of you're really trying to be specific with the practices you do acquire, and given the lower volumes, obviously, that gives you an even enhanced ability to be selective. Can you maybe give us an idea of what some of the attributes or locations that you're focusing on right now? Yeah. From a geographic perspective, we continue to look for geographies that have positive attributes around demographics, positive attributes around the talent environment, as well as being remaining consistent as it relates to the footprint that we look to. Multiple dentists in a location, high visibility, and retail-like real estate locations. We just continue, again, to maintain those conversations, develop those relationships, and continue to be the partner of choice for the leading dentists across the industry. Okay, thank you. Our final question comes from David Kwan with TD Securities. Please go ahead. Hey, guys. Just a couple of probably questions for Nate. Just on the margin side, you talked about the corporate investments pretty much gonna be done by the end of this year and expecting some modest margin expansion in 2024. Can you help quantify it? It sounds like maybe at least in terms of the Adjusted EBITDA margin, we might not get to 19%, that's more likely a 2025 target. Does that sound about right? That does sound about right. I think what you're gonna start seeing, I wish we had the crystal ball as it relates to the cooling of the inflationary pressures. I think we're hopefully at the peak, and we're gonna start seeing the other side. But I think your assessment of it is correct. Great. Thanks, Nate. And then just as it relates to, I guess, M&A and leverage, so obviously had a slow quarter in Q3, expecting a more significant impact in Q4. I'm just kind of curious how you see that impacting the leverage levels. I think you've talked about targeting to get to, you know, kind of the 4-4.25 level exiting this year. You know, if we did... You know, based on this expectation of higher M&A activity in Q4, do you still think that's, that leverage target is reasonable? As far as the completion of our acquisition, again, we do acquire primarily through free cash flow. There will likely be from a leverage perspective ending the year somewhere closer in that 4.3 range, given again the timing of that coming through in one quarter. But we do believe, and we do remain confident in the consistent deleveraging of the business at the acquisition levels that we have been maintaining throughout the year, and that CAD 20 million plus of acquisitions on an annual basis. Again, if we look at the free cash flow generation of the business, the majority of the spend for the funding of those acquisitions does primarily come from free cash flow generation from the business. Oh, it's helpful. Maybe quickly slip one last one in. Do you think that CAD 20 million target in terms of the acquired EBITDA is that something that you still think is reasonable for next year? That's really our plan in the short term, through 2023. I think we have to continue to look to the environment. Given the size, scale, quality of our pipeline and the opportunities before us, that's something that we'll continue to evaluate and make decisions that are in the best interest of the continued growth and scalability of the business. I appreciate it. Thanks. There are no further questions at this time. I will now turn the call back to Dentalcorp's CEO, Graham Rosenberg, for any closing remarks. Great. Thanks, operator. Just to reiterate again, for the fourth quarter, we anticipate continued growth, consistent with that balanced approach for this year, with revenues estimated to increase by 9%-10%, with strong same-practice revenue growth of 5%-6%. And again, completing acquisitions of pro forma Adjusted EBITDA after rent of approximately 8.5 million for the quarter, in line with the expectations that we set for the second half of 2023 and making up for the timing, of some of the acquisitions that did not close in Q3. I know that it's that time of the year again, so if we don't speak to many of you or any of you before the end of the year, wish you and your families a happy holiday, and look forward to reporting on our Q4 results early next year. Thanks. Thanks, operator. This concludes today's conference call. You may now disconnect.