Morning, ladies and gentlemen, and welcome to the good natured Q3 2022 Results Conference Call. At this time, all participants 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 star zero for the operator. This call is being recorded today, Tuesday, November the 22nd, 2022. I would now like to turn the conference over to Spencer Churchill, Director of Investor Relations and Corporate Development. Please go ahead, Spencer. Thank you, operator. Hello everyone, and welcome to the good natured conference call regarding our Q3 results that were released earlier this morning. I'm joined today on the call by Paul Antoniadis, Executive Chair and CEO of good natured, who will provide an overview of the quarter and commentary on the business and strategy. I'm also joined by Kevin Leong, our CFO, who will be speaking to the Q3 results in more detail. If you've not yet received a copy of the press release, you can access it under the News tab on the good natured Investor website at investor.goodnaturedproducts.com. For those of you unable to listen to the entire call, a recording will be made available in the Recent Investor Events section of the website. Before I turn the call over to Paul, I'd like to remind listeners that management's prepared remarks contain forward-looking statements within the meaning of securities laws, which are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. These forward-looking statements include, but are not limited to, expectations surrounding future financial results, new orders and customer additions, new product launches, and M&A activity. We'll also be discussing non-IFRS financial measures, the definitions for which can be found in our MD&A and press release issued this morning. All financial results discussed on the call are in Canadian dollars unless otherwise noted. With that said, I will turn the meeting over to Paul. Thank you, Spencer. Welcome everyone, thank you for joining us today. We wrapped up Q3 with record revenue of CAD 26.2 million, which was up 45% compared to third quarter last year. This was also our fourth consecutive quarter of positive Adjusted EBITDA at CAD 792,000, compared to a loss of CAD 588,000 in Q3 of 2021. Gross margins came in at the high end of our targeted range in Q3 at 27%. Our packaging business group was a bigger portion of our revenue mix in this quarter's results, packaging revenue was up over 200% year-over-year and totaled CAD 10 million for the quarter. As mentioned, our third quarter was driven by strong organic growth from our packaging business group, as well as overall increases in average selling price and contribution from our recent acquisition of FormTex Plastics out of Houston, Texas. The growth in packaging revenue led us to use more of our industrial rollstock production capacity to meet the demand of our own packaging manufacturing facilities. This is in line with our objective to drive a higher mix of revenue from finished packaging and deliver more robust gross margins. I wanna note that our overall revenue growth was partially offset by a reduction in gross revenue from third-party industrial thermoformers who purchased rollstock from us. Late in Q3, we began to see softening of demand of industrial rollstock product from these industrial third parties as they worked through inventory they had accumulated in prior quarters to protect themselves from volatility in their supply chains. This could also be partially due to softening demand they're seeing from their own end customers. We provide further details on management's views of this macro uncertainty and our initiatives to address this uncertainty in our MD&A Outlook section. Our Q3 results illustrate the significant progress we're making towards leveraging our investments in internal production capability and executing our business model to drive higher revenue mix contribution from our higher margin business groups and customer segments. Despite some softening amongst the third party industrial customers mentioned earlier, we are seeing and anticipate continuing to see demand from sustainable earth-friendly products, especially within staple good categories like food packaging, to remain resilient. Our variable gross margin for Q3, which is a non-IFRS measure defined in our MD&A and press release, came in at 34%, up slightly from Q2 and up significantly from the prior year. The team's execution under challenging and continued shifts in macroeconomic and supply chain conditions is delivering improved productivity as they're adjusting nimbly to change, changing pricing conditions in our supply chain and end markets. Our SG&A to revenue ratio continued to decline and was down to 18% in the quarter compared to 21% in Q3 2021. Our investment in process efficiency and productivity continues, and the new high-speed thermoforming machine we installed in our Brampton facility has achieved full commercially operation. On the industrial side of the business, a new high-speed sheet extrusion line at our Richmond, Illinois, location is still expected to be operational in Q4 of 2023. I also want to touch on our decision to purchase the land and building located at our Ayr, Ontario, manufacturing facility, which was announced in early October. We determined that the purchase was strategically and operationally in the best long-term interest of the company on the basis of supporting capital improvements and future expansion plans that could not be achieved through a lease renewal. The financing cost associated with the purchase was largely comparable to what new lease rates likely would have been based on third-party estimates and the rates we were paying at a nearby leased warehouse facility. We believe the underlying value of the asset is very attractive, located just minutes from a major highway and on a high traffic corridor between Greater Toronto Area and the Detroit border. We continue to closely monitor and collaborate with customers and suppliers on supply chain activity, which we believe has been showing signs of improvement compared to recent years. We have had indications that we may see some relief in macro inflationary and supply chain pressures in late 2022 and through 2023. The company expects that the continued changing macroeconomic backdrop will lead to ongoing volatility in underlying supply and demand fundamentals over the coming quarters. In response to these macroeconomic conditions, we are keenly focused on driving growth while improving productivity and supply chain management to reduce working capital requirements and operating costs. We are proactively attacking productivity improvements to aid our efforts to become self-funded. We are maintaining our target ranges of variable gross margins of 28%-35% and gross margins of 21%-28%, while seeking to increase the mix of revenue contribution from our packaging business group through organic growth initiatives and potential acquisitions that help us advance that objective. Finally, I wanna thank our team members, partners, and customers who have contributed to another solid quarter. We believe our commitment to prioritizing customer service, tight management of our supply chain, and continued efforts to self-fund our operation during this period of economic turbulence is what will set us apart from our competition. With that, I will hand it over to Kevin Leong, CFO of good natured, to talk through the Q3 financial results in more details. Over to you, Kevin. Thank you, Paul. Hello, everyone. Revenue for Q3 2022 increased 45% to CAD 26.2 million compared to CAD 18 million for Q3 2021, based on the factors that Paul spoke to earlier. In terms of business mix for Q3 2022, the industrial business group contributed 58% of total revenue, compared to 80% for Q3 2021. The change in revenue from the industrial business group in Q3 2022 compared to Q3 2021 was driven by an increase in average selling price, offset by a reduction of third-party commercial volumes. The capacity reduction caused by reduced third-party volume was partially offset by growing internal demand for extruded sheet material to manufacture our own thermoformed packaging. The packaging business group represented 38% of total revenue for Q3 2022, compared to 18% in Q3 2021. The increase in packaging revenue was driven organically by the addition of new customers, increases in average selling price, and the acquisition of FormTex Plastics, which was completed in July 2022. My final comment on revenues is on our customer mix. The top four customers in Q3 2022 represented 30% of total revenues, compared to 19% in Q3 2021. The increase was due to the addition of a large U.S. food producer originally announced in October 2021. Variable gross margin, a non-IFRS measure defined in our MD&A and press release for Q3 2022 was 34%, compared to 29% for Q3 2021. Some of the factors that influenced the year-over-year increase include a greater mix of revenues from business groups and customer segments, which featured a higher average variable gross margin compared to the prior year. Additionally, product and productivity improvements resulting from the rate of revenue growth in Q3 2022 exceeding the rate of growth in production costs, such as direct labor. Finally, increases in average selling prices in Q3 2022 compared to Q3 2021, which offset the inflationary impact from higher raw material costs over the same period. Gross margin for Q3 2022 was 27%, compared to 22% for Q3 2021. The year-over-year increase was largely driven by the same factors that impacted variable gross margin as discussed earlier. SG&A of CAD 4.6 million was up 19% compared to Q3 2021, which was driven by headcount additions from the FormTex acquisition, higher overall wage rates, increased accounting and audit fees, as well as general legal fees. That said, SG&A as a percent of revenue for Q3 2022 declined to 18% compared to 21% for Q3 2021, demonstrating positive operating leverage, which has led to the improvement in Adjusted EBITDA and net income that I will speak to now. Adjusted EBITDA, a non-IFRS measure defined in our MD&A and press release for Q3 2022, was CAD 0.8 million compared to a loss of CAD 588,000 for Q3 2021. Higher Adjusted EBITDA was generated as the increase in gross profit contribution surpassed the growth in SG&A expenditures and fulfillment and logistics expenses. As a% of revenue, Adjusted EBITDA increased to 3% from a -3% in Q3 2021 due to the positive operative leverage just noted earlier. The company reported a net loss of CAD 2.1 million in Q3 2022, compared to a net loss of CAD 2.9 million in Q3 2021. The reduction in net loss was primarily due to the factors already outlined above when I spoke to Adjusted EBITDA, and an increase in non-cash gain on foreign exchange and decrease in share-based compensation and acquisition related expenses that more than offset increased depreciation and financing costs. Turning to the balance sheet, we ended the quarter with CAD 11.3 million in cash. Net working capital at the end of the quarter was CAD 19.6 million, compared to CAD 12.4 million as at September 30, 2021. Cash generated by operating activities for the nine-month period ended September 30, 2022 was CAD 0.5 million, compared to CAD 12.1 million used by operating activities for the nine-month period ended September 30, 2021. At the end of Q3 2022, we had CAD 105.5 million in assets against CAD 82.2 million in liabilities, which equates to an asset to liability ratio of 1.28 times compared to 1.3 as at December 31, 2021. I'll wrap up by encouraging listeners to visit our investor website at investor.goodnaturedproducts.com, where you can download our MD&A for additional commentary on our Q3 2022 financials. I'll now turn the call back over to Spencer. Thanks, Kevin. Operator, could you now please give instructions for the Q&A section? Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by the one on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment while we compile the Q&A roster. Your first question will come from Steve Hansen of Raymond James. Please go ahead. Hi, guys. This is Robert here filling in for Steve. Just 2 quick questions from us. The first one is just regarding CapEx and M&A. Just wondering if you could provide a bit of a forecast maybe for Q4 as well as into next year. Regarding kind of revenue and sales growth outlook, just wondering if you could provide a bit of additional color as well for that kind of heading into Q4 next year as well. I'll turn it back. Thank you very much. Hey, good morning, Robert. Yeah, I'll answer your first question related to kind of outlook of CapEx expenditures and M&A. One of our largest CapEx expenditures is the installation of our, what we call line nine at our Richmond facility, which was mentioned earlier in the call. This new line will be operational, we're anticipating in Q4 of next year. It'll, you know, bring on significant capabilities into our organization, which will include, you know, extrusion rates well north of GBP 2,000 per labor hour. Just to contextualize that for everyone on the call, all of our owners and potential owners on the call here is, you know, our average, you know, excluding the high speed line that we put in line five in Ayr, Ontario, the average rate is around GBP 800 per hour. You know, our focus on, you know, this type of capital investment is to increase our capacity to support our overall growth, which, you know, is kind of your second question, which I'll speak to in a minute. Also the gain, it's an investment to gain productivity that we, you know, we wanna continue to gain leverage on our operating costs while improving output as we intend to, you know, continue to, you know, to drive growth. I'll balance it by saying that financing of that line is through an equipment financing. It's non-dilutive and, you know, it's built off of, you know, we make these investments anticipating forecasted demand. From an M&A perspective, you know, we're, you know, we're still very active in executing our strategy, which is half of our growth coming from organic initiatives, half of our growth coming from M&A activity. You know, we're super excited about the acquisition of FormTex down in Houston. You know, our view is, you know, we've created this great partnership with Wells. FormTex was part of our strategy of increasing our mix of packaging from a revenue contribution perspective. I look at our forward acquisition activity continuing to be within the packaging business group in going into 2023. That pipeline remains active. We have always, you know, if you go back in the last two years during this economic turbulence, we look at it as a significant opportunity for us to gain market position during this time, and we maintain that maintain that view. From a revenue outlook, as we mentioned on the call, like we're seeing tremendous resiliency in our food packaging and sustainable earth-friendly packaging. We are really gonna lean into that as we did in here in, you know, through 2022. We're gonna continue to lean into that strategy, that's our objective. That pipeline is also very active in our organic growth initiatives. Now we are seeing softening on demand on the industrial, particularly through thermoformers that we have not converted away from petroleum. That was, as I indicated, due to a real buildup in inventory in their supply chain, which part of it was, hey, we're trying to offset this, you know, crazy supply chain that took place on the front end of 2021 and in the back end of 2020. We're now, you know, those folks bought that inventory. I think with the macroeconomic and, you know, interest rates increasing, that may curb some of their downstream, our customers downstream customer demand. You know, we believe that will, you know, eventually, you know, work its way through the supply chain. Our focus remains on capitalizing on the resiliency of earth-friendly products, particularly in packaging. Okay, great. Thank you very much. You're welcome, Robert. Ladies and gentlemen, once again, if you would like to ask a question, please press star one at this time. Your next question comes from Michael Robertson of National Bank Financial. Please go ahead. Hey, good morning, everyone. Thanks for taking my question. was just wondering in your opening remarks, you noted on seeing some of the inflationary and supply chain headwinds abating. was wondering how that sort of impacts your outlook in terms of working capital requirements, maybe particularly inventory. Do you feel like you'll be able to, you know, potentially reduce your sort of carrying balance there moving forward, given the abatement of some of those pressures? Yeah. Good morning, Michael, thanks for the question. The short answer is, yeah, we are definitely seeing inflation abating in some of our input costs. You know, I kind of balance that with, you know, we are seeing a little bit of a mixed supply chain and other inputs. Some are abating, some are maintaining, some are even increasing. Overall, our message is inflation is abating. If you look at forward-looking, our forward-looking indicators, which all signs are, it is abating. As it does, what we're going to see is, you know, our working capital requirements begin to, you know, decrease on a, you know, average purchase price because our input costs are gonna drop. We believe that abating will begin to, you know, take place, and we're starting to see it now. But we're believing that's gonna carry into 2023, but we're kind of in the early innings on this, but we definitely are have that view. Now, I'm gonna continue to balance that. We're still seeing trucking routes and some corrugate costs and, you know, they're kind of all over the place. I don't... You know, it hasn't normalized. Our supply chain hasn't fully, in all input costs, normalized into this abating, but there are definitely indications that it's happening. It will have a, going back to your net working capital, it'll require less capital to make that same purchase from a average purchase price. Now our goal as this inflation continues to abate or normalize into new costing structures over time, we wanna improve our productivity. You know, we're really pleased with, as Kevin had mentioned, you know, we generate CAD half a million dollars of cash for the first nine months of the year. That's compared to using, you know, over CAD 12 million of cash in that first nine months of 2021. These are all positive signs of our efforts to improve productivity, you know, recycle, reuse materials, reuse some of our corrugate cores, things that we've mentioned earlier on the call. These are, you know, these initiatives are still in the early innings, but we're seeing those gains and we wanna continue to, you know, put an operational focus on these productivity gains going into 2023. Got it. That's great color, Paul. Just maybe a follow-up. Like you touched on- Sure. You touched on some of the easing, inflationary pressures there. Just with the supply chain bottlenecks, and maybe less, concern around your ability to procure critical inventory, you know, regardless of dollar value of those products, would you be carrying less volume of inventory moving forward? Or do you feel like it's still good to have a bit of a buffer there given some of those ongoing, issues? Yeah. We've seen supply chain bottlenecks really begin to correct themselves. You know, in that effort, you know, if you go back into, you know, time when we anticipated these inflations, when folks were, I think they were calling it migratory or Transitory? Transitory inflation, right? We did not believe that when that came out. We pride ourselves on forward-looking indicators. We went out and bought a lot of inventory before all that inflationary started to hit the supply chain. What we see now is supply chains are opening up. Our supply chain partners are exceptionally good. We've got great relationship with them. They're really good partners. Now what we're gonna do is move into. I kind of joke about it. I think just in time is back in the supply chain. Not its entirety, not across all categories, but it's definitely just in time is starting to creep back into, I'm not gonna say norms because I don't, you know, there's a lot of new norms out there, but it's definitely improving. We will move more into, you know, that framework of, hey, let's reduce our inventory levels and, you know, bring it more as we need it. I think that's what we see going into 2023. There's always uncertainty on what's gonna happen in this world, but we are seeing a lot of that supply chain open up. That's a good thing. That's a good thing for our customers. It's a good thing for us. It takes a lot of even pressure off our supply chain partners. I do wanna point out, though, there is a glut of inventory in the supply chain, as I mentioned, not just with our customers. You know, just overall supply chain on particularly good natured, we're seeing a build up of this inventory to cause people anticipated the volatility was gonna continue, but now it's opened up and I think the supply, our supply chain partners are, you know, I think that we can look at those inventory levels starting to clean out from the supply chain going into 2023. I think at good natured, we've done a really good job. There's always room for improvement in capitalizing on these supply chain changes. We anticipated the supply chain to improve and moving more into just in time. You know, we're also putting a real focus on managing our inventory levels and repositioning our supply chain into these new operating conditions. Got it. Well, appreciate you taking my questions. I'll turn it back. Your next question comes from Yuri Lynk of Canaccord Genuity. Please go ahead. Paul, wondering if you can give us an update on the IPF and Ex-Tech conversion to plant-based? Yeah. Good morning. Well, I'll tie it back to some messaging that we had shared earlier in the year. You know, we had indicated that the conversion of Ayr and Richmond facility, the Ex-Tech acquisition, was gonna take a longer period than 18 months. At that time, primarily due to supply chain restraints, our packaging business, you know, as we were bringing in inventories, our packaging business began to really take off through our initiatives. We redirected a lot of those inventory, our plant-based inventory resins into that packaging business group. Now, we're still a hold that position. It's gonna take some time, but remember, our conversion strategy is related to capacity as much as it is client. As supply chains, as Michael's question, as they begin to normalize, that will put us in a better position to, you know, further convert over the capacity at both those extrusion facilities. We're maintaining it's gonna take longer than 18 months, for reasons that we had shared earlier. Okay. those two acquisitions, they were both 100%, petroleum? Yes, that is correct. Okay. In Q3, what we did is we set a record in internal utilization of that capacity for our plant-based packaging business. If you look at the growth of our packaging business group relative to industrial or overall company, the packaging business group significantly outstripped our overall company growth. It grew 200% versus 45% for the company. You know, as we grow that packaging business, more of our capacity will be utilized to support that packaging growth. Now, we still are very proactive in our industrial segment. We're gonna maintain our industrial segment business group, and we're quite optimistic in our strategy in offering plant-based industrial products. Like, we believe this earth-friendly we're seeing and have high level confidence this earth-friendly product, particularly in the food package space, is exceptionally resilient during this, you know, kind of economic turbulence that we're all experiencing. Yeah. Understood. Okay. Just on M&A, I mean, I appreciate your earlier comments. Just wanna push you a little bit more on that. I mean, why not, you know, given where your multiple is, and the rise in interest rates, I mean, I think on your new facility, it's SOFR + 2.5%-3%. You know, we could be almost touching double digits next year on that line. It just makes the math harder, right? To do M&A. Is it fair to say that the focus is gonna be more on your organic initiatives like you mentioned on for line nine and stuff like that, and maybe take a break from M&A? Or am I reading that wrong? Yeah, I would say that, you know, you never really take breaks in executing a strategy. You just have to do it within, I think what you're highlighting properly is within the constraints of your balance sheet and your, you know, that's kind of our framework. You know, when you look at the cost of interest rate increase, which you're right, I mean, the general cost of capital, even at that rate, you know, candidly, has been lower than some of the cost of capital associated with raising prior equity raises. You know, we need to be mindful of that, and you're absolutely right. The same token, you know, it's all about the constructs of the transaction and, you know, the generating free cash flow, you know, of the transaction. These are all like levers that people like Spencer and Don and Kevin and the group we assess. If it's a good fit and our, and our balance sheet can support it, we will acquire that company. We look at all those conditions before we make those type of decisions. Okay. If I'll sneak a last one in on, I guess, the same topic. I think. Sure. In the credit agreements, you've got a minimum EBITDA covenant, which, you know, steadily rises to just over CAD 5.5 million for 2023. am I reading that right, first of all, that, you know, you've got to generate CAD 5.6 million in EBITDA, all else equal to be onside that covenant in 2023? Does that, you know... You're a growth company, so I mean, managing the EBITDA doesn't seem ideal to me if you've got, you know, growth opportunities that you wanna pursue. Maybe just how you balance that. Yeah. I mean, I think first and foremost, we've got a great relationship with Wells Fargo. You know, I think both parties are more focused on the liquidity component of our, of our agreement. From an Adjusted EBITDA, like, we've had 4 quarters in a row and, you know, we're focused on a lot of productivity initiatives that we mentioned earlier. For us, you know, we wanna continue. We position ourselves as a growth company, but we're really concentrating on these gains that we wanna, we wanna showcase, you know, in our, in our Adjusted EBITDA or performance along with, you know, we wanna generate free cash flow to help contribute to some of these growth initiatives. I think for us, we've demonstrated that shift, I wanna say that there's still lots of areas to improve. I think these productivity initiatives are still in the early innings but, you know, we, you know, we've demonstrated our ability to, you know, grow our EBITDA in these challenging conditions while still driving growth. I'm confident my team and I can deliver on that expectation. Okay. I'll leave it there. Thanks. There are no further questions. At this time, I'll turn the conference back to Spencer Churchill for any closing remarks. Thank you, operator. For anyone who didn't have the opportunity to ask a question or wishes to ask a question offline, please send these to invest@goodnaturedproducts.com with your contact details, and we will respond as soon as possible. Thank you to everyone for joining us today, and have a great rest of your day. Ladies and gentlemen, this concludes your conference call for this morning. We would like to thank everyone for participating, and you may now disconnect your lines.