Good morning, ladies and gentlemen, and welcome to the Indigo Books & Music Inc. Fiscal Year 2022 Q2 Analyst Conference Call. At this time, all 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 star zero for the operator. This call is being recorded on Wednesday, November tenth, 2021. I would now like to turn the conference over to Craig Loudon. Please go ahead. Good morning, and thank you for joining us to review Indigo's fiscal 2022 second quarter results. My name is Craig Loudon, and I'm the Chief Financial Officer. Joining us from Indigo today is the Chief Executive Officer, Heather Reisman. Regarding the materials for this conference call, we issued the press release yesterday. It can be found at indigo.ca and on SEDAR. The conference call will be recorded and archived in the investor relations section of the Indigo website. A playback of the call will also be available by telephone until 11:59 P.M. Eastern Time on November 17, 2021. This conference call may contain forward-looking statements, and to the extent that it does, we refer you to our cautionary statement regarding forward-looking statements in the press release and the MD&A related to this quarter. I would now like to turn the call over to Heather Reisman. Good morning, everyone, and thank you for joining us. Our strong sales performance this quarter, double-digit revenue growth with improvements across both our print and general merchandise business, delivered second-quarter revenues that exceeded both last year and pre-pandemic levels. Specifically, sales were CAD 238.8 million, a 16.3% increase over last year and a 17.4% increase over fiscal 2020. This sales momentum is being enabled by the strength of our omni-channel strategy, the continuing strength of the book business and strong general merchandise growth. It is worth noting that these numbers were achieved despite the reality that capacity restrictions in retail continue to exist in several markets and foot traffic in city centers remains far below historic levels. Of note, we are particularly pleased with the growth of OUI, our proprietary home brand, and with our newly introduced sustainable paper brand, Nóta. Nóta resonated extremely well during the back-to-school, back-to-work period, and we are pleased to see such strong alignment between our commitment to sustainability and the commitment of our customers. Building quality proprietary product designed in-house is key to our growth strategy. While on the subject of sustainability, we were pleased this month with the public launch of our Write the Future sustainability strategy, where we formally declared our commitment to be net zero by 2035. We encourage everyone to visit our website at indigo.ca/sustainability. In addition to our commitment to the planet, we remain steadfast in our commitment to children's literacy in Canada. Over the past year and advanced this quarter, we provided over CAD 2.2 million in grants to promote literacy in high-needs communities, an effort which includes a purposeful focus on reaching Indigenous children across nine provinces and the territories. While Craig will provide a detailed financial perspective, I would just note that we delivered an adjusted EBITDA of CAD 10.6 million. This was driven by a number of things, including strong sales, a strengthened operating model, which included greater sell-through of full-price goods and a more effective leveraged cost structure, an out-of-the-ordinary benefit offset by lower government support. I will now pass it over to Craig. Thank you, Heather. The results we are discussing are for the 13 weeks ended October 2, 2021. Comparative figures reference the 13 weeks ended September 26, 2020. In the second quarter, we generated revenue of CAD 238.8 million, an increase of CAD 33.5 million or 16.3% from the second quarter last year. This increase in revenue was notably experienced across the company's print and general merchandise businesses. The print business continued to experience strong demand driven by a younger demographic and the popularity of reading on social media. As Heather discussed, the company's proprietary brands, in particular the home brand OUI, are meaningfully contributing to the growth of the general merchandise business. As a result of temporary store closures from COVID-19, the impact of social distancing and government-mandated capacity constraints in reopened stores, we believe that comparable sales are not currently meaningful to evaluate performance. Instead, we focus on total revenue as discussed, as well as omni-channel fulfillment trends. The retail channel, which is inclusive of orders fulfilled through omni-channel store pickup, increased by 16.7% to CAD 159.6 million for the thirteen-week period ended October 2, 2021. Retail revenue growth was achieved through improvements in traffic conversion and average transaction values as pandemic conditions softened and the company's retail network performed stronger than in the same period last year. Online channel revenue decreased by CAD 8.4 million or 13.3% to CAD 54.6 million for the thirteen-week period ended October 2, 2021. This moderated demand reflects the rebound of retail as discussed. The online channel sustained sales levels at 85% of pre-COVID fiscal 2020 and continues to be a lever of omni-channel growth and investment focus. To offer greater connectivity to brands doing business on modern e-commerce platforms and to unlock a drop ship opportunity to sell on indigo.ca, the company integrated with Convictional as a technology partner in the second quarter. This is only the beginning of the company's digital transformation agenda, and we look forward to sharing our plans around an enhanced digital experience in future quarters. Cost of sales increased by CAD 2.9 million to CAD 128.8 million over the 13-week period ended October 2, 2021. Excluding the impact of online shipping costs, cost of sales increased by CAD 2.1 million to CAD 119.2 million for the period. As a percentage of total revenue, this represents a decrease to 49.9% compared to 57.0%. While this was driven by the retail channel rebound, which typically has a higher margin profile, the company realized merchandise margin improvements in both channels. These improvements more than offset the adverse impacts of higher inbound freight costs triggered by global supply chain constraints. Online shipping costs increased by CAD 0.8 million to CAD 9.6 million for the thirteen-week period ended October 2, 2021, largely due to increased fuel costs, which reflect the macroeconomic conditions of the commodity market. Overall, operating, selling, and administration costs increased by CAD 10.9 million to CAD 84.2 million for the period. Operating costs were offset by the recognition of CAD 2 million in occupancy, abatement, and government rent and payroll subsidies, markedly lower than the CAD 5.3 million the company was eligible for and recognized in the prior year. Operating costs also increased on the return of higher sales volumes in the retail channel. Adjusted EBITDA improved by CAD 21.9 million to CAD 10.6 million for the 13-week period ended October 2, 2021. Higher adjusted EBITDA was driven by strong sales performance and stronger merchandise margins, and achieved against lower external COVID-19 labor support and the corresponding increase in retail operating expenses. Adjusted EBITDA also benefited from a one-time payment of CAD 17 million resulting from the renegotiation of the company's partnership with its primary café vendor. The company recognized net earnings of CAD 3.5 million for the thirteen-week period ended October 2, 2021, or CAD 0.13 net earnings per common share, compared to a net loss of CAD 17.5 million or CAD 0.63 net loss per common share for the same period last year, an improvement of CAD 21.1 million. With no outstanding debt, an undrawn CAD 25 million revolving credit facility, and cash of CAD 71.9 million, the company is well-positioned to see through the remaining COVID-19 uncertainty and the execution of a post-pandemic growth strategy. At this point, we would like to open the call for any questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by one on your touch-tone phone. You will 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 star followed by two. If you're using a speakerphone, please lift your handset before pressing any keys. One moment for your first question. Your first question comes from Sid Dilawri with Cormark Securities. Please go ahead. Oh, hi. Hi, Heather. Hi, Craig. Just a few housekeeping ones from me first, and then I'll ask one big-picture one. You know, just looking at the revenue composition, just excluding the CAD 17 million Starbucks payment, rent was approximately 59%, merchandising was 38% of revenue, slightly more weighted towards merchandising, I guess. Are you happy with this relative to last year? Are you happy with this composition or would you like it to be more weighted towards either of those categories? Sorry, could you just say that again? You're saying that the. It's Heather speaking. Hi, good morning. Hi, Heather. You're saying you're noting the mix between our general merchandise and lifestyle and books. Is that what you're asking? Exactly, yes. I was just asking if you're happy with this composition or would you like it to be slightly more weighted towards merchandise or books going forward? No, we're extremely happy with the mix because the customer is telling us two things. As the business grows, the customer is telling us they still value significantly the role we play in books. That business is remaining strong, and we're extremely happy with the strength of that business. At the same time, as the business grows, our general merchandise business grows. What we will look at moving forward, because we see even greater potential for the growth of our lifestyle business, is always to sustain a strong position in books and a strong market share in books. It is the foundation of the business. We're really happy with where it's at, and we see lots of growth potential on both sides. Okay, great. Thanks. That's helpful. Just on that point, you know, in my opinion, there was a mention regarding younger demographics being more interested in reading versus previously. Is there something that drove that or like was it something related to marketing or was it just organic? Actually, it's organic, and it's been supported by TikTok. Canadian young Canadians have said, "We love to read, and we love to talk about reading, and we're gonna talk about reading on TikTok," and it has just blown up. Yeah. Okay, that makes sense. Which is a great sign, right? It says as things are evolving. Yeah People are speaking about the importance of reading in their life and their joy of books. Seriously, it's fantastic. Yeah, I know. It's been good to see that bounce back, you know, from digital. Like, even personally for myself, like I always like reading like hard copy books. And I always read that, like even now, but that's good to hear. And then sorry, just one for Craig. You mentioned inflationary pressures on input costs primarily from freight costs. Are you seeing any inflationary pressure just from any other supply chain disruptions that we're seeing worldwide, not just related to freight or any other input costs on the merchandising side that you're seeing are rising? And if yes, are you passing these costs on to the consumer or are you just sort of waiting for it to stabilize and just consuming it yourselves for the time being? The inbound freight cost has definitely been the most significant and I think, you know, I won't go on too much about that. It's been heavily covered in the news. We've been experiencing that frankly since the start of the year. You already see that in the run rate. But we expect that to continue into next year. The next largest one would be slightly related just in that fuel, you know, the cost of commodities has gone up significantly. All our carriers that do both our inbound, our store distribution network, and then also our direct to consumer transportation, we're seeing high fuel surcharges there. That would probably be the next biggest one. There's always, you know, other commodity pressures in goods but, you know, so far, we are fending that off. You know, there's always some design considerations you can make too in product. As far as passing it on to the consumer goes, although we haven't really changed many of our ticket prices, we definitely have been following a far less promotional selling strategy. That is definitely showing up in significant margin strength. You know, the margins we're seeing are some of the highest we've seen in the company's history. You know, that's as a result of lower discounting. That's really helped get around that cost of goods as well. Yeah. Okay. Okay, Craig. That's helpful. You know, just quickly on working capital, we obviously saw a massive working capital spike related to inventories during the quarter. Is that largely due to your anticipation of a strong holiday season or is there something else happening here? No, that's exactly right. I think also, you know, it's much smaller compared to historical levels but you have to keep in mind when you look year-over-year, we'd followed a very conservative and prudent approach last year of keeping inventory extremely tight given where COVID was at that point and the risk of stores closing and it's lucky we did do that last year because in fact we did find ourselves closed for Christmas in Toronto and then subsequently all of Ontario. Inventory was unusually low last year, and that's what you're seeing. Yeah. Okay. Just one last one big picture one for me. You know, just over the past two years, you have renovated your stores, you have rejuvenated or are still rejuvenating your merchandise lineup. Is there anything else that's on your list of things to do from a strategic standpoint? Heather, do you wanna take that one or do you want me to? Sorry, you broke up just a bit. Can you just ask that one again? Sure. I was just asking, you know, over the past two years you have renovated your stores, you have rejuvenated or are still rejuvenating the merchandising lineup here. Is there anything else that's on your list of things to do from a strategic standpoint? We have lots actually on our plans related to online, related to stores. There's just a significant amount of work going on for changes we're planning, but we will announce those when they happen. Yeah, I think. As we always do. There's lots in the works. Lots. I'm sorry, Craig, you were gonna say something I think. No, I was just gonna say as we mentioned on the last analyst call too, I think our number one priority right now is really, digital reinvention and so we've been working on that throughout the pandemic. That's certainly, you know, as Heather noted, there's a lot going on but that's certainly number one on the list. Okay. That's great. Thanks. That's it for me. Ladies and gentlemen, as a reminder should you have any questions, please press star one. There are no further questions at this time. Please proceed. Thank you for your time and attention today. We appreciate you calling in and look forward to reconnecting on a quarterly basis. Our third quarter results will be announced on or around February tenth. Thank you again for your support and have a great day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day