Good morning, ladies and gentlemen, and welcome to the Indigo Books & Music Inc. Q3 FY 2024 Analyst Conference Call. At this time, all lines are in 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 Friday, February 9th, 2024. 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 2024 third-quarter results. My name is Craig Loudon, and I'm the Chief Financial Officer and Chief Operating Officer of Indigo. Regarding the materials for this conference call, we issued the press release yesterday. It can be found at indigo.ca and on the SEDAR+ website. 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 February 16th. 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 our Chief Executive Officer, Heather Reisman. Good morning, everyone, and thank you for joining us. This has been a challenging year in many ways, both within Indigo and around the world. At Indigo, disruptions throughout 2023, including a ransomware attack, some significant general merchandise overbuys, and a premature launch of our new e-commerce platform in August, combined with a challenging economic environment, have impacted our all-important third quarter on both the top and bottom line. During the quarter, we made the decision to right-size and right-shape our general merchandise inventory. This strategic decision to clear unnecessary inventory had a significant impact on margins and therefore profitability, but it was the right decision. At the same time, we reinvested in our book inventory, consistent with our long-term brand mission to inspire reading and enrich the lives of our customers. We also made the decision during the quarter to simplify elements of our operation and streamline our home office organization. Again, a difficult decision, but the right one. Most important during the quarter, we moved to stabilize our e-commerce operation. As I noted just shortly after my return late in September, we are confident in the underlying strength of our brand, built carefully over 25 years. We are also confident in the clarity of our transformation plan and our ability to connect meaningfully with book lovers. That said, it will take time before we begin seeing our full potential show up in the numbers. Lastly, as was announced last week, Indigo received a non-binding proposal from Trilogy Retail Holdings, Inc., and Trilogy Investments L.P., to acquire all of the approximately 40% issued and outstanding common shares, the ones it does not already own. The board of directors has established a special committee of independent directors that will evaluate the proposal and make recommendations to the board. I would now like to ask Craig Loudon to provide a more detailed financial perspective on the quarter. Thank you, Heather. The results we are discussing are for the 13 weeks ended December 30th, 2023, and comparative figures reference the 13 weeks ended December 31st, 2022. In the third quarter, the company generated revenue of CAD 371 million compared to CAD 423 million for the same period last year, a change of CAD 52 million. Revenue from the online channel decreased by CAD 31 million, or 29%, to CAD 77 million for the quarter, compared to CAD 107 million for the same period last year. As Heather mentioned, disruptions throughout 2023, including the ransomware attack and premature launch of a new e-commerce platform, negatively impacted our ability to serve our customers. This translated to a decrease in online traffic compared to the prior year and underperformance in the channel that was disproportionate compared to the retail network. Sales on the retail channel, which is inclusive of orders fulfilled through omnichannel store pickup, decreased by CAD 25 million, or 8%, to CAD 281 million for the quarter, compared to CAD 306 million for the same period last year. The retail channel continued to feel the effects of the challenging macroeconomic environment with an overall decline in customer demand, as well as lower full-price sell-through. Sales were also negatively impacted by a more mature general merchandise product assortment. In order to right-size this assortment, the company undertook wider discounting, which also impacted sales. We have once again begun reporting on comparable sales. These measures are key performance indicators for the company but have no standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. For more information, please refer to the management's discussion and analysis for the quarter. Total comparable sales, which includes online sales, decreased 14%. Comparable retail store sales for the quarter decreased 10% in superstores and 5% in small-format stores. The company recognized decreased revenue in both its general merchandise and print product lines. The print business showed more resilience in the retail channel, with the decline in sales being skewed by overall weakened online channel performance. The top-selling releases for the quarter were also not comparable to those of the prior year. The general merchandise business suffered from a less successful product assortment, which was missing key top-selling holiday products. Cost of sales for the third quarter decreased by CAD 26 million to CAD 230 million, compared to CAD 256 million for the same period last year. Including the impact of online shipping costs, cost of sales decreased by CAD 17 million to CAD 216 million for the quarter, compared to CAD 233 million for the same period last year, impacted by the discussed overall reduced sales volumes in the quarter. As a percent of total revenue, this represents an increase to 58%, compared to 55% in the prior year. The company engaged in higher promotional activity to right-size product assortment. This, along with customers' greater price sensitivity in light of the current macroeconomic environment, led to an increased penetration of promotions and discounts. Total online shipping costs decreased by CAD 9 million to CAD 14 million for the quarter, compared to CAD 23 million in the same period last year. This was driven by the discussed reduction in online sales, furthered by improvements in online shipping unit economics from the consolidation with carriers offering more favorable terms. Operating selling and administrative costs decreased by CAD 7 million to CAD 102 million for the quarter, compared to CAD 109 million for the same period last year. Variable selling costs decreased in line with the reduction in sales volume. The company was focused on cost containment, realizing cost savings in the retail network from a new store operating model, in warehousing and distribution cost center efficiencies, and from a temporary reduction to the company's marketing programs. In an overall effort to streamline operations, the company also made the difficult decision to rationalize part of its head office workforce. Adjusted EBITDA for the quarter was CAD 22.3 million, compared to CAD 40.8 million for the same period last year. As discussed, adjusted EBITDA was impacted by reduced sales volume, reflecting the lingering impacts of various consumer disruptions, the pressures of the challenging macroeconomic environment, and a less successful product assortment throughout the holiday sale season. Profitability was also negatively impacted by reduced full-price sell-through. These impacts were partially offset by the noted cost containment initiatives undertaken by the company. Net income for the quarter was CAD 10 million, or CAD 0.36 net income per common share, compared to net income of CAD 34.3 million, or CAD 1.23 net income per common share for the same period last year. Subsequent to quarter end, the company amended and extended its revolving line of credit facility with Trilogy. The amended facility is for an aggregate principal amount of up to CAD 70 million, and with the consent of Trilogy, the amount may be increased by up to CAD 10 million. The facility, which expires on December 31st, 2024, and has an interest rate of the Royal Bank of Canada prime rate plus 2.5%, will continue to be used to finance the seasonal working capital and operational needs of the company. 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 the 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 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 David McFadgen with Cormark. Please go ahead. Okay, great. Thank you. Heather, I was wondering if you could just give us an idea of what your priorities are now that you're back at the company. Well, as we noted in the press release, I'm currently working on a transformation plan with the executive team, which will essentially bring the business back closer to the core of what our ambition is. I said in my note, I feel very confident that it's the right direction. Okay. And I guess part of that would also be a renewed focus on EBITDA or profitability. Is that correct? Sorry, say that again. A renewed focus on EBITDA or profitability? It's actually a focus at all levels. A focus on our overall brand commitment to our customers, a focus on the way that we show up in stores with assortment, and of course, the implication of what we have in mind will show a result in the bottom line. As I noted, it will take a bit of time. Okay. Okay. Just a couple of questions then on the business then. There were media reports, and you talked about right-sizing your head office. Is that done in terms of restructuring? Is there more potentially to come? Yes, it is. Yes, it is. Yes, it is. Oh, okay. So you're done? That is just normal course business. We're looking at processes throughout the company, but it's normal course business. Yes, it is done. Okay. And can you comment on the amount of cost savings from that? I can't really tell. Heather, I could probably give a number just on the home office. I think we can share that. It's in the neighborhood related to home office of CAD 10 million, David, on an annualized basis. Then, as we noted in previous calls, we have also been working on operating costs and had committed to getting about CAD 15 million out in the year, which what we achieved in Q3, we believe we're on track for. Okay. And then you talked about how the quarter was negatively impacted by the discounting. You wanted to right-size your general merchandising inventory. You said there was a significant impact. Can you share with us what your estimated impact was on sales and cost of sales? Well, I can give you a sense of the impact to margin rate. It probably had an impact in our GM business, about 5 points of margin. So it was significant. And I think it even shows up in some of the GM top line. I think we've disclosed in the materials, but the print business was down about 8 points, but the GM business was down 18.5 points. And I think it's hard to isolate these items exactly, but some of that is discounting and hitting the top line and margin. But it was also, we do have new merchant leadership in place now, but we don't believe in the home stretch of Christmas that we had the right GM assortment that people were looking for in those final few weeks. There's a bit of both actions in there. There's the clearing undesired inventory, but also just not having on that side of the business what people were looking for at the last moment. Well, that was consistent with our brand, right? Yes. Yeah. Sorry. I missed that comment, Heather. I was just adding to Craig and saying that we don't feel the assortment was consistent with our brand. Oh, okay. Okay. In some cases, as Craig said. Okay. And then you talked about the online business being negatively impacted by the premature launch of the online platform, lingering effects from the cyber breach. Do you think now it's running smoothly as you see? Sorry, Craig, you want me to take that one? Sure, if you want to. Okay. We still have it. It is certainly stabilized, but we still have things that we are working on to get it to the full potential of what we want. Okay. Okay. And you outlined the impact on the costs from the cyber attack. You've received, I think it's CAD 1.3 million in proceeds. Do you have an idea when you will have to settle with the insurer and what the total amount might be? Yeah. David, as you noted, we have received the amount you stated. Our policy limit was in the CAD 10 million range, and we're working through the process, particularly on some of the aspects such as business interruption. We're told these can take a considerable amount of time, somewhere in the 12- to 18-month range, although we have heard from some other organizations that's taken even longer than that. Certainly, we have submitted the claims, and we're working through that presently. Just to follow up on your comment, is the maximum amount that you might receive CAD 10 million then Is that correct, or? Yeah. I believe it's CAD 10 million. It might be CAD 11 million, so I need to double-check that. But it's in that magnitude. Yeah. You've got CAD 1.3 million, and then you might get another CAD 8.7 million, something like that. Yeah. That's a fair assumption. Okay. And sorry, I meant to ask one other question just on the new e-commerce platform. What exactly were the problems with that new platform? I don't think that this is appropriate for us to go into the full details here. Okay. Okay. All right. Okay. That's it for my questions. Thanks so much. Okay. Thanks, David. Thank you, David. Ladies and gentlemen, as a reminder, should you have a question, please press star, followed by the 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 fourth quarter results will be announced on or around May 30th. Thank you again for your support, and have a good day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating with us. Please disconnect your lines.