Good morning, and welcome to Neighbourly Pharmacy Inc's Second Quarter 2024 Conference Call. The speakers on today's call are Skip Bourdo, Chief Executive Officer, and Billy Wong, Chief Financial Officer of Neighbourly. Today's discussion may contain forward-looking information and statements under applicable securities laws that reflect management's current views with respect to future events. Any such information and statements are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information and statements. Also, today's commentary will reference several non-IFRS financial measures. Reconciliations between non-IFRS and IFRS measures can be found in Neighbourly's regulatory documents, which are available on the website and on SEDAR. Finally, the speaker's remarks this morning will align with Neighbourly's earnings presentation for the second quarter of fiscal 2024. This presentation is also available on Neighbourly's website. I will now turn the call over to Skip Bourdo. Thanks, operator, and good morning, everyone. We'll focus today's discussion on highlighting the progress we're making against our strategic priorities, as well as the key drivers of our financial performance in the second quarter. We will not be providing any further comments on PCP's letter of intent to take Neighbourly private. All relevant information related to the announcement can be found in the news release dated October 3rd, and any further clarifying questions can be directed to our Investor Relations team. With that, let me dive into the quarter. I'll start with an update on the talent front, and I'm pleased to say that we are seeing several leading indicators that are starting to turn the corner. Our vacancy rate is down to 9.1%, and the time to fill vacant positions has shrunk significantly, down 21% compared to the start of the year. All of this is a result of our strengthening recruitment capabilities and focus on talent. We remain active on the M&A front and acquired one more pharmacy subsequent to the end of the second quarter, with this transaction closing in mid-September. With the newly added location, our store network spans across 292 locations. Additionally, we have two deals lined up, which we expect to close by the end of the third quarter. We continue to make solid progress on enhancing patient care with the rollout of digital pharmacy tools into another 10 locations. Significant benefit so far has been the ability to free up pharmacists' time by reducing manual work and shifting focus to more meaningful patient interactions. We are also pleased with the improving trend we are seeing on clinical services, with patient consultations related to medication reviews and minor ailments driving year-over-year growth. As it relates to our operational excellence, we have made solid progress on our inventory management initiative. Our ending inventory position at Q2 was only CAD 500,000 higher than the end of fiscal 2023, and this increase reflected our stores ramping up for their largest and busiest quarter, as well as the inventory of our newly acquired pharmacies. Excluding the acquisitions, we saw a CAD 1.9 million reduction in inventory from the end of fiscal 2023, a good start to our inventory reduction initiatives. Additionally, we have implemented price adjustments, which we estimate will improve our gross margin by approximately CAD 1 million on an annualized basis. As part of our enhanced business review process, we also launched a weekly pharmacy push scorecard that summarizes the financial performance of each location, ensuring that our individual pharmacies are all focused on the same key performance metrics that drive the business while emphasizing patient care. Finally, with respect to growth initiatives, I'm pleased with the continued progress we are seeing in Ontario and British Columbia as a result of the increased scope of practice related to minor ailments. Script count in those provinces continues to generate leading growth, outpacing the trend we're seeing in the rest of Canada. I'll now hand it off to Billy so he can walk you through the financial performance in the quarter. Thank you, Skip, and thank you everyone for joining us this morning. I'd like to start by highlighting the drivers of our revenue in the quarter, which reflected solid contributions from our existing store base and recent acquisitions. Our total revenue in the quarter increased by CAD 24 million, up 13.6% versus the prior year, to CAD 203 million. Consistent with the last several quarters, our pharmacy business contributed over 80% of our total sales volume in the quarter, a clear indication of our pharmacy-first focus. Contributions from non-comp locations drove CAD 18 million, or 75% of our revenue growth, while the remaining increase came from our existing network of pharmacies, which delivered a same-store sales growth of 4%. I'll go through the key drivers of same-store sales performance on the next slide. Our sales trend continued on the strong trajectory that we saw in the first quarter. Contributions from pharmacy continued to gain momentum, increasing 5.7% on a same-store sales basis, while the script count on the same-store basis was up 2.6%. The sales performance reflected tailwinds from the increased scope of practice in Ontario and British Columbia, as Skip mentioned earlier. We firmly believe that the evolving scope of practice will continue to drive sizable contributions to our growth. Front store sales were down 2.5% compared to prior year, as we continued to see a softer demand for over-the-counter medicines. Partially offsetting this trend, health and beauty categories, as well as confectionery products, performed strongly in the quarter. Clinical services increased 1.4% on the same-store sales basis. Excluding COVID-related activities, clinical services grew by 15.4% in the quarter. Medication assessments and pharmacist consultations related to minor ailments were the key drivers of this growth. We are pleased with our same-store sales trend and anticipate that Q3 will be in the range of 3%-4%. Adjusted EBITDA for the second quarter was CAD 21.4 million, an 8% increase from the prior year. Our adjusted EBITDA reflected the headwinds related to the ongoing pharmacist labor challenges, as previously communicated, and we anticipate seeing those headwinds begin to diminish in the second half of 2024. Adjusted EBITDA margin rate was 10.5%, a forty basis point improvement relative to Q1, coming in slightly ahead of our previous projections, and was 60 basis points lower than last year. Our early estimates, with only five weeks into the third quarter, are that our adjusted EBITDA rate in Q3 is expected to be 50-60 basis points higher than Q2, reflecting stronger gross margin trends and expected diminishing impact from labor challenges. Corporate expenses came in at 3.6% of revenue, 10 basis points better than the prior year, and within the anticipated range of 3.5%-3.6% we communicated last quarter. Our expanding scale and synergies as a result of Rubicon's integration into our pharmacy network are the key drivers of this trend. As our network continues to expand, we expect our annual corp G&A expenses as a percentage of revenue to continue to decline. I will conclude with a brief update on the company's capital structure. Our pro forma net debt level is approximately CAD 348 million. This results in the pro forma leverage of 3.6x, a level at which we are comfortable to continue driving our M&A growth agenda. With that, I will turn it back to the operator for the Q&A session. Thank you. Ladies and gentlemen, should you have a question, please press the star followed by the one on your touchtone phone. If you'd like to withdraw your question, please press the star followed by the two. One moment, please, for your first question. Your first question comes from Chris Li from Desjardins. Please go ahead. Hi, good morning, Skip and Billy. You provided a good update in terms of where you're at, in terms of your operational improvement in your opening remarks. Skip, I was just wondering if you can share with us, sort of, are you pretty much done with the initiatives right now, or are there still more to do? So, Chris, thanks for the question, and good morning. So, you know, I believe in continuous improvement, so, you know, in this business, we're never done improving. And I look forward to, you know, continuing to strengthen the initiatives that we've already launched. We obviously have, you know, 30 digital pharmacy stores up and running now, and, you know, we continue to roll those out, as previously communicated, 100 by the end of the fiscal year, and we hope to be, you know, chain-wide, by this time next year. So that, that's one example of, you know, our ability to continue to, you know, roll initiatives out that are driving value on behalf of our customers, patients, and team members. But obviously, we're focused on the Christmas of pharmacy and the Christmas of retail and the holiday season. So you know, our teams are laser-focused on taking great care of customers and patients this quarter, and in the background, we'll continue to plan for, you know, continued operational excellence initiatives in service of our customers and patients. Okay, that's helpful. And maybe just a question on front store. You noted that, you know, you continue to see strength in cosmetics and HBA and confectionery. I'm just wondering, is the increase that you're seeing mostly driven by price, or are you actually seeing an increase in unit volume? Just want to get a sense of, you know, just the consumer behavior in this inflation environment. Yeah, and to clarify, Chris, thanks for that question. To clarify, it's more health and beauty than pure kind of color cosmetics. Okay. So it's the health and beauty aids, you know, lotions, deodorants, those type of things. And we are seeing you know, increased demand in those type of products, as well as confectionery, as Billy mentioned. Billy, any additional color on that? We're seeing it both in price and in units as well. Gotcha. Okay. And maybe if I can sneak in one more question before I get back to the queue. Maybe just on drug reforms. Obviously, it was great to see that there's a new long-term generic pricing agreement in place with limited impact on the business. There's still, you know, some rumblings here and there around the national pharmacare. So, Skip, I just wanted to maybe get your updated thoughts on how that could potentially impact your business if it does happen. Yeah, we're staying close to it. As mentioned previously, it's, you know, one of the key drivers of bringing Alicia on board, is to make sure that Neighbourly and community pharmacy, especially in the communities that we serve in, you know, rural and remote parts of Canada, are represented and have a seat at the table, as we navigate, you know, these possible changes. As of today, no major updates. We, you know, we believe that the current direction of travel is more of a fill-the-gap strategy, which we actually see as a positive, especially for the communities that we serve. So, that's really the updates that we have, but rest assured that we are very connected and feel good about the path forward. Excellent. Thanks very much, and all the best. Thank you. Thanks, Chris. Thank you. Your next question comes from Zachary Evershed from National Bank. Please go ahead. Morning, everyone. Thanks for taking my questions. Morning, Zach. Morning, Zach. Hoping for a bit more detail on two topics in particular. Could you give us more color on the progress in dynamic pricing and how hiring and pre-hiring is going? Sure. So, first, on dynamic pricing, so as you recall, we launched earlier this year, the multi-zone pricing. We have completed our initial group of categories, so our higher volume categories. You know, think of health and beauty aids, as we talked about earlier, but also our OTC business. And the feedback has been positive. The teams have done a great job executing against those price changes, and we're seeing the benefits of that initiative kind of pull through. We're able to be more competitive in markets that need us to be competitive, and then, you know, in markets where, you know, high tourism and those type of things, we're actually priced better for the market in those cases. So, we're seeing exactly what we would have expected. Again, kind of similar to my answer previously, this is not a kind of one-and-done type of initiative. We will continuously look at the data. We will make sure that we stay ahead of the market and ensure that we're kind of infusing an idea of continuous improvement in our pricing initiatives. Both on the front store, which is that multi-zone pricing, and the pharmacy is more around, you know, staying ahead of any regulatory changes and ensuring that we're maximizing our reimbursement, you know, per the rules and regulations. So that is, that's the update on pricing. Any additional questions there before I move on to your second topic? No. Great color. Thanks. And then on the hiring front, as I mentioned, kind of in the prepared remarks, we're seeing really good green shoots as it relates to hiring. So some key metrics that we're really proud of is our, you know, our positions open, the percent is down below 10%, for the first time in over two years. We also have, for the first time in several years, zero pharmacy manager openings in the eastern region, and the lowest number of pharmacy manager openings nationwide since the Rubicon acquisition. So those are a few key data points. We are approaching 100 pharmacists hired this year versus, you know, less than 60 during the same time period last year. So again, feel really, really good about our progress. Our talent acquisition team has ramped up their activities on campus. We're at all of the key schools' fall recruiting activities, and we've increased our presence, on campus, as well as other key, recruiting job fairs and career fairs, by over 25%, versus the same time period last year. So the implementation of our talent acquisition team just 13 months ago, has, really, begun to bear fruit. So, feel really good on that front as well. Any other questions, Zach? We've lost Zach. I think he's still muted, so we'll, we'll go to the next question coming from Stephen MacLeod, from BMO Capital Markets. Please go ahead. Great. Thank you. Good morning. Good morning, everyone. Just wanted to follow up on a couple of questions. Just first, with respect to the pharmacist vacancies. Skip, you just gave some great color on sort of how the talent acquisition team is addressing this. But I was just curious if you could quantify, if possible, what the margin impact was in the quarter from increased or incremental costs. So in labor, we still just as a reminder, last year, we wouldn't have experienced a similar level of relief pharmacy and requirements. So the range would be about 60-80 basis points that really would have been impacted by labor. Okay. That's great. Thanks, Billy. Oh, sorry, go ahead. No, I was just gonna ask if that answered your question, Stephen? Yes, it does. Yeah, thank you. Thank you. And then maybe I may have missed it in the prepared remarks, and if so, I apologize, but I was just wondering if you could comment a little bit on the acquisition pipeline, sort of where you sit or what you see out there. And are you still focusing on targets with higher dollar EBITDA and lower multiples? Just curious if you can give some color on how that is evolving or continues to evolve. Yeah. Yep, happy to give an update, Stephen. So in the prepared remarks, we did talk about the fact that we closed on one pharmacy location in Saskatchewan. That particular location is high volume and exceeds our inbound trend of, you know, previous to this year, in terms of higher EBITDA than our average individual pharmacy previously. So feel really good about that. We also, you know, as a quick update, we're seeing fantastic performance of the first 10 pharmacies that we acquired earlier in the year. So feeling good about our ability to very quickly integrate and then start to capture kind of the best of both, as I talked about earlier in the year. And then, as we look to the future, we are looking to close two additional locations in Q3. One is set to close in early November, and the second will be closing in December, and those are also, you know, high quality, higher volume locations, higher EBITDA per location. So, feel good about the pipeline. As we kind of turn the page to next calendar year, we have, you know, very robust pipeline. Feel good about being able to pull those through and get those across the finish line. So, very, very strong progress on the acquisition front. Great. Thanks, thanks, Skip. And just to confirm, are you able to give any color on sort of where multiples are trending for these the acquisitions that you've closed and also the ones that you're looking at that are higher volume for Q3 into next year? So into the next couple of quarters, we're still targeting the lower range. Our standard range would be between 6% to 7%, and we're targeting the lower range, closer to 6%. Okay, great. Okay, thanks, Billy. Appreciate it. No problem. Thanks, Stephen. Your next question comes from Chris Li from Desjardins. Please go ahead. Well, thank you for taking my follow-ups. Maybe first one, maybe for Billy. Billy, in the past three quarters, I noticed free cash flow after dividends have been largely neutral or breakeven. I'm just wondering, you know, going forward, do you expect free cash flow to become more positive as you start to realize improvement in working capital and other initiatives that you've, you guys have been doing? Yeah, Q3 is generally where free cash flow will be the highest. Just, it's, it is our highest quarter and as, Skip mentioned in the pre, prepared remarks, we've just started on our inventory initiatives, and we've already seen a couple million come out of there. I, I gave the target of anywhere from, CAD 6 million to CAD 8 million of how much inventory reduction will yield in free cash flow. So I expect to see that, a large chunk of that come through at the end of Q3. Okay, that's helpful. We also saw a nice improvement in gross margin during the quarter, I think up 40 basis points compared to last year. You know that in the MD&A, you know, lower shrink was one of the drivers. I'm just wondering, is that referring to better inventory management? And then secondly, it sounds like from your guidance for Q3 EBITDA margin, that you do continue to expect a good gross margin improvement, as well. Is that a fair assumption? Yeah, we expect gross margin to continue to improve. Shrink was a good portion of that and also the pricing initiatives that we've been doing. So, I think I said it in a previous call, where with a better inventory management, you not only get free cash flow, but you get better shrink management. You also get a lot less touches in your inventory. So we expect all those things to continue to have a positive, positive flow through into the P&L and into the balance sheet. Okay, that's great. And maybe last one, back to Skip. You know, there's been a lot of press around these GLP-1 class drugs. I know no one has a crystal ball, but, you know, we'd be curious to hear your own personal views about, you know, how big of an opportunity they can be for the pharmacy business over the longer term. Thank you. Yeah, we're continuing to watch that. And, you know, we've had conversations with our key suppliers. And, you know, the number one thing for us to watch in the near term is in-stock condition and making sure that we're able to fill every prescription that we get in. Because, obviously, you're seeing increased demand and increased usage. But we're looking at, you know, the class in general and we anticipate, you know, future growth. And, you know, I would say just at a high level, you know, we want to be there for our customers and patients, you know, for whatever their course of treatment is. Nothing really further to comment on that other than we're keeping a very close eye on it and making sure that we stay close on the supply chain for any molecules that may be, you know, on allocation or restricted supply. Great. Thanks. Thanks for the comments. Yep. Thank you, Chris. Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by the one. Your next question comes from Zachary Evershed from National Bank. Please go ahead. Thank you, sorry for leaving you hanging there. It did disconnect at the end of the question, unfortunately. So just one follow-up for me, and specifically without looking for an update on negotiations between Neighbourly and PCP. The timing of the original announcement does have a lot of investors scratching their heads. Maybe you can comment on the thought process that led to the announcement of an LOI before the definitive agreement and financing were hammered out. Yeah, Zach, appreciate the question. We're, we're not really going to answer any questions on that, as we talked about in our, in our prepared remarks. You know, just the information is already out there that that came out in the press release, and if you have any further questions, feel free to to reach out to our investor relations team. And then, you know, we are committed to providing updates as soon as they are available. So please know that we will we will be transparent and provide those updates as they're available. All righty. That's it for me. All right. Thank you. There are no further questions at this time. I will turn the call back over to Skip Bourdo for closing remarks. Thank you, operator, and thank you everyone for joining us today. We appreciate your time, and have a great week. Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines. Thank you.