All participants, please standby. Your conference is ready to begin. Please be advised that this conference call is being recorded. Welcome to The North West Company Inc.'s fourth quarter results conference call. I would now like to turn the meeting over to Mr. Dan McConnell, President and Chief Executive Officer. Mr. McConnell, please go ahead. Thank you very much, and good afternoon, everyone, and welcome to the North West Company first quarter conference call. I'm being joined here today by John King, Chief Financial Officer, and Amanda Sutton, our VP Legal and Corporate Secretary. I'm gonna start the meeting by asking Amanda to read our disclosure statement. Thank you, Dan. Before we begin, I remind you that certain information presented today may constitute forward-looking statements. Such statements reflect North West current expectations, estimates, projections, and assumptions. These forward-looking statements are not guarantees of future performance and are subject to certain risks, which could cause actual performance and financial results in the future to vary materially from those contemplated in the forward-looking statements. For additional information on these risks, please see North West annual information form and its MD&A under the heading Risk Factors. Dan? Thanks, Amanda, welcome again, everyone. I'm really pleased with our results this quarter and excited about the momentum we're building. I'll start by providing you an overview of the key highlights in the quarter. Consolidated sales in the quarter increased 9.7%, driven by inflation, foreign exchange and new stores. Consistent with previous quarters, we continue to cycle through pandemic-related sales increases from last year, although the impact was less than in previous quarters. Customer shopping behavior has been following the same trend we've seen over the past few quarters, with a shift in spending to food and essentials and a decrease in purchases of discretionary general merchandise. This is all as a result of the impact of the higher cost inflation. This shift in spending was a key factor contributing to the increase in food and decrease in general merchandise on the same store basis. The impact of higher cost inflation and changes in sales blend continued to negatively impact our gross profit rate as cost increases were not fully passed on in retail prices, and we had higher markdowns on general merchandise. That said, the 23 basis point decrease in gross profit rate for the quarter was less than the trend in previous quarters. Overall, net earnings were down marginally in the quarter, but adjusted net earnings, which excludes the impact of a large insurance-related gain last year, were up 17.9% compared to last year. With that overview, I will now provide some more color on the results for the quarter, and I'll start with the Canadian operations. In Canada, sales increased 8.6% in total and were up 2.6% on a same-store basis, with a 4.3% increase in food sales offsetting the impact of a 2.9% decrease in general merchandise sales due to the shift in spending that I referred to earlier. The increase in same-store sales was also due to higher inflation and government inflation relief payments combining with a good in-stock position. The new stores we opened earlier in the year also contributed to the increase in sales. We added a new store in Sheshatshiu in Newfoundland and two new Quickstop convenience stores in Coral Harbour, Nunavut, and Little Grand Rapids, Manitoba. Overall, we were able to maintain a good in-stock position on our essential items, particularly in the Quickstop stores and with the support from NSA, which contributed to the sales increases. Speaking of NSA, in addition to the support they provided our retail stores, they also had a very strong quarter that was driven by high craft utilization in both cargo and passenger. It increased in the third-party cargo and an increase in passenger volumes that also played a factor. In addition to these factors, the higher revenue in the airline is also the result of passenger increases in aviation fuel costs and the return on the investment when we moved a large cargo door ATR in the fourth quarter last year, and this enabled NSA to offer cargo services for larger items. All right, let me switch gears and briefly comment on international. Sales increased 4.5% with new stores in Alaska, with a unique mixed results in the Caribbean and Pacific regions, similar to what we reported last quarter. We opened a new store in December in Toksook Bay, Alaska, which had a great reception from the community. This adds on top of the new Metlakatla store open that we did that earlier in the year. Same-store sales increased 1.4%. We continued to see a similar story to Canada here, where the 3.7% increase in same-store food sales offset a 14% decrease in general merchandise sales as customers continued to shift spending to food, due to less disposable income resulting from a combination of higher inflation and lower government income support funds. On the other hand, certain Caribbean markets like the BVI are performing very well compared to last year as tourism has improved after the pandemic. Similar to Canada, some U.S. markets in the Caribbean and Pacific continue to cycle through government income support funds that were present last year but are no longer available. A few quick comments on the gross profit expenses. Our teams have prioritized operational excellence to help mitigate the impact of inflation. Merchandise cost inflation has continued this quarter. Although we've seen some moderation on the pace at which these costs are rising, there are still increases being passed on by suppliers. When we factor in higher fuel and transportation costs, the impact of inflation on the sale prices is even greater in the north compared to southern retailers given the remote nature of our markets. We continue to work with our suppliers and transportation partners to minimize cost escalations impacts as much as possible for our customers and for the bottom line. The impact of higher merchandise and freight cost inflation that was not fully passed through retail prices, the change in sales blends I referred to earlier and higher markdowns all contribute to the 23 basis points decrease in our gross profit rate in the quarter. Similar to previous quarters, expenses increased 6% compared to last year due to cost inflation, including higher fuel-based utility expenses and stock costs. The impact of foreign exchange and the translation of international operations expenses into export store expenses. In terms of inventory, our levels are higher than last year, largely due to the higher inflation and the impact of foreign exchange. As I just mentioned, we did take markdowns in the quarter in certain general merchandise categories that did not have sell-through that we expected as a holiday season. That said, the overall increase in inventory is predominantly in centers for grocery and categories like motorized and home furnishings that were impacted by supply chain disruptions. Due to the durability of these items and the relevance that they still have in the communities we serve, we still expect to sell through these items in 2023. I will wrap up by saying that I'm optimistic about our journey ahead. Our history has proven time and time again that we're resilient. Inflation and lingering potential of a global macroeconomic slowdown are headwinds that will affect our outlook. Our core competencies and the essential services we provide to the communities we serve will help mitigate the impact of these challenges. Overall, we expect to lap the pandemic-related impacts and begin comparing to more normalized post-pandemic earnings in the second quarter. Looking forward, there are some potential tailwinds, including government transfer payments and higher infrastructure spending in the communities we serve. I'm optimistic about the future. There is tremendous untapped potential that we can unleash to drive efficiencies and grow. Opening new stores in new markets in Alaska and Canada has demonstrated our capabilities to bring to remote markets essential products and services that the communities we serve appreciate and value. Our conviction to our purpose of making people's lives better in the communities we serve is as strong as ever. We will continue to build on and optimize on our core capabilities in merchandising, operations, and logistics. This is one of our top priorities. We will also continue with modernizing our technology to enable greater efficiencies within our business and provide scale and capability for the future. With that, let me open up for any questions. Thank you. Thank you. We will now take questions from the telephone lines. If you have a question and you're using a speakerphone, please lift your handset prior to making your selections. If you have a question, please press star one on your device's keypad. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while the participants register. Thank you for your patience. The first question is from Michael Van Aelst with TD Securities. Please go ahead. Hi, guys. It's Evan standing in for Mike. Congrats on a strong quarter. Thanks. I just had a question on gross margin. In Q3, we saw your gross margins contract about 80 basis points year-over-year. In this quarter, we saw them contract only about 20 basis points. I would have expected that the high inflation in Q4 would have pressured margins more than what we saw. Can you walk through some of the factors that changed in Q4 versus Q3 that prevented gross margins from coming down as much as in Q3? Sure. There's two factors. We did pass on more to the customers as obviously needed to be done, and also NSA. NSA also increased as a result. I told you there was higher performance there. Given some of the charges, the fuel charges that we talked about, we did pass those on as well. That's what led to that impact. Okay, great. Thanks. Is there any change in the competitive activity or are the competitors passing on more than they were in Q3 as well? Anything you could talk to about that? No, I think that's absolutely, that's one of the enablers to allowing us to pass on some of our costs is exactly right, 'cause a lot of the competitors are obviously feeling the pinch, I would say as much, if not more, than we are and, have definitely, taken for a stride in raising some of their prices. Okay, great. Thanks. Looking at sales in Canada, you'd mentioned government inflation relief payments as a contributor. Can you talk about when this started and when it's expected to finish and what level, like, what amount we're talking about? Sure, Evan. Hi, it's John. What we're talking about there is the federal and provincial governments had issued, various, inflation relief payments, is what we've called them. There was an extra GST that was, that vehicle was used. Several of the provinces and territories had, additional payments. Those all added up to have an impact in the quarter. Great. Thanks. I'll get back into queue. Thank you. Once again, please press star one at this time if you have a question. The next question is from Kunal Gidwani with CIBC. Please go ahead. Hi. Thanks for taking my question. I wanted to know if you could talk about outshopping and where does that stand right now versus a year ago and then pre-pandemic levels? Okay. As far as have I seen a significant increase in outshopping? I don't. Yes. Okay, I don't think so. The reason being is because, as I indicated, a lot more of people's money is going towards essential items. I'd say that people's disposable that went towards more general merchandise, which is typically more outshopped, is, you know, is prevalent. If you're talking about previously, there is no restrictions in travel, so people that are traveling out of markets, are definitely procuring out-of-market. It also aligns with the fact that it's, I guess you're probably in Toronto, but the season is a little longer right now as far as the winter road. There's more outshopping than there would've been last year. I'd say things are probably at a normal level as far as our outshopping. Its a little bit more than last year, for the reasons I mentioned. The winter roads are open a little longer and, I think people are definitely getting out of market more. Okay, great. That's helpful. Thank you. My second question is on just kind of gross margins for the year. Given you're gonna be locking some pretty unfavorable gross margin compression, do you think just with the pricing that you're passing through in market right now, that we could probably see gross margin expansion as we are progressive, all else being equal? I mean, that's the hope. I mean, as you can see, we've definitely come around. We don't have a crystal ball really as, you know, some of the economics are so difficult is to understand what the inflation rate's gonna be next year. We don't think it's gonna drop as significantly as we would all like, particularly in the first half of 2023. Our intention and our hope is that we would see a gross margin or gross profit improvement on into the latter half of next year or this year. Okay, perfect. My last question is, in the past, you've talked about making selective price investments. Given that you're passing more price through right now, how does that thinking in this inflationary environment impact that? How did the thinking... Sorry, just to follow up on your question, if you'd clarify. How does the thinking of our past price investment impact the passing on of some of the cost increases today? Is that what your point is? Yeah. Yeah. Okay. I would say that, probably put this right. The price investment is something that we do on a regular basis. That's what I've explained, I think, over the last couple of quarters. It's simply, it's just a fact of regular retail operations. We're always trying to work and negotiate on behalf of our customers better pricing. It's been obviously more difficult over the last couple of years. We've tried to hold back on passing through, you know, all of the price increases, obviously, just given, you know, the fact that we work hard on behalf of our communities. We are taking a more, you know, we're optimizing, I would argue, a little bit more balanced approach. In the future, we have a number of initiatives that we're gonna be exploring to try and bring more value to our customers. This is kind of the work that I indicated near the end of my discussion that we're focusing on because obviously it's been a last couple of years it's been about just procuring, getting, sustaining stock, managing, trying to keep employees, obviously, ambitious and optimistic about the future. Now that we think that the climate outside of COVID is somewhat normalized, despite the inflation and some of the macroeconomic measures that are coming our way, we think it's a great opportunity for us to look internally, within our company and really put a lot more focus into the back office to try and optimize some more efficiencies and create some value that we can pass on to the customers, and the shareholders, frankly, in this upcoming year. Okay. That's perfect. Thank you very much. Thanks. Thank you. The next question is a follow-up from the line of Michael Van Aelst with TD Securities. Please go ahead. Hey, guys. It's Evan again. Just a few more questions. If looking at SG&A and like excluding depreciation, you know, you mentioned, you know, higher fuel-based utility costs and staffing costs and are you seeing further increases so far this quarter in Q1 in that line? Yeah. Hi, Evan. Yeah, we're seeing like for communities in Northern Canada that, you know, pre-bought their fuel and was sent in, that that price is stable. Certainly, other communities we continue to see pressure on the fuel-related utility costs. You know, other costs that are in the business that, you know, things like insurance costs. I don't know, recall whether we specifically called that out, but, you know, those costs are up as well. There is a general, I would say, inflationary impact that permeates through that SG&A. Those would be two items. Okay. And how much of an impact was the lower incentive plan costs year-over-year in the fourth quarter? We didn't quantify that. They were down from last year, but that's just part of the factor. Okay. Great. Just from a seasonality basis, in a normal year, is it fair to say that Q4 is weaker than Q3? That's. Go ahead. Go ahead, John. That's hard to say, Evan. Depends on the transfer payments. Depends on the PFDs. Depends on, you know, it depends on the amount of money that is in market. you know, it's tough to say really conclusively, b ut it's definitely a strong market for us for sure, or a strong quarter. Okay. Great. I guess just one last question. Can you talk a little bit about your decision to close the Curacao store and, you know, the relative size of that store versus other Cost- Plus stores, and if there's similar dynamics that are in play in other islands that may affect your decisions in those markets? Yeah, not at all. In fact, it's a, it's a smaller store. It's, it's always been a store that we had some concerns over. So we were at a point where we didn't think that, you know, well, optics, looking at the market conditions, we didn't think that it was the right place for us to be spending more resources, where we think there's other better opportunities for us to allocate our resources. Okay, great. Thank you. Thank you. There are no further questions registered at this time, so I will turn the meeting back over to Mr. McConnell. Okay. Well, thank you very much for the time today, and, appreciate it, and we'll see you next quarter. Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.