Welcome to The North West Company Inc. Third 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. Hi, thank you, and good morning. Welcome to the North West Company Third Quarter conference call. I'm joined here today by John King, our Chief Financial Officer, and Alexis Cloutier, our VP of Legal and Corporate Services. I am going to start the meeting by asking Alexis to read our disclosure statement. Thank you, Dan. Before we begin today, I remind you that certain information presented may constitute forward-looking statements. Such statements reflect North West's 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. Any forward-looking statements are current only as of the date they're made, and the company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future results, or otherwise, other than what's required by law. For additional information on these risks, please see North West's Annual Information Form and its MD&A under the heading Risk Factors. Thanks, Alexis. I'll begin by providing a brief overview of this quarter's results. I'll then provide some additional color on sales, starting with Canadian and then international operations, before making some comments on the key factors impacting our consolidated gross profit and expenses. Finally, I'll wrap up with a few comments on our outlook and the Next 100 programs before opening up the call for some questions. All right, so let's get into it. To set some context for our third quarter results, it is important to keep in mind that we are comping against a very strong Q3 last year, which had a 5.1% increase in sales and a 26.1% increase in net earnings. Our third quarter results this year were driven by top-line growth on consolidated sales of 3.3% and an increase in gross profit, which was up 4.3% for the quarter, resulting from the impact of higher sales and a 30 basis point increase in the gross profit rate, mainly related to changes in the sales blend. These sales and gross profit results did not fully translate to the bottom line due to the following factors. First, our selling, operating, and administrative expenses increased CAD 10.4 million, or 7%, largely due to higher staff costs related to inflationary and minimum wage increases, additional resources required to execute our Next 100 operational excellence work, and an increase in depreciation and the impact of new stores. Second, the impact of a 103 basis point increase in the effective tax rate substantially due to the implementation of the Global Minimum Tax Act, which came into effect earlier this year. Our top-line performance contributed to a 1.4% increase in adjusted EBITDA, but the overall net impact of the factors I just mentioned resulted in a 4.3% decrease in net earnings compared to the impressive net earnings increase of 26.1% in the third quarter last year. Within this context, I will unpack the results, beginning with our Canadian operations. Sales in Canada were up 4% for the quarter and increased to 4.9% on a same-store basis. We had solid sales performance in both food and general merchandise, with same-store sales increases of 4.8% in food and 5.3% in GM, which were on top of very strong same-store sales gains in Q3 last year of 9% in food and 16% in general merchandise. Sales continue to be positively impacted by increased consumer demand in certain communities, resulting from the claim settlement payments and government program spending. This includes the distribution of First Nations Drinking Water Settlement, payments to individuals, which have been slower than anticipated and are expected to continue throughout the remainder of this year and into 2025. Increased consumer demand from government spending on First Nations Child and Family Services programs, including Jordan's Principle and Inuit Child First Initiative, that help provide greater access to nutritious foods. These factors were partially offset by the impact of government inflation relief payments paid to individuals to help mitigate higher cost of living in 2023, which contributed to a 10.1% increase in same-store sales in the third quarter last year. The same-store sales gains in the quarter this year were partially offset by lower airline revenues and wholesale food sales. From an earnings perspective, the impact of top-line performance and an increase in gross profit did not fully translate to the bottom line, primarily due to three factors. First, as I previously mentioned, selling, operating, and administrative expenses were up in the quarter due to higher staff costs resulting from inflationary and minimum wage increases, an increase in depreciation, and the impact of new stores. Second, we invested in additional staff resources required to execute our Next 100 operational excellence work. This investment in additional resources is required to unlock the future growth and deliver an incremental EBIT expected from our Next 100 initiatives. And finally, the other drag on earnings in the quarter was the impact of softer earnings in North Star Air and lower earnings from our investment in Transport Nanuk, which partially offset what would have otherwise been solid earnings gains in the third quarter. Both NSA and Transport Nanuk were up against a very strong quarter last year and were impacted by higher maintenance costs and, in the case of Transport Nanuk, delays in the sea lift shipping season and lower international shipping rates. On a positive note, despite the shipping delays, we were able to receive all the sea lift merchandise in our markets. The net impact of all these three factors was a 2.2% increase in EBITDA and a slight increase in EBIT compared to last year. Moving on to our international operations, we did see an improvement in sales, but the top-line gains did not translate into an increase in earnings due to higher expenses. International sales increased 2.3% in total, driven by same-store sales increases of 2.4% in food and 5.2% in general merchandise. The increase in general merchandise sales is an improvement in the trend over previous quarters this year and the third quarter last year. Sales were positively impacted by better economic conditions in certain Caribbean markets, largely driven by the tourism season, which is off to a positive start. In Alaska, the Permanent Fund Dividend increased to $1,700 this year compared to $1,300 last year, which had a positive effect on our AC sales, particularly in general merchandise. These same-store sales results were partially offset by lower wholesale sales and weaker economic conditions in Alaska related to commercial fishing. From an earnings perspective, the impact of sales gains and an increase in gross profit did not translate to the bottom line due to higher expenses primarily reflected to staff costs and additional resources to support our Next 100 work. These factors resulted in a 2.3% decrease in Adjusted EBITDA and an 11.6% decrease in EBIT. With those comments on the key factors impacting our results in the third quarter, I'll now briefly talk to you about our outlook and provide a few comments on the Next 100 program. The macroeconomic view is consistent with what we have highlighted previously in 2024. There continues to be economic uncertainty, particularly in our international operations in tourism-dependent markets and countries that do not have strong government income support programs for individuals. There is also uncertainty surrounding potential changes in U.S. government policy regarding tariffs and the resulting impact of the economic environment in the countries in which we operate. In Canada, we expect consumer demand in the fourth quarter and into 2025 to continue to be positively impacted by the distribution of First Nations Drinking Water Settlement payments and government spending on First Nations Child and Family Service programs, including Jordan's Principle and the Inuit Child First Initiative programs. As highlighted in previous calls, we continue to focus on driving operational excellence and delivering further value for our customers, our employees, and our shareholders through our Next 100 work while building capabilities to capture future business and market opportunities. The Next 100 work is expected to drive annualized incremental EBIT, which will begin to ramp up in 2025 as each of the initiatives reach maturity. As we lay the groundwork for these improvements, we have invested in additional resources to support the execution of our Next 100 program. In addition to this investment in resources, we also anticipate one-time costs for professional fees and other expenses in the fourth quarter and into 2025 as each of the initiatives is operationalized. Our expectation is that the annualized incremental EBIT from these initiatives will offset the investment in additional resources and one-time costs. However, there will be timing differences as these costs will be incurred prior to achieving the full annualized benefits. We'll provide further information on these one-time costs in our quarterly reports. Finally, I'll wrap up by saying that our Next 100 work and our efforts every day are underpinned by our commitment to making a positive impact in the communities that we serve and providing our customers with the products and services that they need. With that, I will now open it up for any questions. Thank you. We will now take questions from the telephone lines. If you have a question, please press Star 1. You may cancel your question at any time by pressing Star 2. Press Star 1 at this time if you have a question. There will be a brief pause while participants register for questions. Thank you for your patience. The first question will be from Michael Van Aelst from TD Cowen. Please go ahead. Hi. Good morning. First off, I'd like to ask you about the OpEx growth in Canada. I know you talked about the Next 100, but that OpEx growth has been elevated for much of the past seven quarters, I would say. But this is the first time you've called out the Next 100 that I can see in your press releases. So when did that spending increase actually start related to the Next 100? And can you give us a little bit more color as to the timing as when we switch over to seeing the benefits? Sure. Well, it has been a ramp-up, Michael, so we've been building capability with the new organization in order to identify and develop a plan to execute different initiatives that I've outlined in the Next 100 program over the last number of quarters. So yes, it has been a ramp-up. And the benefits, as I indicated, are going to be into 2025, 2026, and beyond. So it's sustainable incremental EBIT that we're looking to generate. And this is simply the ramp-up program that's been a necessity in order to get us there. So yeah, that's pretty much what I can tell you right now. We're expecting it 2025 and beyond. Okay. And when did the spending start to ramp up, though? Has it just been this year? Was it last year as well? I would say last year. I think I announced this, that we were starting to work on this last year, and we started to build the plans and therefore starting to gradually build up the resources required to develop and finalize some of the planning work that we were now in the execution mode of. Okay. All right. And then on the Canadian gross margin, it looked like it was about 100 basis points lower than I would have thought, given usual seasonality. Is that just tied to the higher maintenance costs at NSA as well as on the sea lifts, or is there something else happening? No, it's a shift in mix, and really is what it comes down to. Okay. And can you give us a little more color then on that shift in mix? Sure. Well, as we basically moved over, you can see our general merchandise sales are down compared to last year, particularly in the Canadian division, and we had, well, they're not down, but they're down on the trajectory. Last year, we had about a 16% increase. This year, they were down to, I believe, it was 7%, and so that's obviously a bit of a drain on the gross profit rate. Okay. I'll follow up after on that one. And then just a quick one for John. Can you just comment on the jump in interest and depreciation in Q3 versus Q2 versus the run rate in the first half of the year and what we should be expecting going forward for those lines? I don't think anything really stands out, Mike, on either one of those lines other than they are up and they have been trending up. I think that would be. I think that trend that we're seeing now, we are going to be on a higher run rate on depreciation as I outlook over the next, I would say, 18 months. So that trend has been going up, and I think where we're at now is that trend will continue. Not to increase, but where we're at. Okay, so it'll continue roughly where we're at now or continue to increase? Yes. Okay. And is that continuing? Yes. No, continuing where we're at now. Not on an upward trend, but where we're at now. Okay, and is that tied to the Next 100 investments as well? No, that's not directly right now. We will talk about that further as we get into the Next 100 program to the extent that there is any CapEx related to that. It's just related to the capital assets and spending that we have now. We have also had some IT spending, not directly related to the Next 100 that is driving some of that increase, but not something that is overly material or a change in direction. It all just contributes to that number. Okay. And the jump in the interest, did you have a change in your rates, or is there anything else that would explain it? No. No material change in rates, just the timing of the combination of average debt levels and average interest rates. Nothing else material there. Okay. All right. Thank you. Thank you. The next question will be from Stephen MacLeod, BMO Capital Markets. Please go ahead. Thank you. Morning, guys. Just wanted to follow up on a couple of things. Just with respect to the Canadian business, do you feel like you have a better visibility into the payments of the drinking water settlements coming through, or is there still sort of uncertainty around the timing on those payments? Unfortunately, we don't have any more insight. It still continues to be, call it a trickle, and it's pretty volatile as to how it comes in. So we don't have any more insight, lack of our efforts to try and get more on top of it. It's just the information is just not available. Oh, okay. I see. So is it? So we anticipated having a longer. Sorry, Stephen. I was just going to say, so we anticipated having a longer tailwind, though. I mean, as a result, it's kind of stretching out over a longer period of time. We anticipated going into 2025. And yeah, that's all we can really say right now. Okay. Okay. I see. Well, that's helpful. I guess maybe dovetailing from that, would you expect sales to accelerate into Q4 based on your commentary and the outlook with respect to kind of some of those payments continuing in Q4? No, we're not at, I don't believe that we're going to have an acceleration of sales in Q4. I think it's going to be along the same trajectory that we're on right now. Okay. That's helpful. Thanks, Dan. And then just with respect to the PFD, higher year-over-year and positively impacted the international business, would you expect that to continue into Q4, or is that typically spent in the Q3 period? The way it fell, I believe a lot of it was spent in the Q3 period this year. Okay. That's great. And then just coming back to the Next 100 plan, I mean, I know you haven't given sort of guidance in the past around what it could mean from an EBITDA perspective or an EBIT perspective. But just wondering if you're able to give a little bit of color on sort of how you expect once you begin to see the benefits from the Next 100 plan, how you expect that to impact margins maybe into 2025 or 2026? Or if not today, when you might be able to share those kinds of insights? Currently, I'm anticipating that we'll be able to share it within the next two quarters, and really, the anticipation was when we realize and we start to expend the one-time expense, then we'll give you a justification as to what the impact that's going to be moving forward. Okay. Okay. Okay. That's great. Thanks, Dan. I'll hop back in line. Yeah. I don't know. Anticipate first or second quarter next year, Stephen. Okay. That's helpful. Great. Thank you. Thank you. Once again, please press Star 1 if you have a question. The next question will be from Sarah Smellie, The Canadian Press. Please go ahead. Hi there. My question is for Mr. McConnell. A study from the Toronto Metropolitan University last year found that companies receiving the Nutrition North subsidies were passing on just 67 cents on the dollar to their customers, North West Company included. As well, the Nunavut government is investigating whether stores, including those owned by the North West Company, have been hiking prices when federal money from programs like Jordan's Principle rolls in. I wonder, is your company keeping part of the Nutrition North subsidies that it receives? And are your stores hiking prices when government money rolls into the communities they serve? Okay. Well, thanks for your question. I can tell you that absolutely not. We're passing on 100% of the subsidy. And there's been a number of audits that have been done by Nutrition North and other firms on behalf of Canada to verify that. So it's something that's obviously, I went in front of the committee, in front of the Parliament, and we had discussions around this exact item. There is another audit that's going on right now, and there continues to be so. And there's never, ever been any findings to indicate that North West has done anything but pass on 100% of the subsidy. And to the second part of your question, I'm not sure how familiar you are with the Next 100, but it's all under the preface of trying to create more value for our shareholders. Especially as of just recent, we've just undergone on a pretty significant opportunity, we feel, on offering another level of savings for our customers through our private label program that we're going to be rolling out here over the next number of quarters. That's all under the same premise of bringing down the cost of products, food, particularly within the communities that we serve. There I can provide you that bit of information just to help you out with your research. But can you answer the question directly? Are stores hiking prices when this funding rolls in? Oh, absolutely not. Sorry, I thought I did answer that. Absolutely not. In fact, my point was that we're actually looking at lowering prices by bringing in other options and lower-cost items under a private label program. How do you balance your company's drive to create profits when you're also in a position where you're often the only place that people in remote indigenous communities can buy food? There's actually a lot of operators that we have competition in most of the markets, a lot of the markets that we operate, and there's lots of options, especially with the mobility and some of the e-commerce platforms that are out there, but given the longevity of how long we have been operating in communities, it's really important that we live by our values, and one of those values is trust, to be a trusted community value store, and so we work really hard with leadership of the community to create partnerships, to give back, to create economic opportunities for other indigenous leaders within the communities and outside of the communities to try and create an economic reconciliation scenario so people can be a part of the success of North West. Every day, the employees that come to North West do so in order to make a positive impact in the communities we serve. So yeah, really, it's just all the things that we do lend towards providing a strong value to the customers within the communities that we serve. Okay. And what do you say to growing frustrations among people in those communities who feel like your prices are increasingly unaffordable? I say that we're absolutely working very hard every day and advocating on behalf of our customers to try and provide better service and fair prices on a regular basis. And like I said, if you took a look into some of the strategies that we're employing here at North West, they're all catered towards doing just that. And we share the frustrations. I know there's been a lot of inflation all throughout in all areas of expenditures in Canada. And I mean, we all share those frustrations, but it just invigorates people at North West to work even harder to try and bring down that cost of living within the communities. Okay. Thank you. All right. Thank you. Thank you. There are no further questions for us at this time. I would now like to turn the meeting over to Mr. McConnell. Please go ahead. All right. Well, thank you, operator. And on behalf of the entire North West team, I just wanted to wish all of our shareholders the best holiday season. And I look forward to our fourth quarter and results call in April. Thank you. The conference has now ended. Please disconnect your lines at this time. Thank you for your participation.