Good morning, everyone, and thank you for standing by. Welcome to the Pet Valu 4th Quarter 2023 Earnings Conference call. My name is Candice, and I will be your coordinator for today's call. All lines have been placed on mute to prevent any background noise. Please note that following the formal remarks, there will be a question-and-answer session. If you would like to ask a question at this time, please press star followed by 1 on your telephone keypad. If you are using a speakerphone, please lift your handset before pressing any keys. We kindly request that you limit your time to one question plus a follow-up before cycling back into the queue, so that will allow time for as many of you to ask questions as possible. I would now like to turn this conference call over to our host, Investor Relations James Allison. Please go ahead, Mr. Allison. Good morning, and thank you for joining Pet Valu’s call to discuss our fourth quarter 2023 results, which were released this morning and can be found on our website at investors.petvalu.com. With me on the call is Richard Maltsbarger, President and Chief Executive Officer, and Glen Macdonald, Chief Financial Officer. Before we begin, I would like to remind you that management may make forward-looking statements, which include guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risks and uncertainties, which could cause actual results to differ materially from those expressed today. For a broader description of risks related to our business, please see our 2023 MD&A, 2023 Annual Information Form, and other filings available on SEDAR+. Today's remarks will also be accompanied by our earnings presentation for Q4 2023, which can be viewed through our live webcast and is also available on our website. Now I'd like to turn the call over to Richard. Thank you, James, and good morning, everyone. I'll begin our prepared remarks today with some highlights of our strategic accomplishments in 2023 and focus points for 2024 before handing it to Glen to review our financials and 2024 guidance. Our unmatched pet specialty omnichannel platform and the untiring efforts of our eaches franchise owners and leaders delivered solid top-line growth and bottom-line leverage amid a challenging macroeconomic backdrop in the 4th quarter. System-wide sales grew over 5%, supported by positive same-store sales growth. Revenue grew 8%. Adjusted EBITDA was up 20% to CAD 71 million. Adjusted EBITDA margin improved 250 basis points from last year as we effectively managed our product and operating costs in a higher volume quarter. Our convenient and compelling assortment kept us top of mind for millions of devoted pet lovers across Canada. The perennial tailwinds of humanization and premiumization remain fully intact, while we continue to benefit from the enduring strength of our consumables and services segments, which accounted for 80% of our sales. This was partially offset by regional-wide softness in discretionary products. The team is proud that we've successfully delivered Q4 across several key financial metrics. This past quarter is a prime example of how our diversified revenue streams of corporate retail sales, wholesale shipments, and franchise fees combine the lower variability caused by fluctuations in consumer demand. We executed our holiday commercial plan with rigor, choosing our moments with exciting and targeted offers while remaining disciplined against more promotions than we expected competitors to put into the market, ultimately finishing the year matching the rate of market growth step for step to hold market share. Our corporate and store operations teams continue to take action to manage expenses in accordance with the demand environment. Together, these actions enabled us to achieve our expected profitability outcomes. In previous quarters, you heard me speak to our growth algorithm built on the pillars of network expansion, same-store sales growth, and margin improvement. Moving forward, we will maintain these pillars, but we will summarize our operational accomplishments and plans in a new framework that ties directly back to our mission statement to be Canada's preferred pet retailer, the clinical strategy shared in our recent ESG report, and the long-term profitable growth we work to achieve every day. The four focuses of our framework are: 1) being the local and everywhere pet specialty retailer, 2) delivering the best pet customer experience in Canada, 3) fortifying our strong retail and wholesale fundamentals for long-term growth, and 4) delivering strong free cash flow and return on invested capital to our shareholders. Starting with our first focus to be the local and everywhere pet specialty retailer, we made strong progress on this front in 2023. We opened 39 new stores and renovated, expanded, or relocated another 40 locations, resulting in total square footage growth of 7% for the year. With 783 locations, we and our franchisees operate Canada's largest specialty pet store network, now putting us within five kilometers of over 75% of Canadians. Our network continues to show it can win across every province and in every type of market: urban, suburban, and rural. Together with our full suite of digital capabilities, these assets enable us to provide convenience unmatched by any pet specialty peer in Canada. Our franchise store mix increased to 72% this year, compared to 70% last year, driven by new openings and resales, and we expect this trend to continue. Our franchisee community forms an essential component of our front line to devoted pet lovers across Canada, helping to present and promote our brand while fostering lasting relationships and loyalty. Further supporting the local part of our strategy, we are targeting 40-50 new store openings in 2024 while continuing to expand our franchisee presence across all provinces. Supporting the everywhere part of our strategy, we are now seeing our cross-channel customers most frequently visit our stores and online channels, proving that devoted pet lovers truly want the best of what a retailer with both strong online and in-store experiences can offer. To further support our omnichannel leadership, we are upgrading our digital platform in the second quarter. This new platform allows us to move to a more advanced digital architecture, enabling us to more quickly adapt and improve online experiences as consumer behaviors evolve. Our second focus is delivering the best pet customer experience in Canada. This starts with having the right combination of premium products and is supported by compassionate, expert-level customer service delivered by our ACEs and franchisees. In 2023, we continue to see key premium national brands such as ACANA, ORIJEN, and Big Country Raw exhibit outsized growth in our stores and online as discerning pet lovers continue to lean into enduring humanization and premium quality trends. We complemented this with our growing lineup of proprietary brands, where we doubled the size of our Performatrin Ultra Freeze-Dried Raw portfolio with the introduction of multi-protein chews and raw-coated kibble. We also introduced Performatrin Ultra Kangaroo in December, which has been one of our fastest-ever product adoptions by our franchisee network. We further complemented the lineup through Performatrin Ultra raw-coated cow ears, collagen, and bully alternative chews. In hardlines, we introduced over 200 new Jump toys through the summer, delivering broader value options to devoted pet lovers so they continue to provide the best for their pets at lower price points for similar or better functionality. We tapped deeper into humanization trends with the expansion of our Bailey & Bella Celebrations apparel line, with the introduction of our new I Do wedding collection and revitalized birthday collections. In 2023, our loyalty programs continued to grow, where we further expanded Access and Relevance by adding Hill's Science Diet, Oxbow, and other brands. Loyalty sales penetration now exceeds 80%, and we ended the year with over 2.9 million active members. Our programs provide valuable trend data and allow us to leverage a growing suite of personalized offers, enabling us to offer value to the right customers at the right time and reduce the use of mass market promotions. In the current market, these insights allow us to choose to invest in the right targeted promotions and media channels, most likely to attract devoted pet lovers with the highest lifetime value and potential for monthly loyalty with Pet Valu. In 2024, we have a full agenda of planned initiatives that will see us continue to elevate the experiences we offer our customers. The boldest of these will be the introduction of Performatrin Culinary, our first proprietary brand entry into the freezer category. Culinary pet food, including frozen raw, gently cooked, and freeze-dried raw, is one of our fastest-growing categories, with a three-year CAGR of over 30%. These products drive high purchase frequency amongst the most valuable devoted pet lovers and have higher barriers to entry, providing a great growth trajectory for our business. Launching nationwide in the second quarter, this line will initially include 15 frozen raw meals and gently cooked recipes. We will be supporting this launch with specific promotions, additional ACE and franchise training, and dedicated advertising. In terms of pricing, the Canadian pet industry has a long track record of successfully passing along cost increases at retail, but can experience short-term intervals where this does not occur. While we worked through most of 2023 to lead the industry with rational pricing given cost inflation, we have not seen all retail peers maintain a similar approach. In response and to maintain our commitment to overall price competitiveness, we will be making specific, intentional investments into our pricing across key value items during the first half of 2024. We expect this action to have near-term impacts on our reported gross margin rate but intend to fund these actions through savings and leverage of our operating expenses, such that we can continue to deliver adjusted EBITDA margin expansion this year. Our third focus is to continually fortify strong retail and wholesale fundamentals to support long-term profitable growth. The flagship initiative geared towards accomplishing this is our supply chain transformation, which positions Pet Valu with Canada's strongest pet specialty distribution network, serving our devoted pet lovers and franchisees with leading speed, accuracy, and cost efficiency, along with scale to support the growth we've seen and the growth we expect for years into the future. It's with these goals in mind that we're excited to talk about our progress. Our supply chain transformation hit significant milestones in 2023, including successfully opening our new GTA DC in July, which enabled us to exit the overflow 3PLs in Ontario and our legacy bulk pick DC, reducing variable operating costs. We solidified the operations of our new warehouse management system, resulting in bulk picking productivity in the new GTA DC now exceeding that of our prior operations, with fewer minutes spent on shuttling products across multiple sites. We began to unlock the potential of wholesale revenue to our Chico franchisee network as we took our first steps to achieve our interim target of annualized CAD 50 million in merchandise shipments by Q4 2025. In Vancouver, we took possession of a 350,000 sq ft LEED-certified distribution center in early November and began setup work. 2024 will be another very important year for us in this transformation. Implementation of our Goods-to-Person automation in the GTA DC is progressing as planned, with ramp-ups scheduled to begin in Q2, after which time we will transition out of our last legacy DC in Ontario. In Vancouver, we plan to transition to the new DC in Q3, concurrently moving out of our legacy building and 3PL overflow facility in that market by the end of 2024. We will then transition our third and final DC in Calgary, beginning in 2025. Looking beyond our supply chain transformation, we are turning to key system upgrades within merchandising and finance as the final steps in our full Omnichannel and systems transformation started in 2019. These projects, which will be paced over the next few years, will allow us to move towards more nimble and resilient architecture and support our future growth. We will continue to drive incremental efficiencies in our corporate store operations. While we are 72% franchised and growing, we continue to operate over 200 corporate stores through which we test all new actions and systems at scale. In 2023, we leaned into incremental wage and hour investments to further enhance our industry-leading sales productivity and customer experiences. We adjusted this investment to adapt to the shifting environment as we move through 2023, and we will continue to do so in 2024. We are also layering in changes to our operating processes, such as truck receiving, perishables tracking, and loss prevention in pursuit of further leverage. Altogether, these focuses work to advance our mission to be Canada's preferred pet retailer. Combined with our Asset-Light franchisee-first operating model, we believe our strategic initiatives will deliver enhanced free cash flow and superior return on invested capital to our shareholders now and in the long term. After several years of accelerating investments to grow and maintain the significant market share we earned since 2019, we expect to see an inflection point in our ability to increase free cash flow in the latter half of 2024. Glen will touch on this in more detail shortly. I am incredibly proud of the dedication of our team who have brought us to where we are today. In my over five years with Pet Valu, we have completely modernized several critical processes and systems while solidifying our key points of differentiation and staying true to the ethos of our success over our storied 47-year history. I could not be more excited for the opportunities that lie ahead for us on the horizon and look forward to updating you on our progress as we move through the year. Now over to you, Glen. Thank you, Richard, and good morning, everyone. I will start by reviewing our full year and fourth-quarter financial performance before discussing our outlook for 2024. Overall, we are very pleased with our financial performance in 2023, with revenues up 11% to CAD 1.06 billion, Adjusted EBITDA up 8% to CAD 231 million, and adjusted net income per diluted share of CAD 1.61. We delivered our key guidance metrics set out at the beginning of the year, despite unfavorable effects, rising interest rates, and easing consumer discretionary spending, showcasing the resilience of our business model. Turning to the fourth quarter, system-wide sales increased 5% to CAD 379 million, supported by organic growth across channels and the addition of 39 net new stores over the last four quarters, including 17 in the fourth quarter. We ended the year with a total of 783 locations, 72% of which are franchised, compared to 70% last year as we purposefully grew our franchise mix over time. Same-store sales grew 2%, driven by sustained growth in average baskets, transactions declined by 1% as we continue to annualize the impact of bag-sized trade-ups seen in early 2023 and fewer casual trips from non-loyal customers. That said, we continue to see strength with our growing active loyalty members, who now account for over 80% of our system-wide sales. Fourth-quarter revenue was CAD 287 million, an increase of 8%, slightly higher than our system-wide sales. Gross profit was CAD 99 million, an increase of 2% from Q4 last year. As a percentage of revenue, gross margin rate was 34.3%. Excluding 220 basis points of cost related to our supply chain transformation, gross margin rate was 36.5%, up 30 basis points from last year, primarily driven by favorable product margins due to lower freight costs and higher franchise fees, partially offset by lapping of vendor recoveries recognized last year associated with supply chain disruptions, higher planned promotional activity, and a weaker Canadian dollar. A quick reminder that from a sensitivity perspective, every penny changed to the US-Canadian exchange rate year over year roughly translates to a 10 to 15 basis point move in gross margin, typically on a 90-day leg basis given inventory terms. Selling general and administrative expenses in the fourth quarter were CAD 50 million. Excluding costs not indicative of business performance, our SG&A expenses were approximately CAD 45 million, down 6% compared to last year and 220 basis points favorable as a percentage of revenue. This was primarily driven by lower variable compensation expenses. At the same time, our in-store and corporate teams did an excellent job managing our expenses in accordance with the consumer demand environment. Adjusted EBITDA was CAD 71 million, up 20% from last year. Adjusted EBITDA margin was 24.8%, an improvement of 300 basis points sequentially from Q3 and 250 basis points improvement from last year as we effectively managed our product and operating costs in a higher volume quarter. Net income was CAD 29 million compared to CAD 26 million last year. Adjusted net income, which excludes items not indicative of our underlying performance, was CAD 39 million, or CAD 0.54 per diluted share, up roughly 26% from last year. Now, turning to the balance sheet, we ended the year with CAD 28 million of cash on hand while our CAD 130 million revolver remains undrawn. Total debt net of deferred financing cost is CAD 293 million. Considering lease obligations, our leverage ratio remains at 2.3x, despite the recognition of an incremental CAD 67 million in lease obligations associated with our new Metro Vancouver DC. Backing out this impact, as well as that of our new GTA DC, our leverage ratio would have been 1.6x, below our leverage of 1.7x in Q4 of 2022. Our inventory balance at the end of 2023 was CAD 122 million, up a very modest 3% from 2022, below sales and revenue growth in the fourth quarter. Our procurement, replenishment, and supply chain teams continue to do a fantastic job managing our stock in response to consumer demand signals while keeping our store shelves full and in season. As a result, we continue to be comfortable with the quantity and quality of our inventory across our DC, corporate stores, and with our franchisees as we move into 2024. Net capital expenditures were CAD 11 million in the fourth quarter, largely related to continued buildouts within our GTA DC and growth CapEx for new stores and rentals. Net CapEx for the year totaled CAD 52 million, shy of our guidance for CAD 60 million, mainly due to timing associated with our supply chain transformation. Free cash flow in the quarter was CAD 34 million, up from CAD 25 million last year due to the timing of CapEx payments. For the year, free cash flow was CAD 49 million, similar to 2022. Now I will provide our outlook for fiscal 2024. During a time when macroeconomic pressures are restricting growth across many retail categories, the Canadian pet industry is setting itself apart, continuing an unbroken 30-year track record of growth. The structural tailwinds of growing pet population and humanization trends that lend well into our business model are expected to continue in 2024. In this context, we expect to deliver on many of the key tenets of our long-term growth model while absorbing the impact of investments that position us for long-term profitable growth. We expect full-year revenue between CAD 1.11 billion and CAD 1.14 billion, representing growth of between 5% and 8%, supported by same-store sales growth of between 2% and 5%, 40-50 new store openings, and increased wholesale penetration at Chico. We anticipate year-over-year revenue growth to accelerate through the year as we begin to lap the onset of easing discretionary spend in late Q2 of 2023. On a two-year basis, we expect our same-store sales growth to be generally consistent each quarter. For Adjusted EBITDA, we expect to deliver between CAD 248 million and CAD 254 million, growing faster than revenue as we leverage fixed cost investments and achieve Adjusted EBITDA margin expansion on a full-year basis. We aim to continue driving operating expense leverage as we closely control discretionary spending while reinvesting some of those savings to maintain competitiveness through the current demand cycle. On adjusted net income per diluted share, we expect to land between CAD 1.57 and CAD 1.63. Note that this includes the absorption of approximately CAD 20 million pre-tax, or CAD 0.20 per share, of incremental depreciation and interest expense associated with the new distribution centers in the GTA and Vancouver. These facilities, together with the plans for a new DC in Calgary starting in 2025, will form what we believe will be Canada's strongest pet specialty distribution network, providing us with a distinct advantage to serve our customers better than any of our peers can today, while simultaneously supporting our expansion over the next decade and delivering efficiencies as we leverage our new capacity. While the immediate-term impact of these investments will result in muted bottom-line growth, we expect to reaccelerate EPS growth in 2025 and 2026. With regard to items excluded from the calculation of our adjusted figures, we expect to incur approximately CAD 17 million pre-tax in business transformation costs, the majority of which is associated with our supply chain transformation, approximately CAD 7 million pre-tax in IT transformation costs primarily associated with our platform upgrades to our website and merchandise systems, and approximately CAD 12 million pre-tax in share-based compensation. Finally, our net capital expenditures are expected to be approximately CAD 55 million, roughly half of which is related to our supply chain transformation, with the balance going towards our new store and renovation programs, maintenance CapEx, and continued investments in our back-office systems. From a free cash flow perspective, 2024 marks an important inflection point for our business. After several years of acceleration, we expected again enhancing our free cash flow profile later this year, driven primarily by stabilization in our working capital. This will unlock the opportunity to return greater capital to shareholders. With this in mind, the board approved a 10% increase in our quarterly dividend to CAD 0.11 per share starting in Q1, representing the third consecutive year of dividend growth. Additionally, we will look to commence share buybacks this year through our normal course issuer bid, which was initiated in late November 2023. As we look into 2025, we expect our free cash flow to improve further as our capital spend and one-time costs associated with our supply chain transformation ease considerably. As a result, we aspire to generate north of CAD 100 million in free cash flow in 2025, providing even more capacity to return further capital to our shareholders over time. In summary, we are very pleased with our financial position today as we navigate the current environment and self-fund critical strategic initiatives that will position our business to deliver long-term, profitable growth and compelling returns to our shareholders. With that, we are now happy to take your questions. Thank you, Linda. If you would like to register a question, please press star followed by 1 on your telephone keypad ensuring you are unmuted locally. If you would like to withdraw your question at any time, you can do so by pressing star followed by 2. As a reminder, we kindly request that you limit your questions to one question plus one follow-up before cycling back into the queue, so this allows as many of you to ask a question as possible. Thank you. Our first question comes from the line of Irene Nattel of RBC. Your line is now open. Please go ahead. Thanks, and good morning, everyone. Looking at the results, it does seem as though demand is remaining relatively stable. But beneath the surface, can you talk about what you're seeing in terms of consumer price-value sensitivity, penetration of promotional items, and also notably what the same-store sales or the demand profile looks like on the discretionary items? Good morning, Irene. This is Richard. I'll be glad to share that with you. So look, as we really went into Q4, we saw a lot of the similar trends to what we've been discussing throughout much of 2023 and continue to see that, right? We continue to see very healthy comps in our consumables and our services, with the strongest growth seen in our premium pet food tiers as we've seen throughout the year, really underpinned by those secular, long-term humanization and premiumization trends for our devoted pet lovers. Consumers are still trading up. Behavior we first saw in the latter part of 2022 has continued throughout the year, so we're continuing to analyze that behavior really to economize on a per-pound basis. So that does put some pressure on our transactional frequency as we move through the year and we continue to see in Q4. At the same time, we saw some softness in hardlines in specialty categories that continued and actually weakened a bit in December as consumers across Canada remained more hesitant on discretionary spending across most retail sectors. We have seen some more resilience in our suburban and rural markets, where approximately 80% of our stores are located. It's really in the more urban markets of Toronto, Vancouver, and Montreal specifically where we've observed some softer discretionary demand, which we believe is tied to the impacts of the recent interest rate hikes on more debt-stretched consumers within those markets. As noted in our remarks, we did see some more promotional activity from other pet competitors than we even expected in the quarter. Our merchandising and marketing teams, though, remained diligent and tactical as we navigated the environment, picking our moments, really making sure not to chase sales and maintaining our focus on long-term profitability for ourselves and our franchisees. That's really helpful. Thank you. Just to follow up on that, please. So, are you seeing it? It doesn't sound like, but I don't want to put words in your mouth. Are you seeing any evidence of consumers trading out of the channel or moving away from some of the premium pet care sort of, I guess, nutrition into something that looks more mass? So, we're not seeing significant changes. What I would say is that as we went through the quarter and saw some of the activity that was being tested by a few of our competitors, what I believe are a little bit of an overreaction to some of the softness within the discretionary categories, we really saw in our loyalty data really just movement in some of the customers that are in our non-loyal base, right? What we were really excited about is as we went through the year and as we continue through the quarter, other than our core loyal customers trading up to some larger pet food bag sizes, what we really saw was any weakness in transactions or weakness in the industry was really non-loyal customers, those who are more likely to cherry-pick outlets based purely on price or convenience rather than the key tenets that differentiate us. So understandably, this minority of shoppers, which really represents a lower lifetime value for us and are more likely in that 25% of consumers that we don't generally target, we'd rather not lose margin pursuing them. So we made a choice to really stick with and continue to grow our monthly customer base. So if or any tradeout we're seeing, it really is in those highly price-conscious customers, a little more attuned to some of the promotional activity from a few competitors. As I stated in our prepared remarks, I just want to reiterate, which was really positive for us, is we matched the market step for step, and we're able to maintain our market share as we move through the quarter. That's very helpful. Thank you. Thanks, Irene. Our next question comes from the line of Michael Van Aelst of TD Cowen. Your line is now open. Please go ahead. Thank you. So just to clarify on the price investments that you're looking for for 2024, it seems to be somewhat in reaction to the competitive activity. But is this any different than what you originally expected when you guided towards the 35%-36% gross margin long-term? Really, there's two parts to this question that you just asked, Michael. Let me talk first about the competitive pricing and what we've said and the actions we take. And then I'll turn it over to Linda, who can talk a little bit about the margin impact in near-term and what's driving some of that. So from a pricing perspective and what we're seeing in the marketplace, look, I just want to remind everyone, our industry has a long track record of successfully passing along justified cost inflation supported by a relatively rational promotional environment. There are periods in which pricing doesn't necessarily keep up with the cost inflation, and we're seeing a little bit of that out of some of our competitors. More particularly, we're seeing some behaviors around promotions that we would like to make sure that we maintain our price competitiveness, but we're planning to do it a little differently. So we work hard every day to behave responsibly, ensuring our customers get the best value for our target customers. So as I said in our prepared remarks, we're remaining disciplined. We are picking our moments to generate some excitement without chasing low-margin sales. So as we've consistently noted, our first choice is to maintain competitiveness primarily in our everyday value. So to this end, as I noted in our remarks, we'll be making some very purposeful, targeted price investments on key value items that will help ensure that we provide customers what they expect from us from both the value as well as the industry-leading customer experiences that we put forward. In terms of implications to margin, I'll turn that over to Linda because there's a bit from pricing, but we're planning to cover most of those pricing investments with our SG&A leverage. Our margin impact is really more from what's happening to our supply chain area. Yeah. So hi, Mike. It's Linda. Over the next few years, we expect our gross margins will likely trend below 35% as we absorb the step-up in depreciation related to our new DC leases as well as the targeted price investments that Richard's just spoken about. We plan to offset any near-term pressure on margins with SG&A leverage as we carefully monitor and control expenses so we can continue to deliver very healthy, adjusted EBITDA margins. Over the longer term, we believe our business can gradually expand back margins up into the 35%-36% range as we increase the capacity utilization of our larger DCs and leverage the fixed costs and providing us with that longer-lasting distribution cost advantage. Okay. Okay. So I guess it's partly just the timing of when you expect the benefits from your supply chain versus these investments in price that's pushing it below 35%. Correct, Michael. In the near term, both from the transition costs themselves and then just from the incremental capacity that we've invested in to ensure that we have the space and capacity for the growth we've seen and the growth we're expecting in the future. Okay. And just to clarify, the same-store transactions that were down 1%, that was your first drop in, I think, 11 quarters. Is the promotional activity or the pricing investment, sorry, for 2024, in a reaction to the lower transaction count or just the competitive? And do you believe that lower transaction count is due to competitive activity or just the trade-up that you talked about? Now, as I noted, we really dive into this to really understand what's going on with our consumers. And as I've said throughout all of fiscal 2023, starting late last year but really picking up speed earlier this year, it really comes down to the trade-up to larger pet food bag sizes. That in and of itself just puts some natural pressure on transactions. Really, when you look at what we're focusing on going into the pricing action we're taking, it goes back to what I've long-term said since before the IPO and will continue to say. Our first decision after a cost inflation event with our vendors is to maintain price competitiveness in the marketplace. For much of 2023, as I noted in our remarks, we led the market to maintain rational price increases alongside the cost inflation. We have not seen all of our competitors take the same behavior. We will maintain our price competitiveness in the marketplace, and thus, we do need to adjust a few very specific key value items to maintain that. I'm just clear. Thanks, Mike. Our next question comes from the line of Martin Landry of Stifel. Your line is now open. Please go ahead. Hi. Good morning, everyone. I just want to follow up on the promotional activity that you're alluding to, Richard. I'm curious to see in which channel are you seeing some heavy promotional activity? Is this in the specialty channel, or is it in other channels? So Martin, we've seen the promotional activity across all of the channels. We do track prices of each one of our different competitors, both real-time tracking of actual everyday prices as well as promotional prices to understand where the movement is. Generally, we expect some promotional activity to always come out of the grocery mass area where, of course, less than 10% of the food we actually sell is actually sold within that channel. And again, primarily focusing on the 25% of the market we don't typically target. What we did see was stepped-up competition in the pet specialty channel during Q4, primarily around the holiday season and really centered on those discretionary hardlines categories that, again, if you go back to our prepared remarks, 80% of our sales came out of consumables and services. So hardlines is, again, roughly only about 20% of our business. That's where we saw more of the activity. That's also where we chose not to match some of that activity to ensure that we focused on our highly loyal, highest-value customers. Okay. Then just a follow-up question on Glen's opening remarks on free cash flow. Obviously, your EPS is impacted by some non-cash item this year. And Glen, you alluded to free cash flow in 2025 being near CAD 100 million or in excess. I'm not sure if I got that correctly, but I'd like to understand where you expect free cash flow to land this year. So as you know, we have a great track record of robust free cash flow. In recent years, we've chosen to reinvest in our business, first through rebuilding our inventory post-COVID and as global supply chain stabilized, and then more recently through our supply chain transformation as we scale up and modernize our distribution network. As we move into 2024, we expect demand on working capital to ease. So we do see growth in free cash flow in 2024. And in 2025, we plan for CapEx and one-time costs to ease as we near the completion of our supply chain transformation. And so that's where we see us being able to gradually increase our free cash flow profile. I'm not giving any specific answer for 2024, but we do expect to see improvement, as I mentioned. Okay. Okay. Thank you. Perfect. Thank you, Martin. Our next question comes from the line of Vishal Shreedhar of National Bank Financial. Your line is now open. Please go ahead. Hi. A lot has happened since you IPOed with the pandemic and the boom and the subsequent consumer retrenchment. Just wondering if you can reflect on your long-term store target, 1,200, I believe, and what you think has changed since you've IPOed and either on the positive or the negative side of that and maybe reflect on other elements that have changed since you've IPOed, if anything stands out? Certainly, Vishal. If anything, it's gone up from our original estimations back at the IPO. So since the IPO is now nearly three years ago, since then, in addition to the boom and the slight shift in consumer demand, we also acquired our way into Quebec. So when we acquired our way into Quebec and now with the two great years of integration and transition we've had with that brand, we've identified that there's even more opportunity for us to grow in Quebec, especially in the rural and outlying suburban markets than we originally estimated. So while we're still going with roughly 1,200 as our target, we're even more confident in that 1,200. As I've noted several times, more than half of that opportunity is in the rural markets where we have a distinct format and flexibility opportunity with our franchise ownership to be able to enter markets that many other pet specialty players simply can't come to. Okay. Thank you. Maybe just changing topics here, on your guidance, could you give us your thoughts on what would constitute the high end and the low end in general terms, just given that the consumer environment, as you noted in December, it seemed to get a little bit more tougher than you contemplated. So given the I wouldn't call it surprising, but given the ongoing consumer retrenchment, maybe you could give us on what you contemplated for the outlook. Glen, I'll take that one. There's many components that we consider when constructing our guidance, starting with the macro backdrop and the latest trends and then layering in the expected contributions from the many strategic initiatives that we plan for the upcoming year. Hitting the low end of our guidance would likely be driven by suppressed consumer demand similar to that seen during prior recessions, whereas reaching the high end would be supported by a return to positive transaction growth, especially if we move through the year and comp up against a relatively weak Christmas in 2023. Looking at 2024 as a whole, we continue to expect many of the key tenets that set our industry and our business apart, despite the constrained consumer spending outlook that we're hearing from economists for the year, we expect to deliver another year of growth highlighted by positive same-store sales growth, an expanding franchise-first network, and gradual Adjusted EBITDA margins. Vishal, just to add on to Glen there when he noted those initiatives and just to return to some of the remarks I made, we're pretty excited about the initiatives that we're bringing to bear in the marketplace. We got a great launch of Performatrin Culinary into the freezer. So our first proprietary brand entry into the freezer coming up in Q2. Great excitement sweeping across our franchise base for that opportunity. So that is a chance now for us to step forward with a point of differentiation in a very fast-growing category. In addition, I noted the digital platform upgrade coming in Q2 as well, why we don't want to share a lot of details until we actually get it launched due to competitive reasons. We're excited about our ability to continue to evolve that channel to change in consumer demand. And then, of course, our supply chain. With the AutoStore robotics in test, I got to see all 100 robots moving last week when I was in the DC. That will greatly expand our ability to add additional SKUs to our online channel for incremental customer occasions where our small format may not always be able to carry those products. So all of those are things that Linda is noting that depending upon the consumer demand environment, we hope to be able to position each of those initiatives well into an improving environment. Thank you. Thank you. Our next question comes from the line of Mark Petrie of CIBC. Your line is now open. Please go ahead. Yeah. Good morning. Q4 was sort of another step lower in SG&A dollars, and I know you spoke about this last quarter, but can you just talk about the drivers of that specifically and then your view on the run rate on a dollar basis for that line in 2024? Yeah. Sure. I'll take that, Mark. So first off, I want to thank our teams for their success in managing the expenses in the current demand environment. That said, Q4 SG&A did benefit from lower variable compensation compared to last year. As we look into 2024, we expect SG&A dollars to normalize, back up a little higher on a quarterly basis, but to a level that still results in modest SG&A leverage for the full year as we continue to grow our revenues at a faster pace. Okay. That's helpful. With regards to Chico, I mean, you reiterated the CAD 50 million over the next two years in terms of revenue contribution. What's a reasonable target for 2024? So Mark, we're not going to set a specific target for 2024, but it is a relatively linear step up with some chunkiness is how I would put it. So the critical step for this is the chunkiness is we will onboard specific national vendors, one vendor at a time as we move throughout the year. And each one of those will be a small incremental step up. So it won't be just a smooth curve to the CAD 50 million, but you will see incremental step-ups from us each quarter as we move through. Of course, that was ACANA and ORIJEN under Champion that we launched in the first week of November last year, and we expect to be in a position to launch several more vendors between now and mid-year. Okay. Understood. And if I could just sneak in one more on just coming back to same-store sales growth, could you just talk about what you've seen so far in Q1 relative to Q4? And then, Glen, you made a comment about the general pacing of same-store sales growth in 2024, but I didn't catch it. So if you could just repeat that, that'd be great. Thanks. Surely, Mark. I'll just go ahead and take both of those real quick given the time frame to get to other questions. So quickly, many of the trends that we've seen in 2023 have continued into 2024, including some of the weaker discretionary spending and some of the stepped-up competitive promotions. So as noted in our scripted remarks, though, we are choosing to take a different approach. So we're sharpening certain of our everyday price points of key value items. We're continuing more rational promotions in our key periods. And most importantly, as you heard, we're leveraging our now 2.9 million active loyalty customer base to target specifically the high-value customers. So while we've started the year in a tight environment, we expect the actions we're taking to help us improve as we move through the year, which gets to your cadencing question. So the remark that Linda made in her prepared remarks was we expect a relatively flat two-year stack comp each quarter as we move through the year. Okay. Got it. Thanks and all the best, guys. Thanks, Mark. Our next question comes from the line of Adrienne Yih of Barclays. Your line is now open. Please go ahead. Great. Thank you very much. And nice to see the progress on the investments and, frankly, on the top line. My question basically is for fiscal 2024, top line 5%-8%, and obviously, the comps are 2%-5%. Richard, when we or Linda, both of you, when we think about the long-term growth model, I mean, the top line seems fairly healthy. So to the extent that you had said reaccelerating EPS growth in 2025 and 2026, is that sort of leverage on that top line growth? And just how should we think about that? Thanks so much. So I'll start, and then Linda can provide a bit more detail. And so the short answer is yes. That is leverage. Again, if you note what Linda shared on the call, this year, we have a CAD 0.20 approximate step up in depreciation associated with a full year of the GTA being included in our unadjusted results and a half a year or so of Vancouver. So as we go into early 2025, we'll annualize the rest of the Vancouver depreciation and then begin to start to get that step up in EPS. So net of the depreciation impact this year, we're seeing good leverage in our expenses. And then, Linda, any more detail? Yeah. So as Richard just talked about the CAD 20 million step up in depreciation and interest expense, sorry. Sorry. I'm in a bit of a voice here. Just give me one second. Just a little bit in terms of timing. First, there will be a step up in Q1 for the GTA lease costs that are no longer being adjusted. And then we'll see a second step up in Q3 for the AutoStore coming online for the GTA and the Vancouver lease costs as we transition into that new facility. So you will start to see that gradual improvement as we annualize and step up into 2025. And then I'll just call it back to, as we pointed out in our prepared remarks, while growth in our adjusted bottom line results will be suppressed in the near term, we think a key development that investors can look forward to in 2024 is that improvement in our free cash flow generation driven by the stabilization in working capital. Okay. Great. And then, Richard, just one more. The ASP, kind of relative to pre-COVID, say, I would imagine, obviously, prices have gone up. So that seems like it's pretty sticky, and you're holding on to sort of the more—I mean, you're taking some more measures on the value-oriented side, but it feels like maybe the branded side and kind of the step up in the ASPs are more sticky. Can you speak to that? And then finally, automation today versus automation at full rollout. Thank you very much. Certainly. So really quickly on the pricing, the average selling price or average unit, we are seeing relatively sticky. Long-term, the pet industry has been relatively slower than some other sectors to take prices up, but also much more sticky once the prices have actually come up at both a retail and a wholesale level. As I noted at the beginning of 2023 and as it actually played out throughout the year, our retail pricing moved pretty well with the industry. I'll note a few exceptions in a second. It's our wholesale pricing that did not move up as quickly. And so that relative impact to our gross margin rates that I noted at the beginning of the year would happen as we were not passing everything on to our franchisees played out. And if you look at our updated AIF, you can see that our franchise unit economics maintained really healthy levels as we moved through 2023, helping our franchisees to transition from a high-growth environment to a more normalized growth environment. Your follow-up question on automation today, I'll assume that meant primarily in the supply chain. So in the supply chain, automation today still not automated, still all manual picks, including each of our ACEs picks that we're doing for all of our stores. Again, we will have roughly 50+% of our supply comes out of our GTA facility. We will be transitioning our piece pick ACE activity into there during Q2. So we'll go from limited to no automation today to significant automation with goods-to-person by about mid-year . Fantastic. Thank you so much. Best of luck. Thank you. Our next question comes from the line of Ty Collin of Eight Capital. Your line is now open. Please go ahead. Hey. Good morning, guys. Thanks for the question. I'm just wondering if you could maybe lay out what your expectations are for consumables versus hardlines categories for 2024, if you can maybe put some goal posts on that. It seems like the sales mix has kind of tilted a little bit more towards consumables, I guess, given the relative outperformance. Is that something that you expect to maintain going forward, or might that normalize in the future when discretionaries makes a bit of a comeback? Yeah. Ty, certainly. Generally, we don't break our same-store sales assumptions down any further just given some of the uncertainty in the market. But let me just point back to some of the statements that we've made. The trends that we saw coming out of 2023 have been quite similar going into 2024 with continued robust performance from our consumables and services side of the business. We do expect we'll start the year in that way. If you'll note the comments that we made last year, it wasn't really until late Q2 of last year that we saw the beginning of the softness to the declines in the Hardlines categories. So as we go through all of Q1 and for most of Q2, we'll be comping up against a relatively strong compare on those categories. So I would expect the trends that you've seen to date to be similar with about 80% of our business coming out of those areas. We do then expect it to begin to normalize in the back half. Long term, though, our business has traditionally been between 70%-75% consumables. We are a primary weekly and monthly visit-focused category for our premium devoted pet lovers. Okay. That's great color. Thanks, Richard. Then for my follow-up, Glen, in your remarks, you mentioned a number of, I guess, capital allocation priorities that will open up for you guys in 2025 when that free cash flow profile steps up. You mentioned buybacks, dividend. I'm just wondering how you're maybe weighing those options, how you're thinking about those, maybe debt reduction as well. I appreciate any additional color there. Yeah. Sure. So you've heard me describe my capital allocation priorities in the past, which always starts with reinvesting in our business because we believe it really generates the greatest returns. And as you noted, we are at the height of our investments in our supply chain transformation, which, in addition to a few other initiatives, is where we're directing our cash flow. As we move through the year, supply chain CapEx and one-time transition costs will ease, which should enable us to consider alternative uses for our cash, including potential share buybacks or debt paydown. As always, we will make whatever decisions maximize EPS depreciation and bear that in mind as we make those decisions. Thank you. Our next question comes from the line of Chris Murray of ATB Capital Markets. Your line is now open. Please go ahead. Thanks, folks. Richard, you talked a little bit about store growth this year at 40-50 stores, but last quarter, you talked about issues around getting stores ready to go just with some delays in construction. How are you seeing 2024 kind of rolling out with being able to get those stores in place? And is there any concern you have on maybe some slippage? So Chris, great question. Really, just to be clear, I provided a bit of color last quarter because we opened 39 stores last year, and I had made a promise that it would be over 40. I don't like breaking promises. Really, the update I provided last year was probably overkill just because I knew we were going to have a tough time getting to that 40th store. We ultimately didn't open that 40th or 41st store, both of which were delays, both of which are now already open. Before we even have this call, we've actually already opened 4 stores this year. It really was just a bit of a timing slippage because I wanted to ensure that we opened after the Anchor grocery store in both of these cases opened, both of which had just postponed their opening so after the holidays. So I have complete confidence we'll continue to open the 40-50 stores this year. Again, last year was a matter of weeks, and there just happens to be a drop called a fiscal year-end in the middle of that. And so we're really healthy and feel that we'll probably have at least half of our pipeline open within the first 6 or 7 months of this year. So really like what we're seeing. Okay. That's helpful. And then the other question I have is just maybe turning back. We've talked about free cash flow and a few other things. You've got Toronto up and running. Sounds good. Vancouver's good. One thing we haven't heard a lot about is the Calgary DC. And just kind of reading between the lines on the expectation for free cash flow in 2025, is it fair to think that the investment for Calgary is going to be some way different than the investments that you had to make for either Vancouver or Toronto, either in terms of the size of the footprint and then the associated lease impact or the capital investments that will go into that that will be a lot lower? Yeah. That's a great intuitive question, Chris. Let me just break it down for everybody again just from the beginning to make sure we catch the nuance here. We're really pleased with the progress we've been seeing. As I noted, the GTA DC, which is 670,000 sq ft and went live last July for bulk picking, is in its process of ramping up to goods-to-person automation for our smaller each picks by Q2. That is by far the most significant capital investment of the entire transformation, is that one building. The second largest is Vancouver, where we did take possession of a 350,000 sq ft facility in November, and we've begun the fit-ups. We do plan in Q3 to transition from our existing Vancouver and 3PL overflow facility into this one new single updated facility. We will then begin the construction process for automation during the holiday season but not activate it until after the holidays. No one ever wants to activate during the holidays. So we'll activate automation in Vancouver. So that makes Vancouver by far the second largest part of this transformation. So then for Calgary, it is both the smallest of our facilities, significantly smaller even than Vancouver. And Calgary is a market that has the most flexibility for real estate. So we do expect that we can really flex and plan that. So at this time, we're kind of holding any activity, really allowing the teams to focus on GTA and Vancouver. So as Linda noted, we will begin to ease the investment. There will still be investment into Calgary. Don't mistake that we're not doing Calgary. We absolutely are. But it will really be 2025 and into early 2026. Look, transformations of this scale, there's learning curves. The great thing is we got the same team moving from one building to the next. And so we've already seen some improvements in our Vancouver approach with the lessons that we learned in GTA. So we expect Calgary to be the most efficient of the three transitions that we make. A ll right. That's helpful. Thank you. And we got time for just one more question. Wonderful. Our final question is a follow-up question from Irene Nattel of RBC Capital Markets. Thanks. Just a quick question, actually, on my part. Would you be able to give us the update on e-commerce penetration at the end of 2023? Absolutely, Irene. I'm so glad you asked that because I did not get a chance to talk about our digital upgrade as much as I would like to. We're quite excited about what we're doing within the e-com space, specifically making sure that we continue to have our overall digital presence, keep up with what's expected in the marketplace, from things like recently launching our updated pet profiles to actions that we're putting into our My Accounts pages. Just like any other IT system upgrade, our digital platform enables our omnichannel business. To your question on penetration, we're still not going to focus on a penetration number for e-com because that's not how we manage, right? We manage to an omnichannel business. One of the great things coming out of having our loyalty program cover more than 80% of our sales is we've got a lot of insight, especially into our cross-channel behaviors. One of our great insights that came out of 2023 and in our deep dive is we've now identified that our average omnichannel customer visits us five times more than our average online-only customer and spends more than four times as much as an online-only customer. So I think our decision to not pursue just the best brick-and-mortar presence or just the most appealing online presence, but actually to provide the store customers the best overall omnichannel experience without putting any particular forcing of a channel choice on the customers, unlike some of our peers who do online-only promotions, is really the right winning combination for customers in this market. So thanks for the question, Irene. And I will just go ahead and transition to our closing. Thank you, everybody, for your continued interest. If there are any follow-up questions, as always, please don't hesitate to reach out to James and our investor relations team. And we look forward to updating everybody on the 2024 progress with our Q1 results expected to be released in early May. With that, thank you all so much, and talk to you later. Ladies and gentlemen, I'd like to thank you for joining today's call. Have a great rest of your day. You may now disconnect your line.