Q4 2025 The North West Co Inc Earnings Call

Operator: Hey, thank you, and good afternoon.

Operator: Welcome to the Northwest Company fourth quarter conference call.

Welcome to the Northwest Company fourth quarter Conference call I'm joined here today by John King, Our Chief Executive Sorry, Chief Financial Officer, and Alexis <unk>, our VP legal and corporate Secretary.

Daniel McConnell: I'm joined here today by John King, our chief executive, sorry, chief financial officer, and Alexis Cloutier, our VP, legal, and corporate secretary. I'm gonna start off the meeting by asking Alexis to please read our disclosure statement.

To start off the meeting by asking all access to our please read our disclosure statement.

Alexis Cloutier: Thank you, Dan.

Alexis Cloutier: Before we begin today, I remind you that certain information presented may constitute forward-looking statements. Such statements reflect Northwest'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 statement.

Speaker Change: 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 perf.

Speaker Change: Formats and financial results in the future to vary materially from those contemplated in the forward looking statements.

Alexis Cloutier: Any forward-looking statements are current only as 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.

Speaker Change: Any forward looking statements are current only as the date. They are made and the company disclaims any intention or obligation to update or revise any forward looking statement, whether as a result of new information future results or otherwise other than what's required by law for additional information on each best please see north.

Alexis Cloutier: For additional information on these risks, please see Northwest's annual information form, and it's MD&A under the heading risk class.

Speaker Change: <unk> annual information form and its MD&A under the heading risk factors.

Daniel McConnell: Thanks, Alexis. All right, I will begin by providing a brief overview of the fourth quarter on a consolidated basis. Followed by some additional colour on Canadian and then international operations.

Alexis: Thanks Alexis.

Speaker Change: Alright, I will begin by providing a brief overview of the fourth quarter consolidated basis.

Speaker Change: Followed by some additional color on Canadian and international operations.

Daniel McConnell: Finally, I'll wrap up with a few comments on our outlook in the Next 100 program before opening up the call for questions. All right, let's dive right in. So we had a positive wrap-up to the fiscal year with a strong Q4 results. For the quarter, consolidated sales were up 4.9% and net earnings increased by 18.9%. Our results in the fourth quarter were driven by strong same-store sales gains and a 9.4% increase in gross profit resulting from the impact of higher sales and an increase in the gross profit rate. These factors were partially offset by higher selling, operating, and administrative expenses.

Speaker Change: Finally, I'll wrap up with a few comments on our outlook in the next 100 program before opening up the call for questions.

Speaker Change: Alright, great.

Speaker Change: Ann.

Ann: So we had a positive wrap up the fiscal year with a strong Q4 results for the quarter consolidated sales were up four 9% and net earnings increased by 18, 9%.

Ann: Our results in the fourth quarter were driven by strong same store sales gains and a nine 4% increase in gross profit, resulting from the impact of higher sales and an increase in the gross profit rate.

Ann: These factors were partially offset by higher selling operating and administrative expenses.

Ann: Yeah.

Daniel McConnell: The next 100 Operational Excellence Initiatives has also started to contribute to the bottom line, net of sum of one-time costs incurred in the quarter. Let me briefly expand on the consolidated results. First, top-line performance was positive in both Canadian and international operations. on the back of very solid inventory positions and strong in-store execution during the holiday season, which generated uplift on both transaction counts and unit volumes. For the quarter, consolidated same store sales were at 5.5% on food and 5.1% on general merchandise. And second, we were able to convert these sales increases to the bottom line earnings.

Ann: The next 100 operational excellence initiatives has also started to contribute to the bottom line.

Ann: Some of one time costs incurred in the quarter, let me briefly expand on the consolidated results.

Ann: First.

Ann: <unk> performance was positive in both Canadian and international operations. This quarter on the back of very solid inventory positions and strong in store execution during the holiday season, which generated uplift from both transaction counts and unit volumes.

Ann: For the quarter consolidated same store sales were up five 5% on food and a five 1% on general merchandise.

Ann: And second we were able to convert these sales increases to the bottom line earnings.

Daniel McConnell: Gross profit dollars were up 9.4%. driven by sales and a 141 basis point increase in the gross profit rate due to changes in sales blend, including a lower blend of wholesale sales. lower markdowns, and more effective promotions as part of the Next 100 work. Selling, operating, and administrative expenses were up 6.8% for the quarter or 45 basis points as a rate of sales. Higher staff costs, including additional resources to support our next 100 work, an increase in technology and depreciation costs, and the impact of foreign exchange on the translation of international expenses were the key factors contributing to this increase.

Ann: Gross profit dollars were up nine 4% for the quarter driven by sales and a 141 basis point increase in the gross profit rate due to changes in sales, Glenn including a lower blended wholesale sales.

Ann: Lower markdowns and more effective promotions as part of the next 100 work.

Ann: Selling operating and administrative expenses were up six 8% for the quarter or 45 basis points as a rate.

Ann: Sales.

Ann: Higher staff costs, including additional resources to support our next 100 works in <unk>.

Ann: Increase in technology, and depreciation costs and the impact of foreign exchange on the translation of international expenses are the key factors contributing to this increase.

Daniel McConnell: In the court, we also reported $1 million in one-time costs for professional fees to the execution related to the execution of the Next 100 program. These factors were partially mitigated by benefits that are beginning to ramp up from next 100 initiatives, which more than offset the next 100 one-time costs in the quarter, and help reduce the impact of higher wages, technology expenses, and depreciation. As a result, the company delivered strong bottom line results with EBIT increasing by 17.5% and net earnings increasing by 18.9% for the quarter.

Ann: In the quarter, we also reported $1 million in one time cost for professional fees to the execution related to the execution of the next 100 program.

Ann: These factors were partially mitigated by benefits that are beginning to ramp up for the next 100 initiatives, which more than offset the next 101 time costs in the quarter and helped reduce the impact of higher wages technology expenses and depreciation.

Ann: Yes.

Ann: As a result, the company delivered strong bottom line results with EBIT, increasing by 17, 5% and net earnings increasing by 18, 9% for the quarter.

Ann: Okay.

Daniel McConnell: Let's unpack the results beginning with our Canadian operations. For the quarter, total sales in Canada were up 2.5% and 6.7% on a same-store basis. We had solid sales performance in both food and general merchandise, with same store sales increases of 7.6% in food and 3.4% in GM for the quarter. Sales continue to be positively impacted by increased consumer demand in certain communities resulting from the continued distribution of First Nations drinking water claim settlement payments to individuals and the government spending on First Nations child and family services programs, including Jordan's Principle and Inuit Child First programs that help provide greater access to nutritious foods.

Ann: So, let's unpack the results beginning with our Canadian operations.

Ann: For the quarter total sales in Canada were up two 5% and six 7% on a same store basis.

Ann: We had solid sales performance in both food and general merchandise with same store sales increases of seven 6% in food and three 4% and GM for the quarter.

Ann: Sales continue to be positively impacted by increased consumer demand in certain communities, resulting from the continued distribution of first Nathan Nathan as drinking water claim settlement payments to individuals and the government spending on first nations child and family services programs, including Jordan's principle, and Intuit child first programs.

Ann: I'll provide greater access to nutritious foods.

Daniel McConnell: The same store sales gains were partially offset by lower wholesale sales and airline revenue compared to the fourth quarter last year. Northstar Air sales in the quarter were impacted by lower third-party revenue as a result of redeploying aircraft capacity to supply the tonnage increase from our retail stores and lower bulk fuel sales. Overall, we are very pleased with the financial performance of NSA and the utilization of aircraft, particularly the cargo services provided to our stores. Consistent with what I have indicated on a consolidated basis, we were able to convert the sales growth into gross profit gains, which ultimately flowed to the bottom line.

Ann: The same store sales gains were partially offset by lower wholesale sales and airline revenue compared to the fourth quarter of last year.

Ann: North Star Air sales in the quarter were impacted by lower third party revenue as a result of redeploying aircraft capacity to supply the tonnage increase from our retail stores.

Ann: And lower bulk fuel sales.

Ann: Overall, we are very pleased with the financial performance of NSA and the utilization of aircraft, particularly the cargo services provided to our stores.

Ann: Consistent consistent with what I have indicated on a consolidate basis, we were able to convert the sales growth into gross profit games, which ultimately flow to the bottom line.

Daniel McConnell: For the quarter, gross profit increased 7% while selling operating administrative expenses increased 2.9% or 13 basis points as a rate to sales. The gross profit rate improved largely due to changes in the sales blend. In addition to the sales blend impact of lower wholesale sales, we also had a change in sales blend within the food categories. More food services, just to mention some, and a blend shift to higher margin general merchandise categories and a decrease in lower margin mortarized sales compared to last year. Lower markdowns, including more effective data-driven promotional activity as a part of our next 100 initiatives, was also a factor contributing to the increase in gross profit rate.

Ann: For the quarter gross profit increased 7%, while selling operating and administrative expenses increased two 9% or 13 basis points as a rate to sales.

Ann: The gross profit rate improved largely due to changes in the sales points.

Ann: In addition to the sales blend impact of lower wholesale sales. We also had a change in sales plan within the food categories.

Ann: Food service is just to mention some.

Ann: Blend shift to higher margin general merchandise categories, and a decrease in lower margin motorized sales compared to last year.

Ann: Lower markdowns, including more effective data driven promotional activity as a part of our next 100 initiatives was also a factor contributing to the increase in gross profit rate.

Daniel McConnell: Selling, operating and administrative expenses were up in the quarter due to two factors. First, higher staff costs resulting from inflationary and minimum wage increases. Ahem, excuse me. an increase in depreciation and the impact of new stores. Second, we invested in additional staff resources, new technology, and one-time professional fees to execute our next 100 operational excellence work, which is required to unlock future growth and deliver the incremental EBIT expected from our next 100 initiatives. Net impact of these factors was an 18% increase in EBIT for the quarter, which is on top of an 11.2% increase in Q4 last year.

Ann: Selling operating and administrative expenses were up in the quarter due to two factors.

Ann: First higher staff costs, resulting from inflationary and minimum wage increases.

Ann: Excuse me at.

Ann: An increase in depreciation and the impact of new stores.

Ann: Second we invested in additional staff resources, New technology, and one time professional fees to execute our next 100 operational excellence work, which is required to unlock future growth and deliver the incremental EBIT expected from our next 100 initiatives.

Ann: Net impact of these factors was an 18% increase in EBIT for the quarter, which is on top of an 11, 2% increase in Q4 last year.

Daniel McConnell: Moving on to our international operations, for the quarter, international sales increased 3.1% in total, driven by same-store sales increases of 2.7% in food and 10% in general merchandise. The increase in general merchandise sales for the quarter is an improvement in the trend over previous quarters this year and the fourth quarter last year. This positive trend was fueled by solid holiday season execution and underpinned by a strong in-stock position. Favourable economic conditions in certain Caribbean markets, driven by an improved tourism season, was also a factor. These factors more than offset headwinds on wholesale sales in Alaska, as well as a weaker economic condition in certain commercial fishing communities in Alaska and some South Pacific markets.

Ann: Moving onto our international operations for the quarter International sales increased three 1% in total driven by same store sales increases of $2 seven in food and 10% in general merchandise.

Ann: The increase in general merchandize sales for the quarter isn't it improvement in the trend over previous quarters, this year and the fourth quarter last year.

Ann: This positive trend was fueled by solid holiday season execution and underpinned by a strong in stock position.

Ann: Favorable economic conditions in certain Caribbean markets, driven by an improved tourism season was also a factor.

Ann: These factors more than offset headwinds on wholesales wholesales sales in Alaska as well as a weaker economic condition in certain commercial fishing communities in Alaska, and some south Pacific markets.

Daniel McConnell: From an earnings perspective, we were able to generate some torque to the bottom line in international operations this quarter. Gross profit increased 8.2% due to sales gains and a higher gross profit rate, largely due to changes in sales blend compared to last year. Optimizing our transport mix through more efficient use of lower cost barge and bypass freight in Alaska and higher market-driven gross profit rates in certain Caribbean locations aligned with improved economic conditions were also factors. Selling, operating and administrative expenses increased 7.7% due to higher expenses primarily related to staff costs and additional resources to support our next 100 work.

Ann: From an earnings perspective, we were able to generate some torque to the Bottomline and international operations this quarter.

Ann: Most profit increased eight 2% duty sales gains in our higher gross profit rate largely due to changes in sales when compared to last year. After.

Ann: Optimizing our transport mix through more efficient use of lower cost barge and bypass freight in Alaska and higher Mark market, driven gross profit rates in certain Caribbean locations align with improved economic conditions were also factors.

Ann: Selling operating and administrative expenses increased seven 7% due to higher expenses, primarily related to staff costs and additional resources to support our next 100 work.

Daniel McConnell: These factors resulted in a 10.6% increase in EBIT for the quarter.

Ann: These factors resulted in a 10, 6% increase in EBIT for the quarter.

Ann: Okay.

Daniel McConnell: All right, now let me talk briefly about our outlook and provide a few comments on the next 100 programs. The macroeconomic conditions, as we all know, are uncertain, especially given the recent developments on U.S. government policy regarding tariffs and the impact of any retaliatory tariffs imposed by Canadian government or other governments. The impact this will have on the cost of merchandise and inflation in the countries in which we operate is uncertain. This is a fluid situation, but we are taking the steps necessary to actively manage it and mitigate, as much as possible, any impacts, including potential increases in the cost of merchandise.

Ann: Alright, now let me talk briefly about our outlook and provide a few comments on the next 100 program.

Ann: The macroeconomic conditions as we all know are uncertain and especially given the recent developments on U S government policy regarding tariffs and the impact of any retaliatory tariffs imposed by Canadian government or other governments.

Ann: The impact this will have on the cost of merchandise and inflation in the countries in which we operate is uncertain.

Ann: This is a fluid situation, but we are taking the steps necessary to actually manage it and mitigate as much as possible any impacts including potential increases in the cost of merchandise.

Daniel McConnell: This includes a disciplined process to monitor product cost increases and explore alternative sourcing arrangements where possible. And like many other retailers in Canada, we are taking steps to identify products that are impacted by tariffs so that our customers can make an informed choice when purchasing products. Within this macroeconomic environment, there is also uncertainty in our international operations, particularly in tourism-dependent markets and territories and countries that do not have strong government income support programs for individuals. That said, there are tailwinds in Canada that can mitigate some of these uncertainties and risks. We expect consumer demand in 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 Inuit Child First programs. As discussed on 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 and helping mitigate the economic headwinds in the current environment.

Ann: This includes a disciplined process to monitor project product cost increases and explore alternative sourcing arrangements where possible.

Ann: And like many other retailers in Canada, we are taking steps to identify products that are impacted by tariffs tariffs sorry.

Ann: Our customers can make an informed choice when purchasing products.

Ann: Within this macroeconomic environment. There is also uncertainty in our international operations, particularly in tourism dependent markets and territories and countries that do not have strong government income support programs for individuals.

Ann: That said there are tail wins in Canada that can mitigate some of these uncertainties and risks.

Ann: We expect consumer demand in 2075 to be 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 principal and in your child's first programs.

As discussed on 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 and helping mitigate the economic headwinds in the current environment.

Daniel McConnell: Our next 100 work is starting to deliver benefits. While we are pleased with the progress to date, there is still a lot of work to do. In 2025, we will be refining merchandise assortments, including launching new private label programs and implementing store-based inventory forecasting replenishment technology, which is expected to improve on-shelf availability. In addition, we continue to focus on driving efficiencies and cost savings across our business. The next 100 work is expected to drive annualized incremental EBIT, which will continue 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.

Ann: Our next 100 work is starting to deliver benefits. While we are pleased with the pleased with the progress to date. There is still a lot of work to do in 2025, we will be refining merchandise assortments, including launching new private label programs and implementing store based inventory inventory forecasting and replenishment technology, which is expected to improve.

Ann: On shelf availability.

In addition, we continue to focus on driving efficiencies and cost savings across our business.

Ann: The next 100 work is expected to drive annualized incremental EBIT.

Ann: We'll continue to ramp up in 2025 as each of the initiatives reach maturity.

Ann: As we lay the groundwork for these improvements we have invested in additional resources to support the execution of our next 100 program in.

Daniel McConnell: In addition to this investment in resources, we also anticipate continuing to incur one-time costs for professional fees in 2025 as each of the initiatives is operationalized, and we will provide further information on these one-time costs and the benefits in our quarterly reports. 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. For the first half of 2025, we are expecting these one-time costs to increase with the expectation that the resulting benefits will fully offset these costs by the end of the year.

Ann: In addition to this investment in resources. We also anticipate continued to incur onetime costs for professional fees in 2025 as each of the initiatives is operationalized and will provide further information on these one time costs and the benefits and our quarterly reports.

Ann: Our execution.

Ann: Our expectation excuse me is that the annualized incremental EBIT from these initiatives will offset the investment in additional resources and onetime costs.

Ann: However, there will be timing differences as these costs will be incurred prior to achieving the full annualized benefits.

Ann: For the first half was 2025, we are expecting these onetime costs to increase with the expectation that the resulting benefits will fully offset these costs by the end of the year.

Daniel McConnell: As a result of these factors, we expect our results in the first quarter of 2025 to moderate from the current run rate, particularly as we take into account the strong performance in Q1 last year, which delivered a 22.3% increase in net earnings.

Ann: As a result of these factors we expect our results in the first quarter of 2025 to moderate from the current run rate, particularly as we take into account the strong performance in Q1 last year, which delivered a 22, 3% increase in net earnings.

Daniel McConnell: Now, let me wrap up things here by saying that the company, as a company, we have proven to be resilient and the capabilities we are developing through the next 100, combined with the passion and enterprising spirit of Northwesters, will enable us to navigate under these uncertain times, while at the same time equipping us with the tools to provide the best value for our customers as we continue to make a positive impact in the communities that we serve.

Ann: Now, let me wrap up things here by saying that the company.

Ann: As a company we have proven to be resilient and the capabilities. We are developing through the next 100 combined with a passion and enterprising spirit of northwest Yours will enable us to navigate under these uncertain times.

Ann: While at the same time.

Ann: Equipping us with the tools to provide the best value for our customers as we continue to make a positive impact in the communities that we serve.

Daniel McConnell: With that, I will now open up the call if there are any questions. Thank you.

Ann: With that I will now open up the call if theres any questions.

Ann: Thank you, we'll now take questions from the telephone lines ETF question. Please press Star One you made counseling question at any time by pressing star too. Please.

Operator: We'll now take questions from the telephone lines. If you have a question, please press star 1.

Operator: You may cancel your question at any time by pressing start. press star 1 at this time if you have a question. There will be a brief pause while the participants register for questions. Thank you for your patience.

Ann: Please press star one at this time you said a question there won't be a brief possible other participants register for questions. Thank you for your patience.

Thai: The first question is from Thai calling from CIBC. Please go ahead.

Ty Collins: Next question is from Ty Collins from CIBC, please go ahead. Hi, good afternoon. Thanks for the question and congrats on the good results there. Maybe for my first one, just on the drinking water settlements, can you kind of comment maybe on the pace of that money coming in in Q4, maybe compared to the previous few quarters and how has that kind of trended through Q1 so far? You know what? It's been pretty steady. Actually, I would say over the last two, three quarters, it's been pretty steady as it was in Q4.

Thai: Hi, good afternoon. Thanks, Thanks for the question and congrats on the good results there maybe for my first one just on the on the drinking water settlements can you kind of.

Thai: Comment maybe on the piece of that money coming in in Q4, maybe compared to the previous few quarters and how does that kind of trended through Q1, so far.

Thai: Hi, Ty you know, what it's been pretty steady actually I would say over the last two.

Thai: Two three quarters, it's been a pretty steady as it was in the in Q4.

Thai: Okay.

Speaker Change: Okay got it and then E L F.

Thai: In terms of that.

Thai: That 23 billion dollar a child and family service settlement I know the claim.

Ty Collins: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered Member NYSE & SIPC, a Fidelity Investments company. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered You know, we we haven't heard anything. It's still quite early in the process. If you can appreciate it's been a couple of weeks. So we don't really have much insight on how it's started or how it's going.

Thai: Claims window for that opened about a month ago today I'm just curious if you're hearing anything around that within your communities in terms of how that processes is kind of working so far and then I guess in terms of your own kind of internal preparations. What are you assuming that that money starts to roll in in and what are your plans in terms of.

Thai: Positioning for that.

Thai: You know we.

Thai: We haven't heard anything it's still quite early in the process. If you can appreciate it's been a couple of weeks. So we.

Thai: We don't really have much insight on how it's started or how it's going.

Ty Collins: No news is good news, I guess. And on the other sense, I would say that we're anticipating probably into 2026 to start seeing some of this money coming in. On the other side of that, obviously, like we have done with many of the other programs, we're looking at amping up inventories where we know there's pent-up demand for our customers. And that's a strategic venture that we've taken note over the last number of settlements that have come out, including the drinking settlement. And we'll just keep a close hand on the pulse and make sure that we're ready when that money starts to drop.

Thai: No news is good news I guess and on the other sense I would say that we're anticipating probably into 2026 to start seeing some of this money coming in on the other side of that obviously like we have done with many of the other.

Thai: Programs.

Thai: We're looking at amping up inventories, where we know there's pent up demand for our customers.

Thai: And that's a strategic venture that we have.

Thai: Taken note over the last number of settlements have come out mix, including the drinking settlement and we'll just keep a close hand on the pulse and make sure that we're ready when that money starts to drop.

Ty Collins: Okay, great.

Thai: Okay, great and if I could just get upset.

Ty Collins: And if I could just...

Ty Collins: Excuse me. Yep, sorry. Sorry, I was just going to finish that off, just put that caveat out there, understand we are dealing with some administrator, some bureaucratic administration. So, you know, you have no plan survives first contact, but that's if we would have looked backwards in time, we would have anticipated the water drinking settlement monies to come in a lot earlier than it did, but optimistically, I'm going to say that 2026 is where we're currently anticipating it.

Thai: Sorry, I was just going to finish that off just put that caveat out there I understand we are dealing with some administrated are some bureaucratic administration. So you know you have no plan survives first contact but that's if we would've looked backwards in time, we would have anticipated the water drinking settlement.

Thai: The money has to come in a lot earlier than it did but optimistically.

Thai: I'm going to say that our 2026 is where we're currently.

Thai: Anticipating it.

Thai: Yes.

Thai: Okay understood and then if I could just sneak in one more you you know you referred to.

Ty Collins: If I could just sneak in one more, you referred to some of the progress around your private label initiatives. Can you maybe just talk a little bit more about how that's being rolled out in terms of initial product categories and the number of stores that that's been implemented in so far, and how's the response from your customers been to date? Sure.

Thai: Some of the progress around your private label initiatives can you, maybe just talk a little bit more about how that's being rolled out in terms of our initial product categories and I guess the number of stores that that's been implemented and so far and then how is the response from your customer spend to date.

Thai: Sure Yeah, so far it's as far as the private label rollout, it's still in its infancy. Its at the beginning stages, we expect it to be rolled out.

Ty Collins: Yeah, so far, as far as the private label rollout, it's still in its infancy. It's at the beginning stages. We expect it to be rolled out to all stores by mid to late Q3, but we can say that the reception so far has been very positive, obviously bringing some incremental value to our customers, and so far it's been received very well. Obviously, commentary from the customers is very strong, as well as the purchases so far, but we're still quite early, but we anticipate it's going to be a very strong program for the stores in the community.

Thai: To all stores by mid to late Q3.

Thai: But we can say that the reception so far has been a very positive obviously, bringing some incremental value to our customers.

Thai: And so far it's been received very well obviously the commentary from the from the <unk>.

Thai: Customers is very strong as well as the the purchases so far but we're still quite early but we anticipate it's going to be a very strong program.

Thai: The stores in the communities.

Ty Collins: Okay, thanks. I'll jump back in the queue. All right. Thanks.

Speaker Change: Okay. Thanks, I'll jump back in the queue.

Thai: Alright, thanks, guys.

Speaker Change: Thank you.

Stephen Macleod: The next question is from Stephen MacLeod from BMO Capital Markets. Please go ahead. Thank you. Good afternoon, guys. Hey, Dan, thanks. Just wanted to follow up just with respect to the Canadian business, you know, nice, nice, strong, same for sales growth. But I guess I would have expected maybe a bit more strength on the general merchandise side, given some of the payments, water settlement payments that have come through. So I'm just curious, are you seeing, you know, those incremental payments being redirected towards food versus general merchandise? Or are you still seeing, you know, that incremental buyer on the GM side?

Speaker Change: The next question is from Stephen Macleod from BMO capital markets. Please go ahead.

Speaker Change: Thank you good afternoon guys.

Speaker Change: I just wanted to.

Hey, Dan Thanks.

Speaker Change: Just wanted to follow up.

Speaker Change: With respect to the Canadian business, you know a nice nice strong same store sales growth.

Speaker Change: But I guess I would've expected, maybe a bit more strength on the general merchandise side, given some of the payments what are settlement payments that have come through so I'm. Just curious are you seeing.

Speaker Change: Those are those incremental payments being being redirected towards food versus general merchandise or are you are you still seeing that incremental buyer on the GM side.

Stephen Macleod: Well, there was it was I mean, we're kind of in in between season, but I would say that yeah, we were we were expecting higher motorized sales. So we had a higher general merchandise sales, but it was You know, then when we anticipated in some of the off categories, so it was not the higher price point, but it was the higher margin sales that we experienced. So, motorized sales weren't as high, but some of the other categories within the general merchandise group with higher margin rates were higher and a lot of the food people switched over to the food.

Speaker Change: Well there was it was.

Speaker Change: I mean, we're kind of in between season, but I would say that yeah. We were we were expecting higher motorized sales. So we had a higher general merchandize sales, but it was.

Speaker Change: Than what we anticipated in some of the off category. So it was not the higher price point, but it was the higher margin sales that we experience.

Speaker Change: So the motorized sales weren't as high but some of the other categories within the general merchandise group with higher margin rates were higher and a lot of the food.

Speaker Change: People switched over to the food we had some strong food sales strong perishable.

Stephen Macleod: We had some strong food sales, strong perishable food sales, high food service. So people were spending a lot of their dollars over there.

Speaker Change: <unk> sales high foodservice, so people were spending a lot of their dollars over there.

Stephen Macleod: Okay, yeah, that's great.

Speaker Change: Okay, Yeah, that's great.

Stephen Macleod: And then maybe just turning to the next 100, you know, I know you gave some colour that, you know, the benefits that you're seeing have outweighed kind of the incremental investment as well as the one-time costs. Are you able to, are you kind of in a position to give a number of what that annualized EBIT might look like? from Next 100 Benefits, either maybe this year or next year. I won't go into the EBIT right now, Steve, but I will say that I anticipate that they're, you know, as I indicated, there's about a million dollars in one-time costs that we put through last quarter, and I expect it to be three or four times that in the first quarter of this year.

Speaker Change: And then maybe just turning to the next 100.

Speaker Change: I know you gave some color that you.

Speaker Change: You know the benefits that you're seeing of outweighed.

Speaker Change: Kind of the incremental investment as well as the one time costs.

Speaker Change: Are you able to are you kind of in a position to give a number of what that annualized EBIT might look like.

Speaker Change: From next 100 benefits either maybe this year or next year.

Speaker Change: I won't I won't go into the EBIT right now so you what I will say that I anticipate that there.

Speaker Change: As I indicated there's about $1 million in one time costs.

Speaker Change: We put through last quarter, and I expect it to be three or four times that in the in the first quarter of this year. So I will give you that in and then I'll kind of as we gauge and we moved through all I'll give you more insights in the quarters to come.

Stephen Macleod: So, I will give you that, and then I'll kind of, as we gauge and we move through, I'll give you more insights in the quarters to come. Okay, that's, that's helpful. And I guess based on your commentary, Yeah, I guess based on your commentary with respect to Q1, I mean, is it fair to assume that, you know, Q1 sounds like maybe more of an investment period. You might not see the costs, the benefits outweighing the costs in Q1, but maybe that turns when you get to the back half of the year. Is that the way to interpret that?

Speaker Change: Okay.

Speaker Change: Okay. That's that's helpful and I guess based on your commentary.

Speaker Change: Yeah.

Speaker Change: I guess based on your commentary with respect to Q1, I mean is it fair to assume that.

Speaker Change: Q1, it sounds like maybe more of an investment period, you might not see the costs the benefits outweigh the costs in Q1, but maybe that turns when you get to the back half of the year is that is that the way to interpret that.

Speaker Change: Yeah.

Stephen Macleod: I think that'd be a good way to narrate that for sure. Yeah, okay, great.

Speaker Change: I think that'd be a good way to an area that for sure.

Stephen Macleod: Thanks, Dan.

Speaker Change: Okay, great. Thanks, Dan and then maybe just one more question.

Stephen Macleod: And then maybe just one more question. Just turning back to general merchandise, international business was quite strong. I know you gave a number of factors that contributed to that. But was there anything that kind of stood out in the international business to drive that strong, you know, low double digit general merchandise sales growth number? Not really. I mean, we did open up a motorized shop in one of our key markets. So that definitely had a play in it. But other than that, nothing else that really that really stood out. Okay, that's great. Thanks, Dan.

Speaker Change: Just turning back to general merchandise at the international business was quite strong.

Speaker Change: I know you gave a number of factors that that contributed to that but was there anything that kind of stood out in the international business to drive that strong low double digit general merchandise same store sales growth number.

Speaker Change: Not really I mean, we did open up a motorized shop and in one of our key markets. So that definitely how to play in it but other than that nothing else that really are that really stood out.

Dan: Okay. That's great. Thanks, Dan I'll put it back to the line appreciate it.

Stephen Macleod: I'll put it back to the line. Appreciate it. Thank you.

Speaker Change: Thank you.

Dan: Thank you.

Michael Van Elst: Next question is from Michael Van Elst from TD Securities. Please go ahead.

Speaker Change: The next question is from Michael Van <unk> from TD Securities. Please go ahead.

Michael Van Elst: Hey, guys, it's Ebenin from... I guess, just starting off with Canada, I guess, so this is, it's been several quarters now that you called out. Program spending related to child and family services. I just want to, I'm trying to understand that a bit more. Is that incremental spend, but not tied to the reform? Okay, it is tied to the reform, but it's probably not, it's not tied to the settlement money. So we've talked about this in the past, like Jordan, because there was a, it was deemed to be an insufficient level of service to Indigenous people in Northern Canada.

Anthony: Hey, guys. This is anthony in for Mike.

Speaker Change: I guess, just starting off with Canada I guess.

Speaker Change: So this is a it's been several quarters now that you've called out.

Speaker Change: Program spending.

Speaker Change: Your child and family services.

Speaker Change: I just wanted to I'm trying to understand that a bit more is that incremental spend but not tied to.

Speaker Change: The reform.

Speaker Change: Okay. It is tied to the reform, but it's probably not it's not tied to the settlement money. So.

Speaker Change: We've talked about this in the past like Jordan, because there was a it was deemed to be insufficient level of service to.

Speaker Change: Indigenous people in Northern Canada. So there is there is there was a definitely a gap between service. So in the meantime, the government has been working to improving.

Michael Van Elst: So there's, there's, there's a gap between service. So in the meantime, the government has been working to improving that gap. As an example, in 2000, so I guess it was two, three years ago was the benchmark, what year was that? It was in 2000. 2021, we estimate that there was about six or seven hundred million dollars spent in this particular area in Northern Canada. So, going towards healthy living and assisting youth and some of the health infrastructure that's existing there. And now we've estimated in 2023, 2024, there to be approximately two and a half to three billion.

Speaker Change: That gap.

Speaker Change: As an example in 2000.

Speaker Change: So I guess it was two three years ago was the bookmark, what you or was that it was in 2019.

Speaker Change: 21, 2021, we estimate that there was about six or 700.

Speaker Change: <unk> million dollars spent.

Speaker Change: In this particular area in northern Canada, so going towards.

Speaker Change: Healthy living and assisting youth in some of the health infrastructure, that's existing there and now we've estimated in 'twenty two 'twenty three 2020 for there to be approximately two and a half to 3 billion. So there has been a significant increase and that's simply just bringing the level of service up too.

Michael Van Elst: So, there has been a significant increase and that's simply just bringing the level of service up to, I call it on the journey to bring in the level of service up. But this is not per se part of the settlement. It's just more bridging the gap of the infrastructure deficit.

Speaker Change: Oh I'll call it on the journey to bring in the level of service up but this is not per.

Speaker Change: Per se part of the settlement, it's just more bridging the gap of the infrastructure deficit.

Michael Van Elst: Okay, great.

Speaker Change: Okay, great. Thanks.

Michael Van Elst: And then in terms of the agreement that was reached between the Ontario First Nations and the federal government, so it looks like that's going to be the first one. to be approved. I'm just wondering how many of your markets Impacted by. Excuse me. The number would escape me, but you can look in our circular or in our annual statement or annual report and you'll be able to see the number of stores that we have within the Ontario border. Sir, I don't have it off hand. Otherwise, yeah, and that would impact all of those. I would think so, yes.

Speaker Change: Then in terms of them.

Speaker Change: The agreement that was reached between the Ontario first nations in the federal government.

Speaker Change: So it looks like that was that's going to be the first one.

Speaker Change: To be approved just wondering how many of your markets would be impacted by.

Speaker Change: By spending from that once it does get approved.

Speaker Change: Excuse me.

Speaker Change: Yeah.

Speaker Change: The number we just gave me, but you can look at our circular or in our annual statement youll be able our annual report and you'll be able to see the number of stores that we have within the Ontario border.

Speaker Change: Sorry, I don't have it off hand, otherwise.

Speaker Change: And that would impact all of those markets.

Speaker Change: I would think so yes.

Michael Van Elst: Okay, and then just quickly on the airline, given that it seems like it's running pretty much at capacity, what are your thoughts on growing that capacity? Yeah, absolutely. As we see demand increase, then we're always looking to see where we can make prudent investments to expand the service. So, I would say our capacity is pretty high, so we would definitely be open to the right acquisition of some more aircraft to continue to service the business that's out there.

Speaker Change: Okay and then.

Speaker Change: Just quickly on the airline.

Speaker Change: Given that it's it's it seems like it's it's running pretty much at capacity.

Speaker Change: What are your thoughts on on on.

Speaker Change: On growing that business.

Speaker Change: But yes, absolutely as we see demand increase.

Speaker Change: And then we're always looking to see where we can make.

Speaker Change: Make prudent investments to expand the expanded service so I would say.

Speaker Change: Yeah.

Speaker Change: Our capacity is is pretty high so we would we would definitely be open to the right.

Speaker Change: The acquisition of some some more aircraft to continue to service the business that that's out there.

Michael Van Elst: Okay, thanks.

Speaker Change: Okay. Thanks.

Michael Van Elst: Switching to international now, how much of your Alaska business And when do you expect to lap the start of? I guess it depends on the macro environment, I mean. I guess we haven't talked about tariffs, and probably the right thing, because who knows what's happening as of an hour ago. I think things have, as I understand, I've been in board meetings, but I understand things have changed again. But the tariffs will have an impact on the fishing industry in Alaska, just given the large number of exports, who the customers of some of the Alaska fishing, where some of the customers reside over in Asia and outside of the US.

Speaker Change: Just switching to international now.

Speaker Change: How much of your Alaska businesses is tied to the commercial fishing economy and when when do you expect to lap lap the start of the weakness.

Speaker Change: I guess it depends on the macro environment I mean.

Speaker Change: Now that I guess, we havent talked about tariffs and probably the right thing because who knows what's happening is as of an hour ago. I think things are the as I understand it a bit in board meetings, but I understand things have changed again, but that the tariffs will have an impact on the fishing industry.

Speaker Change: In Alaska, just given the large number of exports.

Speaker Change: Who the customers are some of the Alaska fishing.

Speaker Change: Where there were some of the customers reside.

Speaker Change: In Asia and outside of the U S. So I think that's going to have an impact however.

Michael Van Elst: So I think that's going to have an impact. However, as far as the LAP, I would expect probably in... in Q2, I would say, is what I would forecast, but bearing nothing else kind of goes weird as it relates to tariffs.

Speaker Change: As far as the lap I would.

Speaker Change: Would expect probably and.

Speaker Change: In Q2, I would say is what I would forecast, but bearings nothing else kind of goes weird.

Speaker Change: As it relates to tariffs.

Speaker Change: Alright, Okay and then.

Michael Van Elst: Okay, and then in terms of SNAP. What percentage of your of your international food sales would you say are tied to SNAP and how much of that do you think would be? We have a pretty healthy SNAP business. We don't disclose the percentage, as you can probably appreciate, and it depends. I'm not aware of any conversations as of yet that have talked about making further changes to the SNAP benefits.

Speaker Change: In terms of.

Speaker Change: Nap.

Speaker Change: What percentage of your of your international Food sales would you say are tied to snap and how much of that do you think would be at risk.

Speaker Change: From any changes in benefits.

Speaker Change: We have a pretty healthy.

Speaker Change: We have a pretty healthy snack business.

Speaker Change: We don't disclose the percentage as you can.

Speaker Change: Probably appreciate.

Speaker Change: And.

Speaker Change: I mean look it depends.

Speaker Change: I'm not aware of any.

Speaker Change: Conversations as of yet that have talked about making further changes to the snap benefits.

Michael Van Elst: However, obviously, if there were changes made and there were changes to decrease the amount of SNAP benefits, it would definitely have a negative impact on our business. Okay, great. In both Alaska and the Caribbean. some of our U.S. markets. Thank you very much. Thanks. Thank you. As a reminder, you may press star 1 if you have a question.

Speaker Change: However, obviously the changes if there were changes made in there.

Speaker Change: <unk> is to decrease the amount of snap benefits it would definitely have a negative impact on our business.

Speaker Change: Okay.

Speaker Change: Okay, great and both the Alaska and.

Speaker Change: And the Caribbean.

Speaker Change: Some of our U S markets.

Speaker Change: Thank you very much.

Speaker Change: Thanks.

Speaker Change: Thank you.

Speaker Change: As a reminder, you May press Star one if you have a question. The next question is from Dai calling from CIBC. Please go ahead.

Ty Collins: The next question is from Ty Collin from CIBC. Please go ahead. Hi, thanks for taking the follow-up. I just wanted to ask a quick clarification, Dan, on your comments, expecting maybe a bit of a moderating pace of the growth in Q1. Were you referring to earnings or was that to the top line to same-store sales as well? Earnings. Have you noticed any change in consumer sentiment or shopping behavior at all since the emergence of the tariff threats and volatility a month or so ago? Has there been any sort of trade-down or any impact to general merchandise or more discretionary type of categories in the first few months of the year?

Speaker Change: Hi, Thanks for taking the follow up I just wanted to ask a quick clarification, Dan on your comments on <unk>.

Speaker Change: <unk>, maybe a bit of a moderating pace of <unk> of the growth in Q1, where were you referring to.

Speaker Change: To to earnings or is that to the topline to same store sales as well.

Speaker Change: Earnings.

Speaker Change: Okay, Great. That's helpful. And then I am also wondering have you noticed any change in consumer sentiment or shopping behavior at all kind of since the emergence of the I know the terrorists threats and volatility are you know a month or so of those than there had been any sort of a trade down or R&D, yet an impact.

Speaker Change: General merchandise or more discretionary type of categories in the first few months of the year.

Ty Collins: Nope. Well, we haven't seen that. Okay, great, thanks. All right, thank you, Ty. Thank you.

Speaker Change: No well, we haven't seen that.

Speaker Change: Okay, great. Thanks.

Speaker Change: Alright, thank you.

Speaker Change: Thank you there are no further questions at this time I would like to turn the meeting back over to Mr. Mcconnell.

Operator: There are no further questions.

Daniel McConnell: At this time, I would like to turn the meeting back over to Mr. McConnell. Okay, well, no further comments from myself, so thank you for attending the conference call, and I look forward to speaking with you on our Q1 results. Thank you.

Speaker Change: Okay.

Speaker Change: Well no further comments from myself. So thank you for attending the conference call and I look forward to speaking you with you on our Q1 results.

Speaker Change: Thank you.

Operator: conference has now ended. Please disconnect your lines at this time and we thank you for your participation.

Speaker Change: Conference has now ended please disconnect your lines at this time and thank you for your participation.

Operator: This conference is no longer being recorded. Cette conférence n'est plus enregistrée.

Speaker Change: This conference is no longer being recorded.

Speaker Change: Uh huh.

Speaker Change: Hey.