Empire Company Limited, Grocery Gateway, Inc., Longo Brothers Fruit Markets Inc. - M&A Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Congrats to Longo's family for building a great company over time. When I was younger I used -- I saw these shops at the multiple location. Okay. So maybe you can just help me with the materials here. It says that the Longo's family aims to be long-term shareholders of Longo's over time? And then it also says Empire can achieve 100% ownership over time. So how should I think about that?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And along the same line of questions that others have been asking, but maybe you can help me understand why Empire would require multiple e-commerce fees for the GTA market. Maybe you've already answered it. I'm missing the message here, but it wasn't the biggest driver of improvement for Voila volume and wouldn't pushing Grocery Gateways volume into Voila, wouldn't that help profitability for all parties?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. Is Grocery Gateway profitable after all the fixed costs are levied in?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. Will this business be fully consolidated in the P&L on your EBITDA line?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. Will it be immediately accretive to the EBITDA margin or it's dilutive?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : All right. Okay. And when you report e-commerce growth, will you include Grocery Gateway's growth in your e-commerce growth numbers?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : And when you -- right. Yes. No, I imagine its early days. And when Longo's coming to Empire and Empire was providing resources and procurement and so on and so forth. Is there a transfer cost between the organizations representing that, that the shareholders don't get 100% benefit of Longo's currently? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 16, 2021 / 1:00PM, EMPa.TO - Empire Company Limited, Grocery Gateway, Inc., Longo Brothers Fruit Markets Inc. - M&A Call

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : At this point, I just have a couple of questions for Anthony, if I can. Anthony, I would have thought that given that this is a multigenerational business, it sounds like you have kids or nephews in the business. So this must have been quite a big decision to sell control to Empire. I'm just wondering if you can talk a little bit -- I'd like to understand you have the personal relationship with Michael Medline and you both thought through ways that you could operate together and maximize the 2 businesses. But can you talk a little bit more about you and your families motivation? Did -- so for example, everyone knows that the grocery business is just changing so rapidly now with e-commerce and data, and it's so many layers of complexity. I'm just wondering if that played a role and just generally what the family thinking was.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then the other thing I wanted to ask you about is, like you yourself said that part of the brand strength of Longo's is imperishable. And I would have thought that your brand positioning is a lot closer to Farm Boy than it is to Sobeys for obvious reasons. So I'm just wondering if you could articulate, like how you think about your positioning and your value proposition versus Farm Boy? And can you really carve out a differentiated position versus Farm Boy?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : My first question is for you, Anthony. Store growth is featured prominently in the last 5 years. And certainly, Mike alluded to the fact that we will see store growth for Longo's going forward. Do you have any new stores in the pipeline currently? And if so, what size format are you focused on of your 3 formats?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then, Michael, if I may. And I missed part of the call, so you might have addressed this. But when you joined Empire, one of the considerations was the fact that the footprint in Ontario and then more particularly in the GTA was not as sound as it needed to be. And with the completion of Farm Boy and when you complete Longo's and the Voila platform, do you feel now feel really good sitting here in 2021, what your GTA set of assets to address that market, do you feel like job is done there?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. Excellent. And then quickly for Mike. Mike, how quickly can you get at procurement?

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Can you get at the procurement synergies?