Colabor Group Inc Q1 2025 Earnings Call Transcript

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

Question: Kyle McPhee - Cormark Securities - Analyst : Everyone, I want to dig into the impact of the institutional client contract repricing. You had disclosed that this client was 11% of 2024 revenue, but on a quarterly basis, is this a, is this client a much higher percentage of revenue in Q1 periods given the institutional client may not be seasonal, but a lot of your other business is seasonal to the downside in Q1. Can you provide any clarity on that?

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, can you tell us how much of your revenue weight this client was in Q1 of last year?

Question: Kyle McPhee - Cormark Securities - Analyst : How much revenue percentage of your revenue this institutional client was in Q1 of 2024, just.

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, so it looks like us analysts may have kind of underestimated the margin impact simply because of this seasonality dynamic and now the opposite should be true going forward, is that correct? This client will be is a lower percentage of revenue than 11% and kind of 2% to 3%-4%.

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, and your press releases and comments mention steps taken to mitigate the impact of the repriced institutional contract. It looks like your wages expense line was a favorable moving part that that helped in the Q1 you just reported, but was Q1 a full quarter benefit of these cost mitigation efforts with wages, or will we see more progress with that, in Q2 to claw back, more margin dollars?

Question: Kyle McPhee - Cormark Securities - Analyst : Got it. Okay. And then beyond, wage adjustments and operational efficiencies, are there other mitigation efforts that may start to help in in Q2 and beyond, specific to how much margin you can make with this specific institutional client maybe, things like more volume on the truck to this client or shifting around margin mix has that begun at all?

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, and would any of that had started in in Q1 or is that kind of more Q2 and beyond? Yeah.

Question: Kyle McPhee - Cormark Securities - Analyst : Okay. And then your press release also mentioned that beyond this this contract re pricing dynamic that impacted margins in Q1, there was also some other unfavorable client mix that that was margin drag. Can you explain what that means and if this was unique to Q1 or something we should be aware of go.

Question: Kyle McPhee - Cormark Securities - Analyst : Okay, appreciate all that color. I'll pass along.

Question: Michael Glen - Raymond James - Analyst : Hey, good morning. So just to start off, can maybe can you are you able just to give us some ideas or thoughts surrounding how we should think about gross margin trending through the rest of 2025?

Question: Michael Glen - Raymond James - Analyst : Okay And I like to think about where you start the year relative to. Where you were last year on gross margin, are the factors you're speaking about, how much are we thinking about in terms of sequential improvement? Is it 50 basis points? Is it 100 basis points? Is that, is there enough in hand to. You. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 1:30PM, GCL.TO - Q1 2025 Colabor Group Inc Earnings Call

Question: Michael Glen - Raymond James - Analyst : Louis, you spoke about gaining some market share given among the independent restaurants just given your positioning in Quebec. I'm just wondering, are there. Any emerging opportunities with national chains who might be looking to source change their sourcing strategy?

Question: Michael Glen - Raymond James - Analyst : Okay, and just on the transaction that we're waiting for the closing for, can you provide some just some thoughts as to what we should think about for expected closing, are you able to indicate, it feels like it's been a little bit longer than expected to close are there some specific items that are that are delaying the close that you can speak to?

Question: Michael Glen - Raymond James - Analyst : Okay. I will leave it there thank you.

Question: Frederick Tremblay - Deutsch Bank - Analyst : Thanks, good morning. Just a bit of a follow up on the last question there, in the financials, we see you know that that the required closing conditions must be met by May 20, 2025. That's pretty soon, so I'm just wondering what's your level of confidence that the conditions will be met by that date and if they're not, is there a possibility for an extension of the deadline there.

Question: Frederick Tremblay - Deutsch Bank - Analyst : Okay. Moving back to the contract renewal, and this is a 2-year contract with two potential 6 month extensions. I was just, given those timelines. I was just curious to know what your Internal expectations are in terms of like getting the full benefits of your mitigating actions on the margin, are we talking about, a year from now, you would expect. The full impact or full benefit from that or is it, sooner or later than that, just a bit of a timing perspective on implementation of your actions there.

Question: Frederick Tremblay - Deutsch Bank - Analyst : Okay, I appreciate that. And last question from me just on the distribution volume increase. Some of it is from market share gains, obviously. I was just curious though on the existing customers, like, generally speaking, The volume demand is it stable up down over a year, and we obviously know that the restaurant industry is in a bit of a challenging place right now, but in terms of your own clients, like what's the general trend that you're seeing with your existing customers?

Question: Frederick Tremblay - Deutsch Bank - Analyst : Yes, thanks for taking the question.

Question: Donangelo Volpe - Beacon Securities - Analyst : Hey, good morning, everyone. Just looking at the wholesale activities, I noticed it was down as a result of restaurant industry slowdown. I was just looking for any commentary regarding the slowdown you guys are seeing. Is it mostly slow down across independence or is it more of a broad-based slowdown? And you guys kind of touched on it, I guess, on the last question, but have there been signs of, a pick up of activity throughout the first month of, the second quarter?

Question: Donangelo Volpe - Beacon Securities - Analyst : I guess you guys kind of touched on it with, I guess you guys said, the March data was the most recently available and you did see a little uptick up 1%. The second part of my question was just relating to, if you guys have been seeing signs of a pick up of activity throughout the first month of, the second quarter.

Question: Donangelo Volpe - Beacon Securities - Analyst : Okay, thank you. I'll hop back in the queue.

Question: Donangelo Volpe - Beacon Securities - Analyst : Okay, perfect. Thank you for the color. I'll hop back in the queue.