Empire Company Ltd Q2 2022 Earnings Call Transcript

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

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Michael, I have one question and then a follow-up. My first question is direct. I'd like to unpack a little bit your assertion that there's a structural shift to more eating at home. And it's -- interestingly enough, we've heard very similar comments, in fact, that very phrase from Rodney McMullen last week on their earnings call. I'd love to hear if you could share with us your thoughts and what is the thinking, what is it that has led you to that conclusion? And then obviously, if that is the case, it would be a nice tailwind over the next several years for the grocers in general.

Question: Patricia A. Baker - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. And then my follow-up just is -- I'm not sure if it's for Matt, Mike or yourself, but just in the press release this morning, you reiterated the fact that in fiscal 2022, you anticipate that dilution from Voila will be in that range of CAD 0.25 to CAD 0.30 per share, which is a number that you've given us several quarters ago. And secondly, also confirm that you believe that this will be the peak year for -- of Voila dilution. So just looking at the fact that you didn't change anything there, am I right in assuming that, that is indicating that you're seeing exactly what you want to see with respect to Voila and the first facility and the progress that you're making cost-wise, et cetera, in Montreal, that things are going as you had anticipated and there's no serious change there that would cause you to have any different viewpoint or outlook for how you think that's going to perform over the longer term?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : On a couple of questions, like you've already touched on this, which is your analytical promotional optimization, which is really facilitating your margin improvement. So can you just elaborate a little bit on what you're doing and what has changed? Is it you have more data, you have more software, more training for your merchants? So when you use that expression, maybe just elaborate a little bit on what you've accomplished there. Pierre St-Laurent - Empire Company Limited - Executive VP & COO - Full Service We're just leveraging more and more the data we hadn't had in the past. So I think that's the improvement. It's the quantity of data we hadn't had in the past was just amazing. We just -- we are just able to deliver just more now than we did in the past. And the team has better, I would say, recommendation insights than in the past, and better information means better decisions, and we remain -- we continue to rely on people, but with the quality of information, they have to make decision, it's much better than it was in the past.

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. That makes sense. Can you talk a little bit about the Olympics? Was there any spend in Q2? And will we see accelerated spend in the next few quarters or the next couple of quarters as we go into the Olympics and will it be noticeable in terms of as your results unfold?

Question: Peter Sklar - BMO Capital Markets Equity Research - Analyst : Okay. And then just my last question. You've talked -- you've explained how the ramps worked for GTA on the CFCs for GTA and Montreal. What's your sense of timing on Calgary? And like have you broken ground there? And when do we start to see the dilutive impacts of Calgary?

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Most of my questions have been answered, but maybe I'll start with some longer-term strategic questions. This management team has been pretty bold and they made some big bets on the future. And so I'm wondering, as you look at your entire business, 2 businesses that I don't hear as much talk about quarter-to-quarter, your C-store business and your Lawton's pharmacy business. Wondering if management's looking at -- if it considers those businesses to be core? Or if you're looking at the attractive multiples in the market and you could take that capital and reallocate elsewhere.

Question: Vishal Shreedhar - National Bank Financial, Inc., Research Division - Analyst : Okay. And switching gears here. Obviously, quarter-to-quarter, management started showing progress with Project Horizon and you indicated that you're pleased with the progress to date. At the time that Project Horizon was indicated, it was pre-COVID, and it was a CAD 500 million growth of EBITDA by fiscal 2023. But that base doesn't include Longo's, it doesn't include the structural potential benefits that we may see in the market. So as management evaluate that target, and I know last time with Sunrise, you took another look at it and you actually increased that expectation. So what does management need to see to get more confident that perhaps there's upside to that target? Or is it a question of market volatility?