North West Company Inc Q2 2024 Earnings Call Transcript

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

Question: Michael Van Aelst - TD Cowen - Analyst : Hi, thank you. A few questions for you. So just looking at the higher same-store sales in Canada, particularly on the food side, it was quite strong. And you did highlight some areas where they had higher access to nutritional foods. So is this part of the $48 billion child welfare [reform] that's supposed to come over the next 10 years, or is this something separate?

Question: Michael Van Aelst - TD Cowen - Analyst : So I guess, it's just hard because they don't describe in detail where that $48 billion is going to be spent. And I don't think they give a lot of detail on how they're going to fund -- how they're going to change their approach with Jordan's Principle. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:30PM, NWC.TO - Q2 2024 North West Company Inc Earnings Call But do you feel that the spending and the increased access to nutritious foods in certain communities is actually sustainable? Or do you think that this was something that might have been more one-time in nature for some reason?

Question: Michael Van Aelst - TD Cowen - Analyst : Okay. So maybe a better way to ask is, are you seeing this continue -- are you seeing the benefits of that continuing into the third quarter?

Question: Michael Van Aelst - TD Cowen - Analyst : Okay. Excellent. As far as your one-time charges are concerned, how large should we expect these to be? And will you be backing these out of adjusted earnings?

Question: Michael Van Aelst - TD Cowen - Analyst : Okay. At this stage, do you expect to remove it from adjusted earnings?

Question: Michael Van Aelst - TD Cowen - Analyst : Perfect. And then on the vessel repairs at TNI, the -- you mentioned that it delayed the start to the sealift shipping season? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:30PM, NWC.TO - Q2 2024 North West Company Inc Earnings Call

Question: Michael Van Aelst - TD Cowen - Analyst : I guess, the question I have is -- I know how important is in getting your inventories up into the North at the lower cost. I was wondering if -- did it shorten the shipping season for you? And did you get the inventory into the North that you wanted to?

Question: Michael Van Aelst - TD Cowen - Analyst : Okay. So we shouldn't expect any additional impact from that event in the coming quarters.

Question: Michael Van Aelst - TD Cowen - Analyst : I think that other than -- it sounds quite positive in Canada, given that sales are starting to pick up already even though we're not really seeing meaningful payments being made yet in either water or child reform, welfare form. And I guess, the first question is, does that -- before I get on to national, is that -- would you agree with those statements?

Question: Michael Van Aelst - TD Cowen - Analyst : And then on the international side, there obviously more -- has been given the macroeconomic conditions. And are you seeing that deteriorate further? Because you're still able to grow their sales modestly, which is a positive given this in this environment. So are you still expecting to be able to grow? Or is there some bigger headwinds coming that you're seeing?

Question: Michael Van Aelst - TD Cowen - Analyst : Yeah. And that's on the international side, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:30PM, NWC.TO - Q2 2024 North West Company Inc Earnings Call

Question: Michael Van Aelst - TD Cowen - Analyst : Okay. Perfect. All right. That's it for now. Thanks very much.

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Yeah. Hi there. Good morning. I just had a couple of follow-up questions to Mike's questions. First, just on the inventory levels, look, I know it's flat on a dollar basis sort of year over year at the end of the quarter or flattish. How should we interpret that? Is some of that affected from the delay into the sealift season, which you've caught up now in Q3? Or how should we think about --?

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Okay. So you would have expected it to be down if it weren't for the optimism and the builds in your inventories around some of these sales opportunities?

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Yeah. Okay. Okay. Fair enough. And I guess, just on that, obviously, the food same-store sales growth is excellent to see, but the merch lagged a little bit. Could you just talk about some of the dynamics there and how you expect those two to sort of move relatively speaking, as the payments kind of flow through and accelerate? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 1:30PM, NWC.TO - Q2 2024 North West Company Inc Earnings Call

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Yeah. Okay. Understood. And I guess, just on my last question is just with regards to the competitive dynamics that you're observing in the Canadian market, just given the flow-through of some of these benefits and the expectations, have you observed any changes to how your competitors are approaching the market?

Question: Mark Petrie - CIBC World Markets Inc. - Analyst : Yeah. Understood. Okay. Thanks for all the comments, guys. All the best.