North West Company Inc Q3 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, good morning. First off, I'd like to ask you about the OpEx growth in Canada. I know you talked about the Next 100, but that OpEx growth has been elevated for much of the past seven quarters I would say. But this is the first time you've called out the Next 100 that I can see in your press releases. So when did that spending increase actually start related to the Next 100 and what -- and can you give us a little bit more color as to the timing as when we switch over to seeing the benefits?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. And when did the spending start to ramp up though? Is it just in this year or was it last year as well?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. All right. And then on the Canadian gross margin, it looked like it was about 100 basis points lower than I would have thought, given usual seasonality. Is that just tied to the higher maintenance costs at NSA and as well as on the sea lifts or is there something else happening?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. And can you give us a little more color then on that shift in mix?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. I'll follow up after on that one. And then just a quick one for John. Can you just comment on the jump in interest and depreciation in Q3 versus Q2, versus the run rate in the first half of the year and what we should be expecting going forward for those lines?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. So it will continue roughly where we're at now or continue to increase? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 2:00PM, NWC.TO - Q3 2024 North West Company Inc Earnings Call

Question: Michael van Aelst - TD Cowen - Analyst : Okay. And is that...

Question: Michael van Aelst - TD Cowen - Analyst : Okay. And is that tied to the Next 100 investments as well?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. And the jump in the interest, did you have a change in your rates or is there anything else that would explain it?

Question: Michael van Aelst - TD Cowen - Analyst : Okay. All right. Thank you.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Thank you. Good morning, guys. Just wanted to follow-up on a couple of things. Just with respect to the Canadian business, do you feel like you have a better visibility into the payments of the drinking water settlements coming through? Or is there still sort of uncertainty around the timing on those payments? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 2:00PM, NWC.TO - Q3 2024 North West Company Inc Earnings Call

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, I see. So is it ¡

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, I see. That's helpful. I guess maybe like dove tailing from that, would you expect sales to accelerate into Q4 based on your commentary in the outlook with respect to kind of some of those payments continuing in Q4?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Stephen MacLeod Okay, okay, that's helpful. Thanks, Dan. And then just with respect to the PFD, higher year over year and that positively impacted the international business. Would you expect that to continue into Q4? Is that typically spent like in the Q3 period?

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Stephen MacLeod Okay. That's great. And then just coming back to the Next 100 plan. I mean, I know you haven't given sort of guidance in the past around what it could mean from an EBITDA perspective or an EBIT perspective. But just wondering if you're able to give a little bit of colour on sort of how you expect once you begin to see the benefits from the Next 100 plan, like how you expect that to impact margins maybe into 2025 or 2026. Or if not today, when you might be able to share those kinds of insights. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 2:00PM, NWC.TO - Q3 2024 North West Company Inc Earnings Call

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's great. Thanks, Dan. I'll hop back in line.

Question: Stephen MacLeod - BMO Capital Markets - Analyst : Okay, that's helpful. Great. Thank you.

Question: Sarah Smellie - The Canadian Press - Analyst : Hi there. My question is for Mr. McConnell. A study from the Toronto Metropolitan University last year found that companies receiving the Nutrition North subsidies were passing on just $0.67 cents on the dollar to their customers, North West Company included. As well, the Nunavut government is investigating whether stores, including those owned by the North West Company, have been hiking prices when federal money from programs like Jordan's Principle rolls in. I wonder, is your company keeping part of the Nutrition North subsidies that it receives? And are your stores hiking prices when government money rolls into the communities they serve?

Question: Sarah Smellie - The Canadian Press - Analyst : But can you answer the question directly? Like are stores hiking prices when this funding rolls in? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 10, 2024 / 2:00PM, NWC.TO - Q3 2024 North West Company Inc Earnings Call

Question: Sarah Smellie - The Canadian Press - Analyst : How do you balance your company's drive to create profits when you're also in a position where you're the often the only place that people in remote indigenous communities can buy food?

Question: Sarah Smellie - The Canadian Press - Analyst : Okay. And what do you say to growing frustration among people in those communities who feel like your prices are increasingly unaffordable?

Question: Sarah Smellie - The Canadian Press - Analyst : Okay. Thank you.