Good morning, everyone, and thank you for that, operator. We are experiencing a bit of -- some headwinds, you could argue today in head office given the major storms that were in the area last night.

I'm not sure if you guys kept up with it, but there were numerous tornadoes and pretty significant winds and rainfall. And as a result, our head office is out of power, so we're -- on the day of the AGM and the conference call.

But nonetheless, the resilient crew is definitely all kicking into action. And we're in the dark right now.

But with technology, we don't expect any further glitches. So with that, I would like to welcome you for the first quarter conference call.

And joining me today of course are John King our Chief Financial Officer and Alexis Cloutier, our VP of Legal and Corporate Secretary. And Alexis is going to start with our disclosure statement.

Thank you Dan. Before we begin today, I remind you that certain information presented may constitute forward-looking statements.

Such statements reflect North West's current expectations, estimates, projections and assumptions. These forward-looking statements are not guarantees of future performance and are subject to certain risks, which could cause actual performance and financial results in the future to vary materially from those contemplated in the forward-looking statements.

Any forward-looking statements are current only as of the date they are made, and the company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise, other than what's required by law. For additional information on these risks, please see North West's annual information form and its MD&A under the heading Risk Factors.

Okay. Thank you, Alexis.

I will start with an overview of our results for the quarter, and then I'm going to wrap things up with some comments on our outlook in the Next 100 program before I then open it up for some questions. Overall, I would say our results for this quarter definitely reflect the resilience of our business and our ability to adapt and deliver performance within a challenging and shifting economic environment.

Consolidated sales decreased 1.5% in the quarter as solid same-store sales gains in our international operations were more than offset by the impact of foreign exchange and lower sales in our Canadian operations from reduced money in market. Our Next 100 work continues to drive gross profit rate improvement through refinements in merchandising assortments, including expanding our private label offering that are delivering value to customers within a rising fuel cost environment.

Expenses decreased 1% due to a $3.8 million asset disposition gain and lower share-based compensation expenses, partially offset by higher staff costs and other inflation-related increases in the expenses. The combined effect of these factors resulted in a 5.4% increase in net earnings in the quarter.

Let me expand on key factors that impacted our performance in the quarter beginning with the sales. We are pleased with the sales performance in our international operations, which delivered a 4.3% increase in same-store sales on top of a 2.8% increase in the first quarter last year.

General merchandise same-store sales led the way with an 8.7% increase on top of a 5.2% increase last year. These sales gains were supported by a solid tourism season in the Caribbean and market share gains in Alaska, including the opening of a second store in Utqiagvik at the end of October last year.

These sales gains were partially offset by the sale of our CUL Chalan Pago store earlier in the quarter, ahead of the expected opening of a new CUL store in Agana, Guam, scheduled for the third quarter of this year. In our Canadian operations, sales decreased 2.2% with same-store sales down 0.9% compared to a solid 4% increase in Q1 last year.

A couple of factors that explain this. First, we discussed in previous quarters there was less money in market this quarter as we lapped the elimination of the Inuit Child First Initiative food voucher program, reduced funding for Jordan's principal programs and lower water settlement payments compared to last year.

General merchandise same-store sales decreased 7.5% as consumers shifted more of their spending on food and reduced discretionary spending amid lower money in market. These factors were partially offset by increased consumer demand from child and care settlement payments which were noncomp to Q1 last year.

That said, the pace of child and care settlement payments distribution has been slower than we anticipated. I'll provide some further comments on settlement payments when I discuss the outlook.

But first, I will briefly comment on consolidated gross profit and expenses. Gross profit increased 0.6% for the quarter due to a 72% basis point increase in rate.

The increase in gross profit rate reflects the positive impact from our Next 100 initiatives, including merchandise assortment assignments refinements, procurement improvements and the expansion of private label products. These changes are providing value to customers, particularly within this increasing fuel and inflationary cost environment.

Changes in sales mix, including lower wholesale food costs were also a factor. These gains were partially offset by higher markdowns and inventory shrink compared to last year due to challenging weather conditions in Northern markets, which contributed to transportation delays.

Expenses decreased 1% in the quarter due to a $3.8 million gain on the sale of our Cost.U.Less Chalan Pago store and lower share-based compensation costs compared to last year. These factors were partially offset by inflationary cost increases and other factors such as high utility costs due to the unseasonably cold weather in our Canadian operations.

The net impact of all these factors resulted in a 5.4% increase in net earnings for the quarter. With that brief overview of the key drivers of our financial performance in the quarter, I'm now going to transition to talk to you a little bit about our outlook and provide a few comments on the Next 100 program.

We continue to expect our Canadian operations to be impacted by an increased consumer demand arising from the First Nations Child in Care benefit settlement payments. But as I mentioned earlier, the ramp-up in the distribution of these settlement payments has been slower than anticipated.

The claims administrator reported that approximately 110,000 claims have been submitted in the Removed Child Class. Based on the payment distribution activity observed to date, individuals in 50 of the 63 impacted communities that we serve have received funds.

However, the number of payments distributed is very low. Based on the activity that we have observed, the sales capture and customer spending patterns are broadly consistent with our expectations.

Overall, we expect the distribution of the Child in Care Settlement payments to continue to 2026 and extend for a number of years based on the requirements for individuals in the Removed Child Class to reach the majority age before payments are issued, combined with the anticipated opening of the application process and distribution of settlement payments for the other 8 classes. However, the timing of these settlement payments is uncertain.

In addition to the Child in Care Settlement payments, we also noted in our report to shareholders that the approval of the agreement on the long-term reform of First Nations Child and Family Services between the government of Canada,, First Nation Chiefs in Ontario, and Nishnawbe Aski Nation will benefit indigenous peoples and communities that the company serves. These benefits will continue -- come directly through programs and indirectly through investments in the infrastructure and local employment.

However, the timing of these benefits is again uncertain. We also continue to monitor macroeconomic conditions, particularly the impacts of higher oil prices and fuel costs, which will result in higher freight costs to deliver merchandise to the stores and increases in fuel-related utility costs.

Later in the quarter, we started to experience fuel surcharges from freight carriers. Due to a longer, more complicated logistic network, the impacts of these fuel increases are more significant when operating in remote northern communities when compared to urban retail.

Higher oil prices are also expected to have a downstream impact on inflation and the cost of products from suppliers. The pressures from high oil prices and fuel-related costs are expected to continue in the near term, although the duration and magnitude remain uncertain.

Regarding the Next 100 program, we remain focused on execution and finding cost efficiencies. This includes the ongoing refinement of our merchandise assortments and procurement strategy with a focus on the expansion of our private label offering.

Additionally, the continued implementation of store-based inventory forecasting, replenishment technology and implementation of a new warehouse management system are expected to improve on-shelf availability, streamline ordering processes for store and warehouse teams, and reduce shrink and markdowns. The Next 100 program is expected to continue to help mitigate some of the external headwinds affecting the business while building capabilities that deliver value to our customers and support a sustainable financial performance for our shareholders.

With that, I'm going to open up the call for any questions.

Hope you guys get your power up and running soon over there. Maybe just to start off, wondering if you could provide a little more detail on the increase in labor costs that you called out in the quarter.

Obviously labor utilization has been an area of focus for you guys with your Next 100 initiatives. So just want to get a bit of an understanding of what was driving that labor inflation in the quarter and to what extent you think you can offset that as we move through the year.

Yes we -- good question, Ty. The good news is we do intend to offset it.

There was definitely the colder weather. Not only was it colder in Northern Canada and with the records amounts of snow, but it was also a record breaker in Alaska as far as the amount of effort that takes just to be able to operate the business in some of the extreme weather conditions.

But there's also some thumb pointing with some of the inflation and just the algorithms that we use and the new tools that we have, we've had some significant savings in our labor efficiency and productivity. And so the gaps that we had and some of the downfalls was our fault, but there was definitely some weather elements that were contributing to it as well.

But the point that you should take away from it is that we expect to get it back in line for the remainder of the year.

Okay. Great.

That's helpful. And then just touching on fuel prices, which you alluded to.

Can you maybe just help us understand the magnitude of the fuel surcharges that you guys have seen so far? And then kind of just help us frame the impact so far to your cost structure and margins.

And then I'm also wondering if you've started to pass along any price in response to that as of today.

Yes, we have started to pass on the -- pass through some of the cost inflation for sure. I would say that obviously coming into the summer season, there won't be as severe impact given the -- from the heating perspective.

Obviously, most of our communities are heated through heating oil and diesel-generated power. So that is definitely not going to be as heavy as it would have been in some of the winter months.

But it's definitely something that we're going to pass through. And it's a TBD as to how long this thing is going to go on for, but that is the plan.

It's going to have to get passed through strategically on to the customers, unfortunately. So we're hoping with some of the support that's been given, I know, onto urban Canada, it obviously is extended into some of the northern communities, but we hope that there'll be some consideration for the significant ripple effect or impact in some of the northern households given the fuel surcharge, as I indicated, has a considerable compounding factor because it doesn't only hit you on the distribution, but it hits you on the everyday living through heating utilities and just the mode of which product gets there, the fuel, jet fuel and the like.

So it has a lot more impact on northern customers than it would on the urban. So we hope the government recognizes that and steps up as they have for urban Canada.

Okay. So just following up on those comments.

What are you sort of seeing in terms of consumer behavior across your markets, I guess, throughout Q1 and so far into Q2? And have you seen any change in response to those kind of higher fuel and oil and heating costs?

Yes, we have. And we've seen the shift in consumer spend away from general merchandise in Canada and over to food, where in the international markets, that's not the case.

So there seems to be more spending capacity in the international markets for the reason that I mentioned. New stores, market share gains, and also typically the higher fuel, as I've talked about, higher fuel costs are typically favorable to Alaska per se, not as much in the Caribbean.

But we are seeing some sales tailwinds in the international division. But in the Canadian division, especially overlapping the tough quarter last year, there were some headwinds there.

But we anticipate now rounding the bend and lapping the strong quarter we had last year and the Inuit Child First Initiative, we expect for our sales to start to -- on somewhat of a different trajectory for the next number of quarters. However, in saying that, some of our plans were also, we anticipated that we would have more benefit payments in market.

And as I indicated earlier, it has been slower than we anticipated. Even the number of markets -- we haven't hit all of our markets with checks as of yet, and the markets that did receive checks, on the most part, it's been very few of them.

So very few of the individuals within the markets to get those checks, like very few. So we're optimistic.

We think that there's some tailwinds. And when they're going to hit, obviously -- we always think we're conservative in these estimates, but we thought that there would have been a lot more money in market at this point.

But nonetheless, it is what it is. But the good news is we're set up for it.

And as I also mentioned, as far as sales drivers, some of the work with the Next 100 and with the Ontario settlement First Nation Chiefs of Ontario -- sorry, and the government of Canada settlement, we expect that there's going to be more activity in the Ontario markets in the near future. We don't know when.

Obviously, we're keeping a close ear to understand what that infrastructure spend is going to be. But we know that when the -- prior to the stop, if you recall, there was some reasonable momentum in markets with spending and improving infrastructure.

And so we expect that, that will continue now that there's a green light for them to commence in Ontario. And then we hope not too long after that, the rest of the regions will also get on track and follow suit.

So short term, yes, definitely, we would have liked to see more sales momentum in the Canadian markets. We have got some good sales momentum in the Alaska markets.

We realized that there was a few challenges with some of the expense controls. We're comfortable that we're going to get that under control for the next number of quarters, especially for the rest of the year.

And we're expecting that we're going to have stronger sales comps in Canada over the next -- for the rest of the year as well. Does that...

Similarly, hope you get your power back soon and hopefully not too much damage for you guys. I just wanted to follow up on a couple of things.

Just with respect to the settlement payments, I mean, obviously you gave a lot of color around sort of how that it was the payments or timing of payments were less than expected in the quarter. Did you see any change as you worked through the quarter?

Did it accelerate or decelerate or pretty stable?

May was really slow, and I think there was some acceleration after May. But what we're summarizing, we think that they're processing these checks once a month is what -- you try to triangulate as much information just like you guys do to see when we can expect more money.

And we haven't really figured out the algorithm yet, but we think that they process them once a month. And as I said there's been 110,000 in it submitted.

And we think -- yes, we don't know when they're going to come, but we think that's probably how they're processing them. And no, we haven't seen a ramp-up.

We did see definitely a drop in May and then a pickup after that. But yes, that's really -- yes, so May had been the down spot, but why that is?

Steve, I have no idea.

Yes, yes. Understood.

Okay, okay. Great.

And then just on the approved agreement between the -- in Ontario, can you give a sense about how many communities of yours that might impact?

Well, we're going to get back to you on that. We did -- I just wanted to make sure I'm accurate on it just because I know last time I mentioned the number of communities impacted with the benefit, I was off by a few.

So let me make sure that I'm on it. I'll respond to you.

I'll get that number to you.

Yes. That's great.

And then maybe just finally, you talked a little bit about the outlook in both the Canadian business and international to a degree as well. Is your view that the positive trends we've seen in international will continue through the balance of the year?

Is there anything on the horizon that makes you think that, that may -- that trajectory might change? And then I guess along those lines, the new store that you're opening in Guam and the one you closed, is there any material top line impact that we should be thinking about for the model?

Well, we've closed a smaller, we called it an express store, and we're opening up, and then we're going to be closing another. So it's a consolidation of 2 into 1.

We're going to be opening up a 55,000 square foot store. So the anticipation in the fourth quarter, we expect to have a nice sales jump at that point.

Yes, I mean, I guess that's probably what I would take it away. Yes, we expect to see a sales increase in the fourth quarter as a result of the opening of this operation.

Okay. And then just in terms of the underlying momentum you're seeing in international, all those trends continue to remain intact with respect to tourism and some of the other positive demand drivers?

Yes, I don't anticipate them not staying into the spot. For everything we know today, as much as the world changes pretty quick, but for what we know today, I would expect that it would continue on for the remainder of the year.

This is Cheryl from TD Cowen. I hope you get your power back soon.

So just to follow up on previous questions, one on the settlement payment. I'm curious if you could help us maybe quantify the impact on sales in Q1, understand that it might not be a lot.

And wonder if you have any insights as to why the payments have been ramping up slower than everyone has anticipated.

I'll answer your second question. So with this idea -- you know what, I really don't know.

Like we've been down this road obviously a lot of time and some of the programs are come quite reasonable in time as far as expected and some are considerably delayed. This is falling into the latter.

We would have thought -- we realistically thought this was going to come fourth quarter last year. I thought that might have been conservative.

I think we indicated to the market maybe a little later, but I really don't know. I mean, I know that this, as I indicated, 110,000 submissions.

I don't think they're as complex as the drinking water settlement applications because there was a pretty significant drag on those as well. But I can't comment really as to why this is extended longer than what we originally anticipated.

But I know it's not a matter of if -- the good news is it's not a matter of if it's coming. It's just a matter of when.

And I don't anticipate -- too long, but it just hasn't -- we haven't seen the traction or the -- we haven't seen the amounts come in that we would like, obviously.

Okay. Understood.

And on the fuel cost, I'm wondering if you're seeing any impact on your international markets in terms of the operating costs and maybe in the Caribbean market as well.

Yes, yes, we definitely have. We have said the same token we've been able to pass those on.

But some of the sales gains, just to let you know, our volumes are up like our market shares are up. And so it's not all inflation, but we have been able to pass on the escalated cost to some of the -- to the customers in the international market.

So yes, costs have been up, and we've been able to pass them on so far.

Okay, that's great to hear. And just one more before I re-queue.

Is there any noticeable change in the consumer behavior because of the higher fuel costs in terms of more people shopping in community versus going out?

Well, the switchover in Canada, particularly, it's moved away from general merchandise purchases and into food. So that would be -- yes, there was an extended winter road season this year in Canada.

So that typically has people out of market longer than usual. So that would have had an impact looking backwards.

But looking forwards, no, we don't see -- I mean, our value offer is competitive, so we don't see money shifting from in-market purchases to out-of-market purchases, if I understood your question correctly.

Okay. Well, thank you operator, and I appreciate the questions, and we'll look forward to speaking to you over in September.