Earnings call transcript: North West Q2 2025 earnings beat forecasts

The North West Company Inc. reported its second-quarter earnings for 2025, surpassing Wall Street expectations with an earnings per share (EPS) of $0.78 compared to the forecasted $0.74, representing a surprise of 5.35%. Revenue also exceeded expectations, coming in at $647 million against the anticipated $640.71 million. Despite these positive results, the company’s stock price fell by 2.32% in the aftermath, closing at $51.20. According to InvestingPro analysis, the company appears undervalued based on its Fair Value metrics, with a solid financial health score of 2.85 (GOOD). The company maintains an attractive 5.65% dividend yield and has raised its dividend for 6 consecutive years.

Key Takeaways

• North West’s EPS exceeded forecasts by 5.35%.
• Revenue beat expectations by $6.29 million.
• Stock price declined by 2.32% after the earnings announcement.
• Same-store sales decreased by 1.1% year-over-year.
• Financial performance impacted by external factors like wildfires and economic conditions.

Company Performance

North West’s overall performance in Q2 2025 was mixed, with consolidated sales remaining flat year-over-year. The company faced a decline in same-store sales by 1.1%, a stark contrast to the 4.3% increase seen in the same period last year. Canadian same-store sales saw a more significant drop of 1.8%. Despite these challenges, net earnings improved by 1.9%, and gross profit dollars saw a slight increase of 0.1%, reflecting effective cost management. InvestingPro data reveals the company’s strong financial foundation, with last twelve months revenue growth of 19.82% and a healthy current ratio of 1.08, indicating sufficient liquidity to meet short-term obligations. Get access to 7 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Financial Highlights

• Revenue: $647 million, up from the forecast of $640.71 million.
• Earnings per share: $0.78, surpassing the expected $0.74.
• Gross profit: Increased by 0.1% year-over-year.
• Expenses: Decreased by 0.1%.

Earnings vs. Forecast

North West’s Q2 2025 earnings per share of $0.78 beat the forecasted $0.74, marking a 5.35% surprise. This is a positive deviation from expectations, although the magnitude of the beat was modest compared to previous quarters, where larger surprises have been observed.

Market Reaction

Despite the earnings beat, North West’s stock price fell by 2.32% post-announcement, closing at $51.20. This decline places the stock closer to its 52-week low of $44.48, indicating investor concerns over the company’s ability to navigate current challenges. The broader market trends and specific economic pressures in regions like Alaska and the South Pacific may have contributed to the bearish sentiment.

Outlook & Guidance

Looking forward, North West anticipates continued challenges due to the impact of wildfires, potential child settlement payments, and macroeconomic pressures. The company is preparing for these potential setbacks and monitoring tariff and inflation impacts closely. The full rollout of its private label products is expected by late October, which could bolster future performance. With a market capitalization of $1.72 billion and a moderate P/E ratio of 12, the company demonstrates resilient fundamentals. Discover detailed valuation metrics and access the comprehensive Pro Research Report, available exclusively on InvestingPro, covering this and 1,400+ other top stocks.

Executive Commentary

CEO Daniel G. McConnell emphasized the company’s focus on meeting customer needs despite external challenges: "We were focused on what we can control, ensuring that we continue to provide the goods and services that meet our customers’ needs." He also noted the cautious spending behavior of consumers: "People are making more critical decisions on how they spend their money."

Risks and Challenges

• Wildfire evacuations affecting community operations and sales.
• Economic downturns in international markets, particularly Alaska.
• Changes in SNAP benefits impacting consumer spending.
• Potential costs associated with child settlement payments.
• Ongoing macroeconomic pressures in the South Pacific.

Q&A

During the earnings call, analysts queried the company’s preparedness for potential settlement payments and the impact of wildfires on future quarters. Executives acknowledged the uncertainty surrounding Jordan’s Principle funding and the slow repatriation of communities affected by wildfires, highlighting the complexity of the current operating environment.

Full transcript - North West Company Inc (NWC) Q2 2025:

Speaker 3: Welcome to The North West Company Inc. second quarter results conference call. I would now like to turn the meeting over to Mr. Daniel G. McConnell, President and Chief Executive Officer. Mr. McConnell, please go ahead.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Thank you. Thank you, and good morning, everyone. Welcome to The North West Company’s second quarter conference call. I’m joined here today by John D. King, our Chief Financial Officer, and Alexis Cloutier, our Vice President Legal and Corporate Secretary. I’m going to start off the meeting by asking Alexis to read our disclosure statement.

Alexis Cloutier, Vice President Legal and Corporate Secretary, The North West Company Inc.: Thank you, Daniel. Before we begin today, I remind you that certain information presented may constitute forward-looking statements. Such statements reflect The North West Company Inc.’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’re 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 The North West Company Inc.’s annual information form and its MD&A under the heading Risk Factors.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: All right, thank you, Alexis. I’ll begin by providing an overview of our results for the quarter, followed by a brief commentary on North Star Air, and wrap up with a few comments on our outlook in the Next 100 program. All right, let’s begin. Overall, I would summarize the quarter this way. It was a flat quarter at the top line, which was negatively impacted by headwinds from community evacuations due to the wildfires and a decrease in child and family services funding for children in our Canadian operations, and a weaker economic environment, particularly in our international operations. With the flat sales performance, there was a bit more torque on the bottom line due to some overall expense savings and a lower effective tax rate, which resulted in a 1.9% increase in net earnings in the quarter compared to last year.

Now, let me expand on the consolidated results, starting with sales. Consolidated sales for the quarter were up slightly compared to last year, but were flat to last year, excluding foreign exchange. Same-store sales were down 1.1% in the quarter compared to a 4.3% increase last year due to the headwinds in our Canadian operations and having to comp very strong sales in the second quarter last year. Canadian same-store sales decreased 1.8% compared to exceptionally strong same-store sales last year of 6.8%. There were two factors that had a significant impact on same-store sales performance. First, obviously, the wildfires we talked about, and this was affecting certain communities that we serve. Second was the decrease in the distribution of funding to individuals from child and family services, including the Jordan’s Principle and Inuit Child First Initiative, or ICFI, programs. Let me unpack these, starting with the wildfires.

There were 16 stores impacted by wildfires during the quarter, with the communities either fully evacuated, in which case our stores were closed, or partially evacuated due to smoke and poor air quality, which resulted in significantly reduced customer traffic. Our thoughts are with those who are impacted, and I want to thank the firefighters, community leaders, and all those working tirelessly to protect residents and ensure their safety. I also want to recognize and thank our store managers and teams who remained in the community to keep stores open and ensure food and supplies are available for emergency personnel and others who remained in the communities. Thankfully, all of our staff are safe, and none of our stores or warehouses were significantly impacted. That said, we did feel the impact on our top line as the evacuations negatively impacted same-store sales.

When excluding stores impacted by wildfire-related evacuations, adjusted Canadian same-store sales increased 1% compared to last year. As an update, the wildfires in Northern Canada have continued into the third quarter, but the impact has moderated in late August. At this time, there are three communities that remain evacuated due to the destruction of hydro transmission lines, which are not expected to be repaired until later in the third quarter, while partially evacuated communities are starting to return. While the impact of the wildfires has moderated, several wildfires are still active, and accordingly, conditions could change. The second factor affecting Canadian sales is the reduction in the distribution of funding to individuals through the Jordan’s Principle and Inuit Child First Initiative programs when compared to last year. We touched on this as part of our outlook discussion in our first quarter call. Let me provide you some further context.

Funding for certain Jordan’s Principle programs in 2025 has decreased to 2024, pending the finalization of an agreement between First Nations, Inuit, and the Government of Canada. This change in funding has negatively impacted a number of Jordan’s Principle programs for individuals in the communities, the community services, and in particular, the ICFI Food Voucher program that started to ramp up in the second quarter last year. The Government of Canada announced that the ICFI program would be extended to March 31, 2026, while Canada and Inuit partners work together on the development of a long-term approach for supporting Inuit children to get greater access to nutritious food.

However, starting in late April 2025, the funding under the ICFI program was limited to individual child-specific claims, which has significantly reduced the amount distributed compared to the ICFI Food Voucher program in 2024, which did provide broad access to nutritious foods for Inuit children. Looking ahead, there is uncertainty on how long this change in funding will last, or if and when the ICFI Food Voucher program that was available in 2024 will resume. Overall, the wildfire community evacuations and changes in child and family services funding were the key factors contributing to a 1.9% decrease in food sales. On a more positive note, general merchandise and other sales increased 5.6% compared to last year, as higher third-party airline cargo and passenger revenue and an increase in pharmacy sales more than offset softer general merchandise same-store sales, which were down 3.5% for the quarter.

All right, let me switch gears and briefly comment on international sales. During the quarter, sales in our international operations decreased 0.8%, as flat same-store sales results were more than offset by lower wholesale sales. Weaker macroeconomic conditions in commercial fishing and tourism-dependent communities and certain Alaskan markets, combined with a reduction in seasonal workers and construction activity, were the main factors impacting sales. Softer economic conditions in the South Pacific were also a factor. As a result, general merchandise sales decreased 11.5% and were down 11.2% on a same-store sales basis compared to last year, as consumers reduced spending on discretionary general merchandise and shifted more of their spending on food, which contributed to a 0.6% increase in food sales. Okay, with that deeper dive on sales, I’ll briefly comment on consolidated gross profit and expenses.

Gross profit dollars were up 0.1% for the quarter, with the gross profit rate flat compared to last year. The positive impacts from our Next 100 work in promotions and category management were offset by changes in sales blend and higher markdowns and inventory shrink. Expenses were down 0.1% for the quarter, or three basis points, as a rate to sales, largely due to lower share-based compensation costs, primarily related to changes in the company’s share price. This decrease was partially offset by investments in higher staff and technology costs to support the Next 100 work, combined with an increase in depreciation and new store expenses. We also incurred $1.7 million in one-time costs related to the execution of our Next 100 program.

These one-time costs were offset by the benefits from our Next 100 initiatives, including more effective promotions, a reduction in print media, and other cost-saving initiatives, which I’ll touch on later. In addition, similar to last quarter, we continue to see store labor productivity gains, which is resulting in lower store staff costs as a percentage of sales. The net impact of all these factors, combined with a lower effective tax rate, resulted in a 1.9% increase in net earnings in the quarter, which is good considering the significant headwinds from wildfires and a decrease in government program funding for children. Before moving on to the outlook, I wanted to briefly comment on our airline operations.

As I highlighted previously, the airline revenues during the quarter were solid in both the cargo and passenger businesses, and consistent with our previous calls, we continue to have high utilization of the cargo and passenger fleet. As noted in our report to shareholders, late in the quarter, we acquired a PC-12 Pilatus aircraft to provide some additional capacity in our scheduled and chartered passenger business and to help maintain our service levels during planned maintenance cycles. I would also like to take a moment to acknowledge the addition of Greg Suretsky, a new member of our Board of Directors, which was announced in early August. Greg brings deep aviation experience and industry knowledge in addition to his C-suite executive and board experience, and I look forward to his contributions as a board member.

Okay, let me now briefly talk about our outlook and provide a few comments on the Next 100 program. Since we have provided commentary on the key factors, we expect the impact on our near and long-term outlook in the report to shareholders, as well as throughout this call. The only other comment I would add is on tariffs, where we continue to see cost increases, but the overall impact to date has not been significant. However, this is a very fluid situation, and there continues to be uncertainty related to the economy and the impact of tariffs on the cost of merchandise and inflation in the countries in which we operate. With respect to the Next 100 program, we remain fully focused on continuing to drive operational excellence and cost efficiencies across our business, while delivering further value for our customers, our employees, and our shareholders throughout the program.

We continue to refine our product assortment and are rolling out our expanded private label offering in our Canadian and international operations. While it is still early in the rollout, the initial feedback from customers has been positive. Similarly, the implementation of store-based inventory forecasting replenishment technology is also underway. This technology is expected to improve on-shelf availability for our customers and streamline merchandise ordering processes for our store teams. Recognizing we still have a lot of work to do, the feedback from our store teams on the process improvements has been positive. We are pleased with the progress and results to date. However, as I said, there’s a lot of work to do as we embed operational excellence in every aspect of our business. To wrap up, we had some external headwinds that impacted our results for this quarter.

We were focused on what we can control, ensuring that we continue to provide the goods and services that meet our customers’ needs and deliver value to our customers, shareholders, and employees through the Next 100 program. With that, I will now open up the call for any questions.

Speaker 3: Thank you. We will now take questions from the telephone line. If you have a question, please press star one on the device’s keypad. You may cancel your question at any time by pressing star two. Again, please press star one at this time if you have a question. There will be a brief pause while the participants register. We thank you for your patience. The first question is from Stephen MacLeod from BMO Capital Markets. Please go ahead.

Stephen MacLeod, Analyst, BMO Capital Markets: Thank you. Good morning, guys. Just a couple of questions here. Just with respect to the outlook and specifically around the lower child and family services funding as it relates to Jordan’s Principle. Just thinking back to the last quarter, I don’t recall you calling this one out. I’m just curious, is this new and/or unexpected? How do you expect it to sort of unfold as you move through the balance of the year and into fiscal 2026?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Yes, it is new to us as far as seeing what it looks like. It’s really uncertain. There are a lot of things still at play, obviously, the budget being one, and just some of the negotiations and discussions going on between, I would say, First Nations, Inuit leaders, and the Canadian government. I would expect there’s going to be some resolution, but at this point, Stephen, for me to tell you when or what it’s going to be, I’m not really clear on what it looks like at this point.

Stephen MacLeod, Analyst, BMO Capital Markets: Right. Okay. Is there any way to quantify what the impact of it might be? If you thought about what kind of growth it gave you up until this point, is there a way to understand what the impact would be to same-store sales growth or anything like that?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: I mean, look, we’ve kind of outlined some of the puts and takes, and I know it’s a tough quarter probably for you guys to forecast, although you guys did pretty well in your sales forecast. I would say that it’s, at this point, I mean, no, because there’s still things that are going on. Some of the infrastructure is, again, slowed down as a result of the Jordan’s Principle dispute with Canada and a majority of the First Nation leaders outside of Ontario. Obviously, as we indicated, some of the Inuit Child First Initiative being scaled back as a result of maybe an overcorrection in how they administer the funds. I think it’s pretty fluid right now, Stephen. I think we’re obviously going to learn more as time goes on here. Right now, it’s really tough for us to forecast that.

Stephen MacLeod, Analyst, BMO Capital Markets: Yeah. No, I understand. Thank you. Maybe just turning to the Next 100 program, in the quarter, did you more than offset the Next 100 costs, or was it a pretty even offset? Maybe the second part of the question is, are you in a position to be able to quantify kind of what, you know, you talked about the annualized incremental EBIT ramping up through this year and next year. Are you able to quantify sort of what that impact could look like?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: I would say a little bit more than offset, Stephen, as far as for your first question. As far as quantifying the forward-looking EBIT, the program is definitely, as I indicated, it’s in its execution mode. There’s a lot of puts and takes, and we’re obviously, I would say, solving some of the opportunities as they come forward. When we do solidify the earnings on a sustainable basis, we’ll definitely attribute some of the growth and the portion of growth that we have experienced to the Next 100 and allow you to kind of forecast that or create a trajectory or put that into your algorithm for a moving forward growth item.

Stephen MacLeod, Analyst, BMO Capital Markets: Okay. Okay. That’s great, Dan. Appreciate it. I’ll get back in line.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Thanks.

Speaker 3: Thank you. The next question is from Ty Collins from CIBC Capital Markets. Please go ahead. I’m sorry, his line just dropped. I will go to the next one, which is Michael Van Aelst from TD Cowen. Please go ahead.

Michael Van Aelst, Analyst, TD Cowen: Thank you. Good morning. I’d like to start off with the $23 billion in child settlement payments that are in the process of being processed and distributed. There was an article that quoted, I think it was the AFN, that said in mid-August the payments were expected the following week to start the following week. When I tried to line that up with what your outlook statement was, it wasn’t, yours wasn’t quite as definitive, let’s call it. Have you seen some of these payments start to come in yet?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Not one. I mean, there’s a bit of a line between their end, I would say, in the administration or the receipt and the approval of some of these and when it gets to market. Right now, Michael, we haven’t seen one. We know they’re coming, obviously. It’s just a matter of time.

Michael Van Aelst, Analyst, TD Cowen: It’s just a matter of time. It’s interesting that they said the payments were starting and in several different places, it was quoted. I guess we’ll have to wait to see on that. Secondly, the water settlement payments, at one point in your press release, it sounds like it was lower this year. In another spot in Canada, you actually say that it was slightly higher. What are you expecting for the back half of the year? I know it’s a crystal ball a little bit, but are you expecting flat water settlement payments, or do you expect it to come down?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Yeah, it was slightly higher. I would say for the forward-looking quarter, we’re projecting flat.

Michael Van Aelst, Analyst, TD Cowen: Okay. When we look at the wildfire impact going into Q3, it sounds like it was still a meaningful issue into mid or late August. At some point, when you get, if you’re down to three communities now or three stores that are impacted, and you have people coming back in, I’d assume there has to be some form of a restocking benefit when they first come back. Do you see the wildfires being a net negative still in Q3?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Yeah, I think they will be, Michael. I mean, at the same time, we say people are starting to migrate back, but it’s not one big swoop. To your point, I think there will be a stock-up shop once people get back to, you know, back to community. I do believe that the fires will be a net negative or a headwind on sales for Q3.

Michael Van Aelst, Analyst, TD Cowen: Okay. Finally, on the gross margin, it was the one area where we were surprised it was a little low. You offset it with better OpEx. On the gross margin side, you talked about markdowns and shrink. I’m wondering, was that a one-time event? I know some of it’s tied to the wildfires. I assume that hit has been taken in Canada. Correct me if I’m wrong.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: No, that’s correct.

Michael Van Aelst, Analyst, TD Cowen: Okay. As far as your international markets, where you talk about markdowns more because of the economic environment in Alaska, parts of Alaska, is that something that you think is just due to the season that you’re in and you’ll adjust and we won’t see those in the coming quarters?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: That’s our intent, absolutely.

Michael Van Aelst, Analyst, TD Cowen: Okay. All right. Perfect. Thank you.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Thanks.

Speaker 3: Thank you. The next question is from Rylan Conrad from RBC Capital Markets. Please go ahead.

Michael Van Aelst, Analyst, TD Cowen: Yeah, thanks very much. Good morning. I guess just to start off, you called out higher third-party airline revenue in the quarter. Is that related in any way to the wildfires, or is that more so the stronger performance with the expanded facility in Thunder Bay?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: The prior for sure. We definitely saw an increase as a result of the wildfires. I would attribute a lot of it to that.

Michael Van Aelst, Analyst, TD Cowen: Okay. Got it. On the private label initiatives, could you just provide a bit of an update there on how the rollout is progressing and maybe just how the initial uptake has been in the stores where that’s now being stocked?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Yeah, definitely. We’re still quite early, but I was in stores over the last month. Like I said, the customers are receptive. The cost and the price differential between the private label and the national brands, I think, is meaningful. I am anticipating that customers are going to take advantage of it. There is going to be a trial period, obviously, as a lot of the products are new to some of the consumers. We have to prove to them that the quality and value is worth it. I definitely anticipate that, given the economics and some of the communities that we serve, it’s going to be a benefit to our consumers. I think it’ll get some good traction over the next number of months. We expect to be in strong operation. I would say our plan is to be up and operating with a full complement in late October.

That is our goal and that’s our plan right now. We’re on a good track to get to that.

Michael Van Aelst, Analyst, TD Cowen: Awesome. That’s helpful. Just on inventories, up quite a bit year over year and sequentially, is there anything to call out there? Related to that, I guess, as this kind of $23 billion settlement, the payments begin to be dispersed. How are you feeling about your ability to meet that demand just from an inventory perspective?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: We’re feeling good. We’re feeling good about our, you know, about our ability to meet that demand for sure. It’s something we’ve put a lot of planning into. We’ve been kind of down this road before. I wouldn’t say that we’ve left any pages unturned as far as just our planning and some of the speculation that we have around when the money is coming and what the built-up demand would be on behalf of our customers. Yes, we’re managing and monitoring our inventory levels. We know that they are high, but we definitely feel that when the money comes, that we’ll be ready.

Michael Van Aelst, Analyst, TD Cowen: Okay. Great. Just the last one from me, I guess. Would be good to get your latest thoughts on the capital allocation with the NTIB utilized this quarter. Was that more opportunistic, or should we kind of expect you to remain active there?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: It was opportunistic. Yeah.

Michael Van Aelst, Analyst, TD Cowen: Okay. Got it. Thank you.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Thanks.

Speaker 3: Thank you. Once again, please press star one on the device’s keypad if you have a question. The next question is from Ty Collins from CIBC Capital Markets. Please go ahead.

Michael Van Aelst, Analyst, TD Cowen: Hey, good morning, guys. Apologies. Good morning. My line got dropped earlier, so apologies if I missed anything. Let me know if any of my questions have already been asked and answered. My first one, just on the Canadian communities that are being repatriated. Can you help us understand, maybe from some of your experience so far, how long it’s taking for those stores to ramp back up to 100% once those communities have had their evacuation orders lifted?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: It can be fairly long, unfortunately. That’s what we’ve experienced so far. It is a bit of a long drive, especially the time of year being the summer. It just hasn’t happened as quickly. I think there’s more things to do, maybe some more distractions and some more opportunities for people to catch up on some of their activities within the urban cities that they’re currently in. It hasn’t happened as quickly as we would like. Put it that way, Ty.

Michael Van Aelst, Analyst, TD Cowen: Okay, great. That’s helpful. In terms of some of the headwinds within Alaska, I know you guys have called out some of the macro headwinds in previous quarters related to the fisheries. It does sound like tourism might have been a bit of an incremental issue now. I just want to understand what changed this quarter compared to previous quarters to drive the deceleration there. Maybe you could speak to how dependent your stores and your communities are on tourism specifically.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: They are on both tourism. The economy overall, they have an impact with fishing, obviously, just given the remoteness. There’s really government, there’s government employees, there’s tourism, fishing, which are the drivers behind the economics of our communities. It is substantial. I mean, the Alaskan economy, I think even seeing other places within the U.S., they’re definitely feeling a pinch, and it’s just trickled on into our operation. Even some of the SNAP decline, I know that’s happened in the past, but people are still feeling it. It’s at a lower baseline rate. We’re comping it off last year, but it just continues to be an issue. You see it in our general merchandise sales as our people are moving their preferences over to food. It’s definitely going to a, call it a less expensive food choice than in the past.

People are making more critical decisions on how they spend their money.

Michael Van Aelst, Analyst, TD Cowen: Right. On tourism, yeah, you alluded to that being an issue throughout the U.S. Do you get the sense that some of the more recent headwinds in Alaska are related to lower tourism from Canada specifically, given some of the noise around tariffs? If that’s the case, would you be inclined to characterize that as a bit more of a transitory issue as that moves into the rearview mirror, hopefully?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: I mean, look, definitely that’s a consideration. We think we don’t know how long that’s going to last. I think you’ve probably heard some of the commentary behind some of the Canadians that are moving their travel from the U.S. to other places. At the same time, I think it’s probably just a macroeconomic impact from, yes, tourism is one of the points, but I think it’s just an overall pinch. Looking at hopefully some of the dollars that are going to be coming back to the state of Alaska through some of the military spend and some of the other programs that are going to be driving a bit of a catalyst behind that economy. We’re optimistic around that. Right now, I think it’s a number of factors that are just having a negative impact on the macroeconomic scene in Alaska. Tourism is definitely one.

The reason, you know, what you identified as the Canadians going over to Alaska is definitely a contributor. I think there’s a lot of factors at play right now and the macroeconomic environment, that is.

Michael Van Aelst, Analyst, TD Cowen: Okay, got it. Just last one for me. I think you, in one of your previous answers, mentioned that SNAP or changes to SNAP has already sort of been a headwind in Alaska. My understanding was that the more recent changes came into effect after this quarter. Are you expecting incremental headwinds from SNAP, or are some of your consumers, you know, sort of pre-positioning for those changes and already dialing back before those decreases actually came into effect?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: I would say probably the latter. I mean, look, people are more nervous about the economy. The fact that the changes are coming into play, some of the commentary around the president’s comments around SNAP, I think that Alaska will be excluded from some of the impacts or changes that are going to be occurring maybe in the lower 48. Yes, I definitely think it’s just some of the pessimistic outlook on the economy is rippling through, just to my previous comment. It all contributes to the macroeconomic picture in Alaska. People are a lot tighter on their pocketbooks, making more frugal decisions, shying away from general merchandise, moving away from some of the, call it, more luxury food, and just more into an essential mindset as far as what they’re procuring for their homes. Did we lose you again, Ty?

Michael Van Aelst, Analyst, TD Cowen: Sorry, I think I’m having technical difficulties all day. I just said thanks for the questions. I appreciate it.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: That’s funny, Ty, because we’re the ones that are remote right now. We’re out in a log, we’re in a log out in a remote community.

Michael Van Aelst, Analyst, TD Cowen: Oh, we got you crystal clear.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Oh, good. Glad to hear it.

Speaker 3: Thank you. The next question is from Michael Van Aelst from TD Cowen. Please go ahead.

Michael Van Aelst, Analyst, TD Cowen: Thanks. Just a couple of quick follow-ups. First of all, on the higher SG&A spending tied to your investment in staff resources and IT to support your Next 100 program initiatives, when do we kind of cycle the higher run rate of spending?

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Q4, Q1? I’d say Q4 is probably more conservative, probably Q1, but I’d say Q4.

Michael Van Aelst, Analyst, TD Cowen: Okay, in other words, you kept spending at a higher level through the first half of, I guess, through the end of last year and then starting into this year.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Correct.

Michael Van Aelst, Analyst, TD Cowen: Okay. The tax rate, John, it’s moved around a little bit. I know you have the global minimum tax, but last year was at just over 25%. Where should we expect it for the full year? I think it’s really, at this point, now that we’re comping on the global minimum tax, and that came in in Q2 last year. Just a reminder that that was a year-to-date true up in Q2 last year. That’s the reason for the tax rate differential in the second quarter. We should be comping on that now heading into the back half of the year. It really comes down to the earnings across the various jurisdictions. Going off of, you’ll come up with your run rate tax rate, but more in line with, I would think, where we ended up last year as an overall blended rate. Somewhere in that range.

I don’t think there should be too much other noise like the global minimum tax rate. It should be more normal course just blend of operations. Okay. Just actually one more question. You mentioned that you purchased another or leased another. Did you lease or purchase the PC-12 Pilatus aircraft? And is this something?

Okay, you purchased it. I think in the past you said you wouldn’t add more capacity unless you’re confident you could fill it.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Correct.

Michael Van Aelst, Analyst, TD Cowen: This doesn’t have to do with just the higher demand during the wildfires or anything like that. You’re actually seeing a higher level of third-party demand, I suppose.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Yeah, that’s correct. This was, you know, contemplated, obviously, and planned and actually executed well before the wildfires.

Michael Van Aelst, Analyst, TD Cowen: Okay, we should expect this to contribute pretty quickly.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: Correct.

Michael Van Aelst, Analyst, TD Cowen: All right. Great. Thank you.

Speaker 3: Thank you. There are no further questions registered at this time. I will turn the call back to Mr. Daniel G. McConnell.

Daniel G. McConnell, President and Chief Executive Officer, The North West Company Inc.: All right. Thank you, operator. Thank you everybody for attending. We’ll look forward to speaking with you for Q3.

Speaker 3: Thank you. The conference is now ended. Please disconnect your lines at this time. We thank you for your time.

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