Ladies and gentlemen, welcome to the 2024 Annual and Special Meeting of Goodfood Market Corp. Please note that the meeting is being recorded. I would like to introduce Jonathan Ferrari, CEO and Chairman of the Board, and Chair of today's meeting. Mr. Ferrari, the floor is yours.
Thank you. Mesdames et Messieurs, bonjour et bienvenue à cette assemblée des actionnaires de Goodfood. Je suis Jonathan Ferrari, président du conseil et chef de la direction de Goodfood, et je suis heureux d'être avec vous aujourd'hui. To provide an equal opportunity for our shareholders to attend the meeting, regardless of their geographic location, the meeting will be held in virtual format. By now, you may all be familiar with the procedure for a virtual meeting. However, please note that the instructions on how to exercise your voting rights or ask questions during the meeting are displayed on your screen for ease of reference. We would like to remind you that the registered shareholders and registered proxy holders are the only persons entitled to vote or to ask questions at the meetings.
We will conduct the votes on all the matters before us by poll using the online platform. The poll will be open for all motions and resolutions at the same time. This will allow you to choose to vote on each motion and resolution immediately, or to wait until the conclusion of discussion prior to casting your vote. Once the discussion on all items or business has been concluded, I will give you a minute to enter your votes and then declare voting closed on all resolutions. If you have already voted by proxy, it is not necessary to vote again. Please note that if you choose to vote again, only your vote cast during the meeting will be counted, and the vote that you submitted by proxy will be revoked.
Registered shareholders and duly appointed proxy holders have the opportunity to ask questions throughout the meeting by selecting the messaging icon on the online platform. Generally, we would ask you to keep your questions for the specific period identified for such purpose at the end of the formal meeting. If questions are asked, we will read the questions aloud so that they may be heard by all of the shareholders, proxy holders, and guests present at the meeting. I now declare the polls open on all resolutions. Laissez-moi vous présenter les personnes qui pourront répondre à vos questions concernant le déroulement de l'assemblée: Neil Cuggy, président et chef des opérations, Roslane Aouameur, chef de la direction financière, Caitlin Rose, associée chez Fasken et secrétaire de Goodfood, ainsi que moi-même.
Before we continue, I want to mention that we have received satisfactory proof that the notice calling this meeting was duly publicized and made available to the shareholders of the company per the notice and access provisions under applicable securities laws. In accordance with our bylaws, I will be acting as chairman, and Ms. Rose will be acting as secretary for the meeting. This meeting will be held in English and in French. To ensure the proper proceeding of the meeting, we have designated in advance Mr. Neil Cuggy to act as proposer and Mr. Ross Aouameur to act as seconder. Please note that both Neil and Ross are shareholders and proxy holders of the company.
Cette année, l'assemblée est considérée comme étant une assemblée extraordinaire, car en outre l'élection des administrateurs de la, et la nomination des auditeurs, les actionnaires sont appelés à se prononcer sur l'adoption d'une résolution ordinaire visant à autoriser les options et les unités d'actions restreintes non attribuées aux termes des régimes de rémunération à base de titres de la Société et la modification des statuts de la Société en ce qui concerne la demande de certification B Corp. Conformément aux pouvoirs qui me sont conférés par les règlements administratifs généraux de la Société, je nomme Madame Kalpana Nadkarni et Monsieur Julien Lavallière, de Fiducie TSX, comme scrutateurs de l'assemblée.
Les scrutateurs nous ont informés que nous avons obtenu le quorum, étant donné qu'au moins deux actionnaires qui détiennent au moins 25% des droits de vote rattachés aux actions donnant le droit de voter, sont présents ou représentés par procuration. En conséquence, je déclare la présente assemblée régulièrement constituée aux fins de délibérer sur les points à l'ordre du jour. Nous avons l'intention de traiter en premier lieu des aspects juridiques et techniques de l'ordre du jour. Ensuite, nous vous présenterons les activités et les résultats financiers de la Société pour l'exercice terminé le 2 septembre 2023 et le premier trimestre de l'exercice 2024, terminé le 2 décembre 2023. Once the formal part of the meeting is completed, we will proceed to the presentation of Goodfood's business and financial results. A question-and-answer period with management will follow.
Any person wishing to ask a question should, at the appropriate time during the question-and-answer period, submit their questions through the online platform. La réception des états financiers audités de la Société pour l'exercice terminé le 2 septembre 2023 est le prochain point à l'ordre du jour. Les états financiers, y compris le rapport des auditeurs ainsi que le rapport annuel, ont déjà été transmis aux actionnaires de la Société dans le délai prescrit. Je demanderais à la secrétaire de noter le dépôt des états financiers pour les fins du procès-verbal. L'élection des administrateurs est le prochain point à l'ordre du jour. Comme il est indiqué dans la circulaire de sollicitation de procuration par la direction, la direction a proposé 5 candidats à titre d'administrateurs de la société.
Le mandat de tous les administrateurs se terminera à la fin de la prochaine assemblée annuelle des actionnaires de Goodfood ou lors de l'élection ou la nomination de leur successeur.
My name is Neil Cuggy and I move that the following five persons be nominated as directors of the company: Neil Cuggy, Jonathan Ferrari, Donald Olds, Terry Yanofsky, John Khabbaz.
My name is Roslane Aouameur, and I second the motion.
Ms. Rose has confirmed that, to her knowledge, the company has not received any written notice from a shareholder nominating another individual for election to the board of directors within the period prescribed by applicable laws and the company's bylaws. Comme il n'y a pas d'autres candidats en nomination, les actionnaires voteront sur la motion visant à élire les candidats proposés par la direction à titre d'administrateur de la société. Je vous invite maintenant à voter sur l'élection des administrateurs. Vous devez exercer votre droit de vote pour chacun des cinq candidats. Nous vous rappelons qu'il est possible de voter pour toutes les propositions à l'ordre du jour, et ce, jusqu'à la clôture du vote, après le dernier item à l'ordre du jour.
The next item on the agenda is the appointment of the auditors for the financial year ending on September 7, 2024, and the fixing of their remuneration. I would ask a motion for the appointment of the auditors.
My name is Neil Cuggy, and I move that KPMG LLP be appointed auditors of the company for the financial year ending September 7, 2024, and that their remuneration be determined by the board of directors.
My name is Roslane Aouameur, and I second the motion.
I now invite you to vote on the appointment of the auditors. The next item on the agenda relates to approving and authorizing the unallocated awards pursuant to Goodfood's security-based compensation plans. As explained in the circular for this meeting, given that the company's security-based compensation plans do not have a fixed maximum aggregate of securities issuable thereunder, the rules of the Toronto Stock Exchange require that all unallocated options, rights, or other entitlements under our security-based compensation arrangements be approved by shareholders every three years. The text of the resolution appears in Annex C of the management proxy circular of this meeting. To be adopted, this resolution requires the approval of the majority of the votes cast by the shareholders attending the meeting or represented by proxy. I would ask for a proposer and a seconder.
My name is Neil Cuggy, and I move that the ordinary resolution approving and authorizing the unallocated awards pursuant to the company's security-based compensation plans until January 16, 2027, the whole as set forth in Annex C of the Management Proxy Circular, be hereby approved.
My name is Roslane Aouameur, and I second the motion.
I now invite you to vote on the resolution. The next item on the agenda is a special resolution authorizing and approving an amendment to Goodfood's articles in connection with the company's application for B Corp certification. As explained in more detail in the circular for this meeting, in order to obtain the B Corp certification from B Lab, the company is required to make certain amendments to its articles related to the interest of stakeholders to be taken into account in determining the best interest of the company. As explained in the circular for this meeting, in order to obtain the B Corp certification from B Lab, the company must integrate commitments to stakeholders into its articles.
The text of the resolution appears in Annex D of the management proxy circular of this meeting, and a copy of the draft articles of amendment can be found in Schedule A to the resolution. To be adopted, this resolution requires the approval by not less than two-thirds of the votes cast by the shareholders attending the meeting or represented by proxy. I would ask for a proposer and a seconder.
My name is Neil Cuggy, and I move that the special resolution approving and authorizing an amendment to the company's articles with respect to stakeholder interests in relation to the company's application for B Corp certification, the whole as set forth in Annex D of the management proxy circular, be hereby approved.
My name is Roslane Aouameur, and I second the motion.
I now invite you to vote on the resolution. Since we have covered all the topics on the meeting agenda, we will now pause for one minute in order to allow registered shareholders and proxy holders to vote if they have not already done so... I remind you that if you have already voted by proxy, it is not necessary to vote again. The voting period is now closed for all the topics on the meeting agenda. Les scrutateurs nous ont remis leur rapport préliminaire, et je déclare donc que une majorité des votes exprimés par les actionnaires est en faveur de l'élection au poste d'administrateur de chacun de Neil Cuggy, Jonathan Ferrari, Donald Olds, Terry Yanofsky et John Khabbaz. Une majorité des votes exprimés par les actionnaires est en faveur de la nomination de KPMG à titre d'auditeur de la société.
Une majorité des votes exprimés par les actionnaires est en faveur de la résolution ordinaire, autorisant les options et les unités d'actions restreintes non attribuées aux termes des régimes de rémunération à base de titres de la société, et une majorité aux deux tiers au moins des votes exprimés par les actionnaires est en faveur de la résolution spéciale, autorisant et approuvant la modification des statuts de la société en ce qui concerne les intérêts des parties prenantes dans le cadre de la demande de certification B Corp de la société. Le résultat final des votes pour chacune de ces propositions sera déposé sur SEDAR dès que disponible. As we have completed the business of the meeting, I will ask for a motion to close the formal portion of the meeting before proceeding to a question period and the management presentation.
My name is Neil Cuggy, and I move that the meeting be closed.
My name is Roslane Aouameur, and I second the motion.
I now declare the meeting terminated. We are now opening the question period. I would like to remind you that only shareholders or proxy holders are entitled to ask questions, and that the instructions for asking a question appear on your screen. We will take a short break to allow you to ask your questions, if any, by following the instructions that appear on your screen. As there are no further questions, we will now proceed to the management presentation. Over the past year, we have spent time thinking back to our purpose and the value proposition Goodfood is looking to provide Canadians.
Our mission is to spark joy by making, cooking, and eating a fun, exciting, and enjoyable experience, to help Canadians live longer by achieving a balanced and healthy diet, and to enable our community to enjoy a healthier planet by offering planet-conscious products that are sourced, packaged, and delivered sustainably. As we embark on the year of Goodf ood's 10th anniversary, we are very motivated to continue to execute towards that ambitious purpose. We will look forward to a laser focus on our meal kit experience and align our teams towards building Canada's most loved digital-first food brand. We will now move to slide 10 to review recent strategic developments. We're pleased to have built on our profitability momentum by delivering consecutive quarters of positive EBITDA and record EBITDA for the full fiscal year.
This performance demonstrates our commitment to build on our improved financial performance, to generate growing profitability and cash flows. Operational efficiencies our teams have worked hard to gain, in addition to continuous pricing optimizations, drove robust gross margin with gross margin stable year-over-year on a lower net sales basis. Combined with unwavering SG&A discipline, the improved gross margin has led to strong EBITDA performance. The efficiencies our team have been laser-focused on achieving are key to Goodfood's profitable growth. Both in recent months and into the future, we continue to build on the momentum we've created by consistently strengthening our customer value proposition to increase the stickiness of our customer base and unlock new total addressable market. We have increased and continue to increase our assortment of delicious recipes.
We are investing in the user experience on our digital platforms, while doubling down on sustainability and building inspiring partnerships with Goodfood ambassadors and brand partners. Overall, we are lean, mean, and disciplined, which puts us in a strong position to continue delivering EBITDA growth, and look forward to accelerating that growth and profitability. I will now move to slide 11 to review our outlook. In recent quarters, we shared with you the customer feedback that is informing our roadmap and execution to enhance our customer value proposition every day. This feedback has been instrumental in creating a stickier and more engaged fan base, as well as helping to carefully grow our addressable markets, both within our direct-to-consumer meal kit market and within adjacent categories to increasingly serve the needs of new customer segments. Overall, home cooking remains the most popular way Canadians eat dinner.
In the current challenging economic climate, with the potential for a recession and discretionary income spending correction, home cooking is becoming even stickier. Our customers, families, and busy professionals are increasingly focused on preparing and eating healthy, nutritious, and tasty meals at home with high-quality ingredients that can be prepared quickly. Armed with that feedback, we continue to broaden our assortment of healthy recipes that provide low-carb options, and with the expanded customization options we launched, we have given our customers the option to choose different proteins for various recipes or even customize the size of protein they can order. We also continue to partner with key brand ambassadors to align our customers' wants and values with our meals and brands. After a successful partnership with Montreal Canadiens' captain Nick Suzuki, we have also partnered with Sarah Nurse, pro hockey Olympic medalist, with more exciting partnerships to come.
In addition to answering our members' call for more health-focused options, we have also taken in stride customers' desire for experiences that spark joy while offering an alternative to pricey restaurant and takeout options. For example, we have introduced a rotation of delicious value meals starting at CAD 10.99 per serving that combine our leading culinary creativity with our farm-fresh ingredients and unique sourcing abilities to provide a delicious meal experience at an attractive price. We also started selling 4-serving family-style recipes on our 2-serving plans, which can be used for entertaining or weekly meal planning and provide great value to our customers. These family-style recipes are a great way for us to continue increasing our average basket size.
As Canadians increasingly eat at home, we're continuing to find new ways to spark joy cooking at home, building on the momentum of our curated, unique partnerships with some of the best restaurants in Canada, bringing local flavors from Alo in Toronto and St. Lawrence in Vancouver, with more exciting collaborations in the pipeline that are sure to delight our fans. Finally, Canadians are prioritizing planet-friendly options whenever possible. Our members have long enjoyed the perfectly portioned ingredients that nearly eliminate food waste and our farm-to-table supply chain that removes intermediaries and additional costs from meal planning.
After building on that, offsetting carbon emissions on Goodfood deliveries, and by introducing packaging innovations that have helped us remove the equivalent of 2.4 million plastic bags annually from our deliveries, we are taking it up a notch by entering the process of applying for B Corp certification, a rigorous and credible certification that will further highlight our sustainability efforts across many areas of Goodfood. We have already started seeing results from the initiatives we have mentioned today and in previous quarters. For example, our customers are ordering bigger baskets containing more portions of our delicious recipes, with basket sizes increasing double-digit percentage points year-over-year, further supported by our customers' order rate, also displaying a significant increase compared to the same period last year. Overall, we are lean, mean, and consistently growing our profitability.
We are also remaining focused on consistently growing our customer value proposition, and with continued SG&A and operational discipline, we are in a strong position to continue growing our free cash flow at an attractive pace in fiscal 2024 and beyond. On that note, I will pass it on to Ross to go over slide 12 and briefly review our financial performance for this past fiscal year and most recent quarter.
... Thank you, John. For fiscal 2023, we are pleased to report our largest ever Adjusted EBITDA performance of CAD 5 million, or a margin of 3%, compared to an EBITDA loss of CAD 41 million or negative margin of 51.5% last year. This successful turnaround and record performance stem from the operational efficiency gains, as well as our focus on consistently improving unit economics over time through enhancements to customer value proposition. This strong performance is underpinned by a structurally strong gross margin, which also hit an annual record of 39%. On the SG&A side, we have reduced annual non-marketing SG&A by CAD 34 million this year, enabling a cost structure that can consistently drive growth in our profitability metrics.
Our marketing efficiency initiatives have also begun bearing fruit, as our customer acquisition cost has decreased by double-digit percentage points compared to the same period last year and to the early quarters of last fiscal year. These levels of profitability have translated into a CAD 87 million improvement in adjusted free cash flows, well on our way to consistently generating and growing positive free cash flows. Fiscal 2023's financial performance provided the ideal launchpad for our plan to generate profitable growth for years to come and generate significant shareholder value. As such, we used 2023's momentum to generate positive Adjusted EBITDA for a fourth quarter in a row in Q1 of 2024, driving LTM Adjusted EBITDA to CAD 8.5 million.
We also generated strong positive cash flows from operations in the first quarter of fiscal 2024, leading to adjusted free cash flow of CAD 4 million in the first quarter. Overall, we are energized with consistently strong results that have driven record profitability and cash flow metrics continuously improving quarter after quarter. On this note, I will pass it back to John.
Mesdames et Messieurs, je souhaite vous remercier à nouveau de vous être joint à nous aujourd'hui pour cette assemblée virtuelle de Goodfood, et j'ai déjà hâte de vous retrouver à l'assemblée annuelle des actionnaires l'an prochain.
Thank you for attending today's meeting. You may now disconnect.