AGM 2020

Jan 13, 2021

Slides

The health and safety of our employees, directors, clients, partners and shareholders are our highest priorities in these uncertain times. Given the current COVID-nineteen pandemic And in order to comply with the social distancing measures in place, we have decided to hold our 2020 meeting of shareholders in a virtual format only. It is the first time that Good Food holds a virtual meeting, which means that the procedure will be different from previous years. The instructions on how to exercise your voting rights or ask questions during the meeting are currently displayed on your welcome screen. We would like to remind you that registered shareholders and registered proxy holders are the only persons entitled to vote or ask questions at the meeting. Questions will be answered at the end of the meeting during the question and answer period. 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 discussion on all items of business has 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 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 shareholders, proxy holders and guests present at the meeting. I now declare the polls open on all resolutions. Philippe Adar, Chef Deladereaction Pinanciere Caitlin Rose, Secretaire and Sikem Moaman. Moving to Slide 5, I want to mention that we have received satisfactory proof that the notice calling this meeting was duly publicized and sent to the shareholders of the corporation. 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 Cagui to act as proposer and Mr. Philip Adam to act as seconder. Please note that both Mr. Caughey and Mr. Adam our shareholders of the corporation. Once the formal part of the meeting is terminated, we will proceed to the presentation of Good Food's business and financial results and a question and answer period with management. Any registered shareholders logged in with a control number wishing to ask A question should, at the appropriate time during the question and answer period, submit their questions through the online platform. My name is Neil Cughey, and I move that the following 6 persons be nominated as Directors of the company: Neil Cughey, Jonathan Ferreri, Hamnet Hill, Donald Olds, Francois Dimard, Terry Yanovski. My name is Philip Adam and I second the motion. Ms. Rose has confirmed that to her knowledge, the company has received no written notice from a shareholder nominating another individual for election to the Board of Directors within the period prescribed by the bylaws. Moving to Slide 7. The next item on the agenda is the appointment of the auditors for the financial year ending on August 31, 2021, and the fixing of their remuneration. I would ask a motion for the appointment of the auditors. My name is Neil Cugge, and I move that KPMG LLP be appointed auditors of the corporation for the financial year ending August 31, 2021, And that their remuneration be determined by the Board of Directors. My name is Philippe Adam, and I take on that 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 options pursuant to Good Food Stock Option Plan and ratifying the grant of options made by the company since June 1, 2020, pursuant to the Stock Option Plan. As explained in the circular for this meeting, as the Stock Option Plan does not have a fixed maximum aggregate of securities issuable thereunder. The rules of the Toronto Stock Exchange require that the unallocated stock options under our stock option plan be approved by shareholders every 3 years. The shareholder approval for the unallocated options under the stock option plan would have been required by June 1, 2020, as the stock option plan was adopted on June 1, 2017. Given that this approval is only being sought at the meeting, the options granted by our Board of Directors between June 1, 2020 and the date of the meeting must be ratified by shareholders. The text of the resolution appears in Annex C of the 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 Caughey, and I move that the ordinary resolution approving and the unallocated options pursuant to the company's Stock Option Plan and ratifying the grant of options made by the company Since June 1, 2020, pursuant to the Stock Option Plan, the whole has set forth an Annex C of the Circular be hereby approved. My name is Philippe Adam, and I second that motion. Okay. I now vote I now invite you to vote on the resolution. The next item on the agenda relates to approving and authorizing the adoption of the company's restricted share unit plan and ratifying the grant of restricted share units made by the company on September 29, 2020. As those granted subsequent to the date of the Circular being grants made on November 20, 2020 and January 11, 2021, which amount to 214,325 restricted share units pursuant to the restricted share unit plan. As explained in the circular for this meeting, our Board approved the adoption of an RSU plan allowing for the grant of restricted shared units to eligible employees and directors of the company. Our Board approved this plan to ensure that the company is able to attract and retain personnel who are in a position to make a significant contribution to the growth and successful operation of the company. The text of the resolution appears in Annex D of the 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 proposal and a seconder. My name is Neil Cugge, and I move that the ordinary resolution approving and authorizing the adoption of the the company's restricted share unit plan and ratifying the grant of restricted share units made by the company on September 29, 2020 pursuant to the restricted share unit plan, the whole as set forth in Annex D and the Circular be hereby approved. My name is Philip Adam, and I second that motion. I now invite you to vote on the resolution. Since we have covered all of the topics on the meeting agenda, we will now take a short break 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 of the topics on the meeting agenda. This now concludes the formal business of this Annual General Meeting. I invite you to read the caution on forward looking statements. Turning to Slide 10, I want to highlight a few key achievements. First, we continue to deliver strong growth across the board, which is the keystone of our overall business and record financial performance. By building and positioning Good Food to respond to Canadian strong and sustained demand for online grocery and meal solutions shopping, we have been able to not only significantly increase our subscriber base year over year, but also provide customers with an offering that allowed them to purchase bigger baskets as evidenced by the revenue growth being nearly double the subscriber growth this quarter. 2nd, this strong performance has been and continues to be enabled by our obsession with member happiness. This quarter, we continued to execute on our strategy to consistently enhance our members' experience by launching and increasing the availability of our unlimited same day delivery service, Good Food Wow, starting with the Greater Montreal area and now rolling it out to many more Canadians coast to coast by the end of the year. We have also continued to bolster our product offering, which now counts over 500 meal kit ready to eat and grocery item products. We continue to add new items every week as we work towards our goal of having 4,000 items to satisfy all of the grocery needs of our subscribers. 3rd, Our team continues to execute at a very high level on all fronts to drive operational excellence from fresh product sourcing all the way to customers' doors. We have increased the penetration of our Good Courier fleet, which now delivers well over half of our volume. Combined with lower packaging costs and investments in technology and automation, which continue to drive efficient operational savings. Our gross margin now stands at 32.3% for the quarter, a grocery industry leading level in Canada. Overall, all these accomplishments have led to an increase in the number of grocery products we deliver as well as the profitability per subscriber we generate. On Slide 13, I want to highlight the key strategic components driving our everyday execution. We call this the good food flywheel, which is a great illustration of our strategy to grow long term shareholder value and to create a strong competitive advantage for good food in the online grocery business. We have been working hard to build on all of the different elements which drive and accelerate our flywheel's pace and momentum. Our strategy is simple. We continuously grow our subscriber base and gain market share by ensuring a world class experience for our members, by increasing selection and flexibility and by investing in automation and growing subscriber density. We use leading edge technology as a powerful lever to improve our customer experience and operational capabilities. This allows us to maximize and optimize the customer experience and value proposition for our subscribers, while increasing our profitability per subscriber, which in turn allows us to continue to invest and improve our value proposition and to attract more subscribers. And so rolls the wheel and our passion to provide our subscribers with the best possible good food experience while maximizing long term shareholder value for you. Moving to Slide 14 to introduce Neil, who will now present some key operational developments, many of which are key to driving the good food flywheel. Thank you, Jonathan. We can proceed to Slide 15. Our operational footprint has continued to grow this year. We now count 7 purpose built facilities amounting to 589,000 square feet capacity across the country. Our footprint contains a mix of larger and smaller fulfillment centers built to optimize our operations and our fulfillment capacity. Our flagship Toronto facility, which is under construction, will be our largest and most automated yet and will serve as the model for future facilities across the country. On Slide 16, you can see how our footprint has helped us provide a better and fresher product to our customers, while also significantly improving our cost structure. In addition, we have been able to demonstrate very strong operational execution that has led to significant margin expansion. While we have kept our food costs constant, giving More to our subscribers to invest in our value proposition, we have invested in automation and technology, gained scale and packaging and developed initiatives like Good Courier to improve our shipping costs. These initiatives were executed flawlessly and have generated 14 percentage points in gross margin expansion since 2018, leading to a gross margin of 32.2% in our last quarter, among the best in the Canadian grocery landscape. I will now move to Slide 17. Increasing the value proposition to our customers is at the core of what we do. With that in mind, we have developed and launched Good Food Wow! An unlimited same day delivery service. As Canadians increasingly look to e commerce solutions to fill their Need for groceries. We have given them the ability to receive their groceries quickly, choose from a high quality and always increasing product offering and to do so at a price discount to other national brands. In addition, this initiative has allowed us to increase Our use of sustainable packaging, a key value for our customers. We expect Good Food Wow! To radically change how our Current and future members complete their grocery and meal shopping, which met us flexibility and delivery to their doorstep. On Slide 18, you can see Good Courier has been a catalyst in our ability to deliver better value to our customers and shareholders. It has allowed us to give better customer experience, achieve same day delivery and support our strong growth as Good Courier now delivers over 50% of our volume. In addition, it has significantly reduced our delivery costs, improving profitability meaningfully. Finally, on Page 19, we are committed to our green vision. Over the past year, we have launched and expanded our reusable delivery box program, launch sustainable packaging such as paper bags on same day deliveries or plant based packaging for our ready to eat meals. We are committed to reducing the plastic we use inside the box by 50% and are on track to achieve this goal. Moving to Slide 20, I will now turn it over to Philippe to go over our recent Financial performance. Thank you, Neil. We are now opening the question period. May I remind you that Mr. Neil Cugge, President and Chief Operating Officer Mr. Philip Adam, Chief Financial Officer and Ms. Caitlin Rose, Corporate Secretary and myself are available to answer your questions. I'd like to remind you that only shareholders or proxy holders are entitled to ask questions and that the instructions for asking a question As there are no further questions and we have completed the business of the meeting, I will now ask for a motion to close the meeting. My name is Neil Caughey, and I move that the meeting be closed. My name is Philippe Adam, and I second that motion. I now declare the meeting terminated.