Good morning, ladies and gentlemen, and welcome to the Metro Inc. 2022 fourth quarter results conference call. At this time, all lines are listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on November 16, 2022. I would now like to turn the conference over to Sharon Kadoche, Manager, Investor Relations and Treasury. Please go ahead.
Thank you, Julie, and good morning, everyone. Thank you for joining us today. Our comments will focus on the financial results of our fourth quarter, which ended on September 24th. With me today is Mr. Eric La Flèche, President and CEO, and François Thibault, Executive VP and CFO. During the call, we will present our fourth quarter results and comment on its highlights. We'll then be happy to take your questions. Before we begin, I would like to remind you that we will use in today's discussion different statements that could be construed as forward-looking information. In general, any statement which does not constitute a historical fact may be deemed as a forward-looking statement. Expressions such as expect, intend, are confident that, will, and other similar expressions are generally indicative of forward-looking statements.
The forward-looking statements are based upon certain assumptions regarding the Canadian food and pharmaceutical industries, the general economy, and our annual budget, as well as our 2022, 2023 action plan. These forward-looking statements do not provide any guarantees as to the future performance of the company and are subject to potential risks, known and unknown, as well as uncertainties that could cause the outcome to differ materially. A description of these risks, which could have an impact on these statements, could be found under the Risk Management section of our 2021 annual report. As with the preceding risks, the COVID-19 pandemic constitutes a risk that could have an impact on the business, operations, projects, synergies, and performance of the company. We believe these statements to be reasonable and pertinent at this time and represent our expectations.
The company does not intend to update any forward-looking information except as required by applicable law. I will now turn the call over to François.
Thank you, Sharon, and good morning, everyone. Before I begin the review of the quarter, I wanna highlight a few changes we made in the MD&A and the financial statements. The MD&A reflects the new requirements with respect to non-GAAP and other financial measures, and you'll see additional text to that effect in pages 10 and 11 of the interim report and page 5 of the press release. We also took the opportunity to provide more details in the consolidated statements of income. Cost of goods sold, gross profit, and operating expenses, which were previously disclosed in a note, additional information on nature of earnings, are now presented separately in the consolidated statements of income. Gains or losses from the disposal of assets have been reclassified from operating expenses and are presented on a separate line in the consolidated statements of income.
Impairment charges are also reclassified from operating expenses, and if important, are presented separately in the income statement or otherwise will be part of the depreciation expense. Turning to the quarter, total sales were CAD 4.4 billion, an increase of 8.3% over last year, and food same-store sales increased by a strong 8% for the quarter, while pharma same-store sales were up 7.4%. Our gross margins stood at 20.4% of sales, stable versus the same quarter last year. For the year, food gross margin came down slightly, but was compensated by stronger margins in our pharmacy division, resulting in stable gross margin overall for a fiscal 2022.
During the quarter, we recorded CAD 70.1 million of impairments of assets, net of reversals, including CAD 60 million resulting from our decision to have Jean Coutu withdraw from the Air Miles loyalty program in the spring of 2023. This impairment of CAD 60 million represents the entire carrying value of the Jean Coutu loyalty program asset and is an adjusting item for net earnings and EPS. The remaining CAD 10.1 million represents mostly impairment of right-of-use assets. Furthermore, we recorded CAD 11.2 million of gains on the disposal of assets, mostly real estate. Operating expenses stood at CAD 476.1 million or 10.7% of sales versus 10.5% of sales in the corresponding quarter last year. The increase is due mainly to inflationary pressures on costs, namely labor, transportation, energy, and supplies.
EBITDA for the quarter totaled CAD 441.4 million, up 9.4% year- over- year, and as a percentage of sales, EBITDA was 10% versus 9.9% last year. Excluding the gains on sale of assets of CAD 11.2 million this quarter and the small one last year, EBITDA grew 7% and represented 9.7% of sales versus 9.8% last year. Adjusted net earnings were CAD 219.4 million compared to CAD 206.6 million last year, an increase of 9.4%, and our adjusted net earnings per share amounted to CAD 0.92, up 13.6% versus last year's adjusted EPS of CAD 0.81.
At the close of fiscal 2022, capital expenditures amounted to CAD 621 million, an increase of CAD 22 million versus last year. For 2023, we are planning to invest a record level of CapEx of about CAD 800 million, resulting mainly from our ongoing investments in the modernization of our supply chain in both provinces. On the retail side, we opened 5 new stores this year, including one conversion. We also relocated a Metro store and carried out major renovations in 17 stores, representing a net increase of 141,000 sq ft or 0.7% of our food retail network. Turning to in-store technology, we ended the year with 454 stores equipped with self-checkouts, and we plan on adding another 60 in the coming year.
As for electronic shelf labels, we ended the year with 243 stores, and we plan on adding another 85 this year. We completed our annual normal course issuer bid program on November 8, repurchasing a total of 7 million shares for a total consideration of CAD 482 million, representing an average share price of CAD 68.81. In closing, the company announced its support for the Task Force on Climate-related Financial Disclosures. We aim to increase the resilience of our business to address physical and transition climate-related risks by continuing to integrate climate risk and opportunities into our governance, strategy, risk management, and metrics and targets, as recommended by the TCFD. We're convinced that a combined approach to climate change mitigation and resilience will be beneficial to all our stakeholders. That's it for me. I'll turn it over to Eric.
Thank you, François, and good morning, everyone. Our 2022 fiscal year ended with a solid performance in the fourth quarter as our teams worked very hard to offer products at competitive prices in the current high inflation environment, which we know is difficult for many consumers. Our diversified business model allowed us to maintain stable gross margins in the quarter while delivering good value to our customers, as reflected in overall tonnage growth and market share gains in the quarter, driven mainly by our discount banners. Total sales grew by 8.3%, as François said, and adjusted EPS by 13.6%. Food same-store sales were up 8% in the quarter, compared to a decrease of 2.9% for the same quarter last year, when most pandemic restrictions were lifted. The three-year stack is 15.4% or 4.9% CAGR.
Our internal food basket inflation accelerated to 10%, up from 8.5% in the prior quarter, as the industry continues to experience unprecedented increases in cost of goods sold. Traffic was up while the average basket remained flat. Promotional penetration continues to increase as consumers look for the best value. Two weeks ago, we opened our 100th Super C store in Saint-Jérôme, north of Montreal, a significant milestone for us, and the store is off to a great start. Pharmacy comparable sales were up 7.4% with a 6.4% increase in prescription drugs, helped by COVID-related activities such as the distribution of rapid tests. Front store sales were up 9.9%, supported by strong growth in over-the-counter medications, cosmetics, and seasonal merchandise.
Turning to online, sales were up 33% for the quarter, driven by added capacity through our partnerships as well as the expansion of Click and Collect. We started to deploy Click and Collect service at our Super C stores in Quebec, and we plan on rolling out the service to most of those stores by the end of this fiscal year. On September 27th, we announced the launch of Moi, an evolution of metro&moi, our loyalty program in the province of Quebec. Moi will capitalize on the strength and complementary nature of our food and pharmacy networks, where more than 95% of Quebec households already shop. Our new loyalty program will also include a co-branded Visa card with RBC, and we are very excited about this new partnership.
The program will provide customers more opportunities to earn points and integrated digital experience and enhanced personalization in close to 900 locations across our Metro, Super C, Jean Coutu, Brunet, and Première Moisson banners in Quebec. We look forward to launching the program next spring. Turning to our supply chain investments, we are pleased with the productivity gains at our new frozen distribution center in Toronto. The additional capacity of the new freezer has also enabled a reduction in direct-to-store deliveries from certain vendors, resulting in efficiency gains and a better in-stock position at store level. Work on the new fully automated fresh and frozen facility in Terrebonne is advancing well, and the startup is scheduled before the end of the 2023 fiscal year.
Construction of the second phase of our fresh distribution center in Toronto is being completed as we speak, and the installation of the automation equipment will begin in January. The operation start date has been pushed by six months to the spring of 2024. Looking forward, we continue to face market uncertainties, labor shortages, and a higher than normal cost inflation. We expect food inflation to moderate in the new year as we will start to cycle the high inflation of 2022, but the inflation outlook remains uncertain as we continue to receive many vendor requests for price increases in February. That said, we are confident that our dedicated teams, multiple banners, strong private label offering, effective weekly promotions, and loyalty programs position us well to meet the needs of our customers as we navigate through this period of turbulence.
Finally, next month, Metro will celebrate its seventy-fifth anniversary. We are proud of our roots, our success over the long term, and our renewed purpose to nourish the health and well-being of the communities we serve. Thank you, and we'll be happy to take your questions.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. If you would like to withdraw your question, please press star followed by the two. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from George Doumet from Scotiabank. Please go ahead.
Yeah. Good morning, guys. I'm just wondering to what extent did the outperformance of the discount banners kind of accelerate from last quarter? Was it pretty stable? Anything you can share maybe in terms of trade down happening within the conventional stores?
Well, as I said in my opening remarks, customers are searching for value that is accelerating the discount shift. We've been talking about it for a few quarters. It continued to accelerate in the past quarter from conventional to discount. The good thing is we are very well-positioned in both Quebec and Ontario with our discount banners, and that's driving a lot of our growth and gains. Happy about that. Conventional banners, Metro stores, continue to do well. There's a search for value in those stores for sure also. Private label penetration continues to increase. We have aggressive promotional strategies, and are trying to serve our customers as best we can in this high inflation environment.
To answer your question, the discount shift accelerated in Q4 relative to the past two quarters.
Yeah, thanks for that. On the OpEx rate, I believe it's up 20 basis points. You guys usually run a tight ship, so can you maybe talk a little bit about where that pressure is coming from and maybe how should we think of that kind of run rate for next year?
Yeah. Yes, there was some inflationary pressures on OpEx. Mainly labor, transportation, energy, supplies. Those were an increase in costs versus last year, sorry. Yeah, this quarter was a bit of a catch-up in inflation. Inflation is not just in gross margin, there's inflation in our OpEx. That's our job. Well, our job is to make sure that we contain it as much as possible. This quarter, yeah, there was a bit of catch-up and pressure on the OpEx.
Okay. Just one last one, maybe for you, François. On the CapEx line, it seems to be kind of trending higher as well, as a percentage of sales. I think you called it CAD 800 million of CapEx for next year. Can you maybe just talk general trends of CapEx maybe above and beyond next year, and just maybe give us a little bit of sense of what's in the CAD 800 million bucket?
Yeah. It's mostly. Well, there's no reduction in our retail network investment, so that continues. The increase over normal levels, if you will, is the modernization of our supply chain. It's all the automation of our DCs in Ontario and Quebec. You should expect 2023 and 2024 to be at higher than normal levels, and then it should taper off somewhat as we move into 2025, 2026. This is not new. It's planned for, but that explains the main variations.
All right. Thanks, guys, and happy 77.
Thanks.
Thank you.
Your next question comes from Mark Petrie from CIBC. Please go ahead.
Hi, this is Kunal filling in for Mark. Thanks for taking our question. First, I wanted to know if you could please talk about the impact of inflation on your front store comp numbers. Earlier this year, it was indicated that front store inflation was at more normal levels in the 2% range. I just wanted to know if you could share how that has evolved as the year has progressed, and where do you see that trending into fiscal 2023. If you could talk about which categories are seeing the most inflation, that would be great as well. Thank you.
Thank you. Yes, there's inflation in the health and beauty products also. That has increased. The increase in inflation is broad-based, but clearly at lower levels than on the food side. That said, there are products that are common between food and pharmacy, and that's having an impact on the general inflation of health and beauty. The health, our inflation for health and beauty is in the 5% range. That is fueling some of the growth in front store sales. However, I would say, the main driver is COVID-related or COVID-like symptoms, cough and cold.
COVID-like symptoms are driving traffic for OTC products and general traffic to our stores which is helpful to our front-end sales. Pleased with our performance on an absolute and on a relative basis over there.
Okay. That's great. Thank you. My follow-up is on the launch of the new loyalty program next spring. Should we expect a slight ramp in marketing expenses around the launch in the spring? Once it is in market, do you expect the program to operate much differently versus what you have now in terms of customer engagement and incentivized behavior?
Yes, you can expect some launch costs. Anytime you launch a major program like that, there's gonna be some marketing and we will have one-time expenses, but nothing material or that you know we will manage with. We'll take care of that. Like I said, the program is an evolution of metro&moi. It will include all of our banners, food and pharma. A renewed technological platform, more and better personalization. I think there's gonna be more there for the customer, more chances to earn the points. With the co-branded credit card, they can accumulate points, Moi points, on all their purchases elsewhere outside of our networks that can be redeemed in our networks.
We think that it's gonna be well received by our customers as an added benefit. For us, it will be a better tool to personalize our merchandising.
Okay. That's great. Thank you very much.
Your next question comes from Vishal Shreedhar from National Bank. Please go ahead.
Hi, thanks for taking my question. I just wanted a bit more detail, François, if you could, on that CAD 10 million impairment on store assets. Is this gonna be a frequently recurring type of thing? Like, how often should we expect this?
No, it's not. There's always some small ups and downs every quarter that we basically don't mention 'cause it's not important. In any event, it's always flagged in the cash flow statement. When it is important, we did flag it in the past, and now we wanna make sure that it's included in a separate line, so to give you more visibility. It's not. That level is not a common amount. You know, every quarter, every end of year, we look at all our assets. We make impairment tests, and it happens that sometimes we have to make a write-off. That's what happened today, but it's not a.
That's not a run rate number. In any event, we will, as I said, we will continue to flag it to make sure that you can compare apples to apples.
Okay, thank you for that. Just changing gears here to the Moi loyalty program and might be still early days for this question, but wondering how Metro's thinking about how Ontario fits in to this loyalty change and if there's any thoughts there.
Well, it's something we're gonna evaluate and consider, so we're really focused on getting a good launch in Quebec. Then we'll see what we do next in Ontario. Something we're gonna be evaluating and determining at a later date, and we'll keep you posted. For now, we have a relationship with our members that continues in Ontario.
Okay. As someone alluded to earlier, you know, Metro has a disciplined approach to capital allocation and, you know, there's a proposed federal 2% buyback tax. Details aren't fully out, but wondering if there's any early thoughts on how management thinks about that, if it would alter its capital allocation considerations?
No, nothing that I've read would have us change our capital allocation. No change on that front.
Okay. Maybe just one last one here. Cybersecurity is a topical issue. Is there anything that Metro could do, if needed, to further enhance protections? How should Metro think about the risks and potential cost increases if necessary to increase defenses?
Well, it's something that we've been thinking about for a long time as most companies and all companies do. We think we have good defense and we have good systems and good plans, but everybody's vulnerable and we are very mindful of that and to make sure our contingency plans are updated and tested. We're doing everything we can to mitigate the risk, but it's a risk that's out there that we have managed consistently and that we'll try to continue to do the same. Extra cost. Yeah, cyber, it costs more every year and has been for years. It's a good part of our IT budget, and it will remain a good part of our IT budget.
We have a dedicated team, and we make sure that we report to the audit committee and the board regularly on that. It is a topical subject, so we are paying a lot of attention, no question.
Okay, thank you.
Your next question comes from Kenric Tyghe from ATB Capital Markets. Please go ahead.
Thank you, and good morning. Eric, just in terms of your gross margin performance in quarter, you know, modest increase on the various mix shifts. Can you provide some insight on gross margin in food versus pharmacy retail, even just directionally? Then also the biggest drivers of the margin change in each segment.
Well, as François indicated, our gross margin overall are stable due to our diversified mix. The short answer is, gross margin in food is slightly down, and gross margin in pharmacy is slightly up, and net, we come out pretty stable. On the food side, you know, the search for value, the promotional penetration is putting pressure on gross margin. The other side of that is private label. The sales are doing really well, and that's good on the gross margin rate. A lot of puts and takes and ups and downs, but shrink levels tend to vary in high inflationary times. In produce, when prices get out of whack and there's sticker shock, there's more shrink.
Our teams are, like I said, working really hard to offer competitive prices and great weekly promotions to deliver value to our customers and to manage our gross margins as best we can. There's pressure on the gross margin, for sure, due to cost of goods sold and our ability to pass those costs in our pricing. We don't pass it all at once or and in some cases, we don't pass it all at all. We absorb some of those cost inflations because we wanna be at a price that will attract customers and do the job to deliver value.
It takes experienced managers, good merchandisers to build the pricing program, the promotional program, and to come out with a margin that will deliver results. That said, there is pressure on the food side. I hope that helps.
It does. Thank you, Eric. Then just on the topic of food inflation, we saw CPI numbers just hit the tape for October. You know, very modest cooling, I think 11% from 11.4 prior. Can you provide some insight just on how challenging it is or has become to continue managing double-digit inflation? Also, you know, are you seeing indications that, you know, inflation can continue to cool or perhaps we even see an acceleration of the cooling, over the next number of months given the, you know, all the various levers that have been pulled? Thank you.
Yes, for sure. Double-digit 10% inflation or so is challenging. As I said, our ability to pass those cost increases through is very difficult. I'm not gonna repeat my previous answer, but.
Mm-hmm.
Careful management, experienced management, is required to manage through inflationary turbulence like this. As far as going forward, the cooling, we hope it will cool. We certainly don't expect, because we don't know, we don't have a crystal ball. There's a lot of global phenomena impacting food inflation globally, so far from me to predict. Typically, historically, when we've had inflation peaks or higher inflation year-over-year, it tends to come down simply because of the supply and demand. We expect that, as we cycle high inflation in the next months and quarters, we expect year-over-year inflation on food to moderate.
I don't wanna say this is more hope than expectation, but it's based on our experience. That's what usually happens, but it doesn't mean it will happen this year. It will be, we'll see how what the pressures are on global food supply and how our vendors or manufacturers are coming through. Like I said in my opening statement, we have continued to receive cost increases effective next February. We're negotiating hard with our suppliers to mitigate that. We want them to justify that, and we're pushing back 'cause there is resistance for sure from customers and our ability to merchandise. If the vendors wanna keep their volumes, you know, the cost increases will have to moderate.
It's a challenging time and we're managing through it.
Great. Thank you, Eric. I'll get back in queue.
Your next question comes from Michael Van Aelst from TD Securities. Please go ahead.
Hi, good morning. The question on the front store of the pharmacy, the beauty and cosmetics has been rebounding really strong over the past year. I'm curious as to when you start cycling your tougher comps in these categories. On top of that, historically, you know, what level of economic sensitivity have you seen in this category?
Yeah. Cosmetics have been doing well ever since the pandemic restrictions lifted, basically, and people started to socialize and return to the office or go out. That was basically Q4 last year. Like you see today, we're reporting good front store year-over-year. There's a bit of inflation there, but there's strong demand. We're confident that we can maintain that on the cosmetics side. The COVID symptoms or cough and cold, that's another issue. On the cosmetics, we're pretty confident that that will remain pretty strong.
Even in recessionary times, our experience is that that's a small pleasure that people will keep for as long as they can, and it's not something that will be cut. You know, we're confident that cosmetic sales can remain very healthy.
Okay, that's helpful. You exited the UGI buying group, and I'm just curious why, what the rationale would be for exiting it if there was no significant financial impact.
Well, I think we have reached a scale that allows us to reach the same or more volume rebates that we were entitled with through UGI. It's just a question of more efficiency for us, more independence. Just, we're trying to simplify our business anytime we can. It was a great association for many years. It was helpful. As we grow and as we evolve, we're at a point now where we think we're best to go on our own.
Does it require you to add more capabilities in-house then? That's offsetting some of that, you know, better, maybe potentially better purchasing.
Capabilities, I'm not sure I get it, but in terms of that.
Well, just buying capability, like more in-house staff or for procurement if you're not buying UGI.
No. Our central procurement team handles, you know, all procurement basically, and all the UGI association stuff. They will have that less to do and focus directly on the vendors.
Okay. Finally, on the guidance, the outlook statement is relatively short, not completely unusual. There's no comment on, you know, long-term 8%-10% EPS growth expectations, and definitely nothing for this year coming up. I'm wondering, you know, are you expecting growth in fiscal 2023 on an earnings standpoint? Maybe if you could discuss some of, like, the high level expectations, pluses and minuses, in a bit more detail.
Michael, I'll just start by saying that we have not changed our annual growth targets.
You know, sales at 2%-4%, operating income 4%-6%, and EPS 8%-10%. Those are not changed. Those are, you know, medium long term targets on an annual basis. The outlook was not meant to give guidance. The outlook was. We gave more detail on the outlook during the pandemic and where things were very very uncertain, volatile, but no change in our growth targets.
We've never given guidance, but like François said, our targets remain the same, and we're confident that we can continue to grow.
Exactly.
Excellent. Thank you very much.
Thanks, Michael.
Your next question comes from Peter Sklar for BMO Capital Markets. Please go ahead.
Good morning, François. I just have arithmetic question to start on the comp. Your comp was 8% for food, and I think you're saying that your inflation you experienced was 10%, you know, which, you know, doing the subtraction implies about -2% tonnage. I think during your commentary and in the writeup, you've said you had positive tonnage growth. I'm just wondering if you can reconcile the two.
Yeah, no, you're right. That simple equation works better when things are stable and when the inflation and sales are at lower amounts. At those levels, the math is a bit skewed, especially given the significant consumer shift to discount private label promotion. That formula gets to be less precise. We've had tonnage growth validated by external agencies. In fact, not only have we grown, but we've grown more than market. We always validate our own shipments from warehouse. This quarter they were up for the first time this year.
That's why we were confident to say that our tonnage is up despite that simple arithmetic that would imply it's down 2%.
Right. Also, you see the data that we don't see, the market share data that, you know, some of the consultants gather and sell to you. Can you comment just a little bit, like how you think you're doing in terms of market share and conventional and discount?
Like I said in my opening statement, we're very pleased with our market share performance in food. We're not gonna segregate it between discount and conventional, but overall our market share is up and we're very pleased with that. No secret that it's driven by the discount growth.
Yeah. Okay. Just my last question, just back on, you know, cost pressure and vendor asks, etc. Look, I know we're still inflating at a high level, and the vendors are still asking for these increases. You know, kind of, I guess, you call it a second derivative effect is the rate of increases that they're demanding. Like, is it starting to level off and diminish a little bit? Like, are you seeing some of this beginning to tail off, or is it just, you know, these cost pressures continue to accelerate?
Well, I wouldn't say they accelerate, but they remain at elevated levels in terms of rates. That's what we're challenging, because in 2022, we accepted quote unquote we had to take several increases multiple times during the year at significantly higher rates. Those that are coming back for more at higher rates, it's that's why I said if we're pushing back on those. It's leveling off in terms of rates, and we hope that it will start to decline. Again, it's our job to mitigate, negotiate and protect our costs as much as we can.
That said, vendors have pressures, they have cost increases, and we have to sit down with them and come to an understanding.
Okay. That's all I have. Thank you.
Thank you.
Thanks, Peter.
Ladies and gentlemen, as a reminder, should you have a question, please press the star followed by one. Your next question comes from Christopher Li from Desjardins. Please go ahead.
All right. Good morning, everyone. Sorry if you made a touch on this earlier, but are you seeing any notable changes in the competitive environment, or has it remained intense but rational overall?
Yes, it remains very competitive as always, intense, rational, yes, that still applies. With the accelerating discount shift, you know, all other banners are trying to protect their share, their sales, so they are aggressive, very aggressive. We will defend obviously, and we will do our own best to keep, you know, some decent sales and growth in commercial banners. Short answer, it's very competitive.
Okay. Okay, that's great. Thanks, Eric. You had a very strong quarter in terms of e-commerce sales way ahead of some of your peers. Can you tell me a little bit about what drove the performance? Is it mostly driven by capacity expansion, or are you actually seeing some nice organic growth within your existing customer base?
It's driven by additional capacity. That's what I tried to point out in my opening statement. We have expanded Click and Collect, so that's additional capacity. We have signed a new second partnership, so we have two third-party delivery partners, Cornershop and Instacart, and that has contributed to the growth you see. On a same store basis or organic growth has been pretty flat. The total e-com market is flat or somewhat slightly declining. Our growth is driven by what I just said.
Okay. Helpful. In terms of job vacancy, both in terms of pharmacists and warehouse employees, are you seeing any improvement on that front?
It remains very challenging in the province of Quebec, especially labor shortages frontline employees in the stores, a lot of open positions. And DCs, it remains challenging. Pharmacists and tech lab technicians, again, there's pressure there. The labor shortages, the situation has not changed. It remains very challenging, something that's structural and permanent for a while that we have to manage with. Doing a lot of work to attract, retain our people that has put some pressure on our wages, but it's a reality. We have to fill those vacant positions as much as we can and working hard to do it.
Okay. Thanks for that. Maybe a quick one for François. Just, you know, your CapEx is going up. Can you give us a sense of what we should pencil in for depreciation, for next year? I think it was about CAD 500 million for fiscal 2022. Just directionally, what's a reasonable number for next year? Thank you.
Sorry, Chris, I didn't hear the first, but what went up?
With CapEx going up, I'm assuming depreciation is also gonna go up next year as well. I'm just wondering if you can give us some guidance on what to pencil in for next year for D&A.
You're right, CapEx will go up, so you should expect, you know, to see some impact on depreciation. I will say that most of those CapEx are in long-term assets in terms of the depreciation life. It's not gonna be as impactful as the increase in CapEx may suggest. You know, you've seen an increase in depreciation this year. It's gonna be something similar to what we've seen this year. You know, as I said, we do all this to have benefits which our aim is certainly to compensate that and more on the OpEx side.
Okay. Thanks very much, and all the best, guys.
Thanks.
Thank you.
Presenters, there are no further questions at this time. Please proceed.
Thank you all for your interest in Metro, and we will speak again soon to discuss our first quarter results on January twenty-fourth. Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining and ask that you please disconnect your lines. Thank you.