The North West Company Inc. Announces Second Quarter Earnings and an Increase in the Quarterly Dividend

Executive Summary

• The North West Company Inc. reported unaudited financial results for the second quarter ended July 31, 2025, showing a slight increase in consolidated sales and net earnings compared to the prior year period.
• The Board of Directors declared a quarterly dividend of $0.41 per share, representing a 2.5% increase from the previous quarter, payable on October 15, 2025.
• Management cited significant headwinds from wildfire-related community evacuations in northern Canada, decreased government funding (Jordan’s Principle), and a softer economy in Alaska, which were partially mitigated by the "Next 100" operational strategy.

Key Details

• Consolidated Sales: Increased 0.1% to $647.0 million (from $646.5 million in Q2 2024).
  • Canadian sales increased; International Operations impacted by foreign exchange.
  • Sales excluding foreign exchange impact were flat.
  • Food sales decreased 0.8%; General merchandise and other sales increased 2.8% (driven by third-party airline revenue and pharmacy sales).
  • Same store sales decreased 1.1% (vs. a 4.3% gain in Q2 2024).
  • Excluding stores impacted by wildfire evacuations, adjusted same store sales increased 0.6%.
• Gross Profit: Increased 0.1% to $219.9 million (from $219.8 million). Gross profit rate remained flat at 34.0%.
• Selling, Operating and Administrative Expenses: Decreased $0.1 million (0.1%) to match the prior year.
  • Decrease driven by $3.9 million lower share-based compensation costs and reduced vessel repairs.
  • Partially offset by increased staff resources, technology costs, depreciation, and new stores.
  • Includes $1.7 million in one-time costs related to the "Next 100" strategy.
  • Excluding share-based compensation and one-time costs, expenses increased $2.2 million (1.4%).
• Earnings From Operations (EBIT): Increased 0.5% to $55.2 million (from $54.9 million).
• EBITDA: Increased 2.1% to $85.2 million (from $83.4 million).
• Adjusted EBITDA: Decreased 0.6% to $87.9 million (from $88.4 million).
• Interest Expense: Decreased 0.5% to $4.3 million.
• Income Tax Expense: Decreased to $13.2 million (from $13.6 million); effective tax rate decreased to 26.0% (from 27.0%).
• Net Earnings: Increased 1.9% to $37.6 million (from $36.9 million).
• Earnings Per Share (EPS): Diluted EPS was $0.74 (from $0.73).
• Adjusted Net Earnings: Decreased 2.5% to $39.6 million (from $40.7 million).
• Dividend Declaration: Quarterly dividend of $0.41 per share (increase of $0.01 or 2.5%); record date September 29, 2025; payment date October 15, 2025.
• Conference Call: Scheduled for September 9, 2025, at 9:00 a.m. Central Time.

Notable Quotes

• “Our results this quarter reflect the significant headwinds from community evacuations due to widespread wildfires across northern Canada, a decrease in Jordan’s Principle funding and ongoing pressures from a softer economy, particularly in our Alaska markets,” said Dan McConnell, President & CEO. “Our Next 100 work, including the continued refinement of our merchandise assortment and focus on labour efficiency and expense management helped mitigate these headwinds. We remain confident in the strength of our business and the resiliency of our product and service offering within this uncertain economic environment and we are committed to executing our Next 100 strategy to drive sustainable value for our customers and shareholders.”