North West : 2024 Management's Discussion & Analysis

Published: 2025-04-17 14:36:07 ET NWC.TO

The North West Company Inc.

2024 Management's Discussion & Analysis

Financial Highlights

All currency figures in this report are in Canadian dollars, unless otherwise noted

Year Ended

($ in thousands, except per share information)

January 31, 2025

January 31, 2024

January 31, 2023

RESULTS FOR THE YEAR

Sales

2,576,344

2,471,678

2,352,760

Same store sales % increase/(decrease) (1)

4.4 %

2.9 %

(0.8)%

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) (2)

325,165

301,173

278,678

Earnings from operations (EBIT)

209,546

195,897

180,305

Net earnings

143,253

134,291

125,836

Net earnings attributable to The North West Company Inc.

137,296

129,391

122,190

Cash flow from operating activities (3)

260,625

230,427

182,838

FINANCIAL POSITION

Total assets

1,527,505

1,396,010

1,336,890

Debt

295,776

281,576

290,050

Total equity

794,714

705,773

647,900

FINANCIAL RATIOS

Debt-to-equity

.37:1

.40:1

.45:1

Return on net assets (RONA) (2)

17.8 %

17.7 %

17.9 %

Return on average equity (ROE) (2)

19.3 %

19.9 %

20.5 %

Sales blend: Food

77.2 %

76.9 %

77.3 %

General Merchandise and other

22.8 %

23.1 %

22.7 %

PER SHARE ($) - DILUTED

EBITDA (2)

6.70

6.22

5.73

Net earnings attributable to The North West Company Inc.

2.83

2.67

2.51

Cash flow from operating activities

5.37

4.76

3.76

Market price: January 31

46.44

38.89

36.24

high

55.93

40.49

40.09

low

37.15

29.58

30.55

THE NORTH WEST COMPANY INC. 2024

Management's Discussion & Analysis

TABLE OF CONTENTS

Management's Discussion & Analysis

Forward-LookingStatements

Our Business Today

Vision,Principles and Strategies

Key Performance Drivers and Capabilities Required to Deliver Results

Consolidated Results and Financial Performance

Canadian Operations Financial Performance

International Operations Financial Performance

Consolidated Liquidity and Capital Resources

Quarterly Financial Information

Fourth Quarter Highlights

Disclosure Controls

Internal Controls Over Financial Reporting

Outlook

Risk Management

Corporate Social Responsibility & Sustainability

Critical Accounting Estimates

New Accounting Standards Implemented

Future Accounting Standards

Non-GAAPFinancial Measures

Glossary of Terms & Abbreviations

Eleven-YearFinancial Summary

MANAGEMENT'S DISCUSSION & ANALYSIS

Unless otherwise stated, this Management's Discussion & Analysis ("MD&A") for The North West Company Inc. ("NWC") and its subsidiaries (collectively, "North West Company", the "Company", "North West", or "NWC") is based on, and should be read in conjunction with the 2024 annual audited consolidated financial statements and accompanying notes. The Company's annual audited consolidated financial statements and accompanying notes for the year ended January 31, 2025 are in Canadian dollars, except where otherwise indicated, and are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

The Board of Directors, on the recommendation of its Audit Committee, approved the contents of this MD&A on April 9, 2025 and the information contained in this MD&A is current to April 9, 2025, unless otherwise stated.

FORWARD-LOOKING STATEMENTS

This MD&A contains forward-looking statements about North West including its business operations, strategy, expected financial performance and condition, and legal matters. Specific forward- looking statements in this MD&A include, but are not limited to, future or conditional future financial performance (including sales, earnings, growth rates, capital expenditures, dividends, debt levels, financial capacity, access to capital and liquidity), ongoing business strategies or prospects, the Company's plans regarding sales of private label products and intentions regarding a normal course issuer bid and the number of shares purchased, the potential impact of a pandemic on the Company's operations, supply chain and the Company's related business continuity plans, the realization of cost savings from cost reduction plans, the anticipated impact of The Next 100 strategic priorities and possible future action by the Company. Forward-looking statements are contained throughout this MD&A and are typically identified by words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts", "foresees", "could", "goals", "intends", "seeks", "strives", "will", "may", "should" and other similar expressions, or negative versions thereof, as they relate to North West and its management.

Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company, economic factors and the retail industry in general.

Forward-looking statements reflect the Company's estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward- looking statements, including those described in this MD&A and the Company's 2024 Annual Information Form. Such risk and uncertainties include, but are not limited to: changes in inflation, tariffs, commodity prices, interest and foreign exchange rates, government fiscal health and changes in government policy that result in a reduction in financial support for programs benefiting

individuals including Nutrition North Canada ("NNC"), Jordan's Principle and Inuit Child First in Canadian Operations, and the U.S. Supplemental Nutrition Assistance Program ("SNAP") and Alaska bypass mail system in International Operations, which contribute to lower living costs for eligible customers, the Company's ability to maintain an effective supply chain, changes in accounting policies and methods used to report financial condition, uncertainties associated with critical accounting assumptions and estimates, including estimates of contingent consideration, the effect of applying future accounting changes, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Company's ability to complete and realize benefits from capital projects, E-Commerce investments, strategic transactions and the integration of acquisitions, the Company's ability to realize benefits from investments in information technology ("IT") and systems, including IT system implementations, or unanticipated results from these initiatives and the Company's success in anticipating and managing the foregoing risks.

The reader is cautioned that the foregoing list of factors that may affect the Company's forward-looking statements is not exhaustive. Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including, without limitation, the Risk Factors sections of the 2024 Annual Information Form, and in our most recent consolidated financial statements, management information circular, material change reports and news releases. The reader is also cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements, which reflect the Company's expectations only as of the date of this MD&A. Other than as specifically required by applicable law, the Company does not intend to update any forward-looking statements whether as a result of new information, future events or otherwise.

Additional information on the Company, including our Annual Information Form, can be found on SEDAR+ at www.sedarplus.ca or on the Company's website at www.northwest.ca.

2 THE NORTH WEST COMPANY INC. 2024

Management's

Discussion &

Analysis

OUR BUSINESS TODAY

The North West Company is a leading retailer to rural and developing small population communities in the following regions: northern Canada, rural Alaska, the South Pacific and the Caribbean. Our stores offer a broad range of products and services with an emphasis on food and a compelling value offer of being the best local shopping choice for everyday household and lifestyle needs.

North West's core strengths include: our ability to adapt to varied community preferences and priorities; our on-the-ground presence with hard-to-replicate operating skills, customer insights and facilities; our logistics capability in moving product to remote markets; and, our ability to apply these strengths within complementary businesses.

North West has a rich enterprising legacy as one of the longest continuing retail enterprises in the world. The Company traces its roots back to 1668 and many of our stores in northern Canada have been in operation for over 200 years.

Our stores in Alaska and northern Canada serve communities with populations ranging from 300 to 9,000. A typical store is 6,500 square feet in size and offers food, family apparel, housewares, appliances, outdoor products and services such as fuel, post offices, pharmacies, quick-service prepared food, prepaid card products, ATMs, cheque cashing, income tax return preparation and proprietary credit programs.

Growth at North West is driven by market share capture within existing locations and from applying our expertise and infrastructure to new product categories, markets and complementary businesses. The latter includes vertical investments in shipping and air cargo, wholesaling to independent stores, and retailing through mid-sized warehouse and supermarket format stores serving the South Pacific islands and the Caribbean.

A key strength and ongoing strategy of North West is our ability to seize unique community-by-community selling opportunities better than our competition. Flexible store models, store management selection and education, store-level merchandise ordering, community relations and incentive plans are all ingredients of our approach to sustain a leading market position. Our enterprising culture, our execution skills in general, and our logistics and selling skills specifically, are also essential components to meeting customer needs within each market we serve.

North West delivers its products and services through the following retail, wholesale and complementary businesses:

Canadian Operations

International Operations

MANAGEMENT'S DISCUSSION & ANALYSIS 3

VISION

At North West our mission is to be a trusted provider of goods and services within harder-to-access, under-served communities. Our vision is to help our customers live better. This starts with our customers' ability and desire to shop locally with us for the widest possible range of products and services that meet their everyday needs. We respond by striving to be innovative, reliable, convenient, welcoming and adaptable, at the lowest local price, within what are typically higher cost environments. For our associates, we strive to be a preferred, fulfilling place to work. For our investors, we strive to deliver sustainable, total returns through earnings growth, dividends and disciplined capital allocation.

PRINCIPLES

The way we work at North West is shaped by six core principles: Customer Driven, Enterprising, Passion, Accountability, Trust, and Personal Balance.

Customer Driven refers to looking through the eyes of our customers while recognizing our presence as a supportive community citizen.

Enterprising is our spirit of innovation, improvement and growth, reflected in our unrelenting focus on new and better products, services and processes.

Passion refers to how we value our work and the opportunity to make a positive impact in our customers' lives.

Accountability is our management approach to getting work done through effective roles, tasks and resources.

Trust at North West means doing what you say you will do, with fairness, integrity, inclusion and respect.

Personal Balance is our commitment to sustaining ourselves and our organization, so that we work effectively and sustainably in our roles and for our customers and communities.

STRATEGIES

The strategies at North West are guided by our vision and aligned with a total return approach to investment performance. We aim to deliver top-quartile returns through earnings growth and dividend yield with opportunities considered in terms of their growth potential and ability to sustain an attractive cash return within a lower business risk profile.

The Company's overriding goal is to offer essential products and services that help our customers to live better and to deliver sustainable growth through operational excellence and by continuing to build capability for the future through the following priorities:

Collectively these priorities are referred to as "The Next 100", which is focused on driving operational excellence, expanding our capabilities and pursuing value for our customers, our employees, our shareholders and the communities we serve. The initiatives within the Next 100 program noted above leverage the power of data through new tools and analytics, and will be enabled by investments in technology and training which will help sustain the benefits of this work in the years to come. The Next 100 touches on every aspect of our business and aims to drive annualized incremental EBIT, which is expected to ramp-up through 2025 and 2026 as our initiatives reach maturity. As we lay the groundwork for these improvements, we are investing in additional resources and technology to support the execution of the Next 100 program. In addition to this investment in resources, we anticipate incurring onetime costs, including professional fees and other expenses, in advance of the incremental EBIT being realized.

4 THE NORTH WEST COMPANY INC. 2024

Following is an update on the work in 2024 related to these strategic priorities:

Operational Excellence We continue to focus on being in-stock on food and other essential items such as transportation, home furnishings and appliances, while striving to provide value for our customers within a high cost environment by minimizing as much as possible the impact of cost increases from suppliers. In addition, we continue to seek opportunities to deliver cost savings in other aspects of our business through improved store labour planning, lower inventory shrink and other expense management initiatives.

In 2024, we piloted an inventory forecasting and replenishment application which is planned to be rolled out to stores in northern Canada in 2025. The implementation of forecasting and replenishment is expected to improve our in-stock position on essential food items, reduce inventory shrink and enable more efficient logistics planning.

Investing in Stores, Products and Services Three new stores were opened, including two stores in Canadian Operations and one store in International Operations as follows:

In addition, an AC Quickstop convenience store in Bethel, Alaska was converted into an AC Motorsports dealership.

As part of the refinement of merchandise assortments included in our Next 100 work, the Company added Loblaw Companies Ltd. as a supplier and expects to begin selling Loblaw private label products in its northern Canada stores in the first quarter of 2025 as the new assortments are implemented. Development of new private label products for our International Operations began in 2024, with the implementation of an expanded private label assortment planned for late 2025.

Building a Superior Logistics and Supply Chain Capability NSA's cargo aircraft utilization rates and service levels continue to meet targets and deliver consistent service to northern Canada and were a key factor in maintaining good in-stockrates in our stores. Third party cargo, charter and scheduled passenger business contributed to earnings gains in 2024. NSA is building a hangar in Thunder Bay, Ontario to support its cargo and passenger business, which is expected to be completed in the second quarter of 2025.

Optimizing our IT Infrastructure Investments are being made in upgrading hardware and replacing legacy software, including the implementation of new pricing and data analytics software, and the implementation of a new warehouse management system ("WMS") in International Operations in 2025 followed by the implementation of the WMS in Canadian Operations in 2026.

Environmental, Social and Governance ESG is integrated within our strategies and work priorities and guide our decisions across the Company. We recognize that one of the strengths of our Company is the diversity of our workforce and that continuing to enhance a culture of diversity, equity and inclusion is critical to our business and our ability to attract, develop and retain top talent. We completed a prioritization exercise to determine which areas of ESG have the greatest impact on our business and business partners, including the communities we serve, employees and other stakeholders. The results of this exercise have been incorporated into our strategy and work priorities. Our ESG strategy is embedded in our business operations and unique business model, supporting underserved communities in remote geographical locations.

As we continue to develop and implement our action plans, we recognize that this is an ongoing learning process that requires adaptability to make progress towards our ESG objectives. Our ESG strategy also aims to complement "Our Promise to Indigenous Peoples" and our commitment to building more collaborative relationships that will enhance the inclusion and social well-being of Indigenous People in Canada. North West is fully committed to the spirit of reconciliation reflected in the Truth and Reconciliation Commission of Canada's Call to Action and final report.

In 2024, North West received an Impact Award from Canadian Grocer in the Diversity, Equity and Inclusion category for our Indigenous Procurement Strategy which aims to reduce barriers and obstacles to allow the development of economic partnerships with local and Indigenous businesses and suppliers. In addition, we continued to advance our Indigenous Cultural training as part of Our Promise to Indigenous Peoples, having over 200 employees in associate, manager, director and executive roles completing a two-day Indigenous Cultural workshop.

Another factor that is critical to our success is talent attraction, development and retention, including the training and development of our front-line employees. In 2024, we launched "Compass", an innovative learning platform, that has provided employees with new tools to support their well-being and professional growth.

Further information on our ESG Strategy is provided in the Corporate Social Responsibility and Sustainability section.

MANAGEMENT'S DISCUSSION & ANALYSIS 5

KEY PERFORMANCE DRIVERS AND CAPABILITIES REQUIRED TO DELIVER RESULTS

The financial capability to sustain the competitiveness of our core strengths and to pursue growth: Our investment priorities center on our store management and front line people, lower costs to help mitigate inflationary price increases, next level technology and superior logistics.

The ability to be a leading community store in every market we serve: We strive to connect with the customers and communities we serve in a highly valued way. It starts with being able to tailor our store formats, product/service mix, community support and store compensation, while still realizing the efficiencies of our size. Investing in relationships, embracing a broad range of products, services and store sizes, flexible technology platforms and "best practice" work processes, are required to achieve this goal.

Our ability to build and maintain supportive community relations: To preserve our community access we must be trusted, open, respectful, adaptable and socially helpful. Store leases and business licenses are often subject to community approval and depend on our track record in these areas and the perceived community and customer value of our retail store compared to other options.

Our ability to develop highly capable store level employees and work practices: Store work and related processes must drive sales and efficiently enable our store-levelpersonnel to manage the other key facets of their store. This enables our full potential to realize local selling opportunities, meet our customer service commitments and build and maintain positive community relationships. It recognizes that our store roles must be compelling and provide opportunities to learn and reach their full potential in order to attract and retain the best people, including our on-goingability to hire within- community.

Our ability to deliver merchandise and information through our unique store network: The integration and build-outof our air cargo capability in northern Canada enables us to deliver and receive products faster, cheaper and more reliably compared to third-partyproviders. Similar advantages are possible through our investment in information technology.

Consolidated Results

2024 Highlights

FINANCIAL PERFORMANCE

Some of the key performance indicators used by management to assess results are summarized in the following table:

Key Performance Indicators and Selected Annual Information

($ in thousands, except per share)

2024

2023

2022

Sales

$2,576,344

2,471,678

2,352,760

Same store sales % increase/

(decrease)(2)

4.4 %

2.9 %

(0.8)%

EBITDA(1)

325,165

301,173

278,678

Earnings from operations

209,546

195,897

180,305

Net earnings

143,253

134,291

125,836

Net earnings attributable to

shareholders of the

137,296

Company

129,391

122,190

Net earnings per share -

2.83

diluted

2.67

2.51

Cash flow from operating

activities(3)

260,625

230,427

182,838

Cash dividends per share

1.58

1.54

1.50

Total assets

$1,527,505

1,396,010

1,336,890

Total long-term liabilities

457,937

439,579

440,384

Return on net assets(1)

17.8 %

17.7 %

17.9 %

Return on average equity(1)

19.3 %

19.9 %

20.5 %

6 THE NORTH WEST COMPANY INC. 2024

Following is an analysis of the significant factors that impacted the financial results and key performance indicators:

Consolidated Sales Sales for the year ended January 31, 2025 ("2024") increased 4.2% to $2.576 billion compared to $2.472 billion for the year ended January 31, 2024 ("2023"), and were up 9.5% compared to $2.353 billion for the year ended January 31, 2023 ("2022"). The increase in sales compared to 2023 was due to same store sales gains, the impact of foreign exchange on the translation of International Operations sales and new store sales. These factors were partially offset by lower wholesale sales. Excluding the foreign exchange impact, sales increased 3.5% from 2023 and were up 7.8% compared to 2022. The increase in sales compared to 2022 is largely due to same store sales gains, the impact of foreign exchange, sales from new stores and higher inflation.

On a same store basis, sales were up 4.4% compared to a same store sales increase of 2.9% in 2023 and a 0.8% decrease in

2022 as shown in the following table:

Same Store Sales

(% increase/(decrease))

2024

2023

2022

Food

4.5 %

3.4 %

1.7 %

General merchandise (GM)

4.1 %

(0.1)%

(13.3)%

Total food & GM sales

4.4 %

2.9 %

(0.8)%

The impact of higher merchandise and freight cost inflation in 2023 and 2022 resulted in changes in product sales blend as consumers allocated more of their spending to food and reduced purchases of general merchandise.

Consolidated food sales increased 4.7% from 2023 and were up

3.8% excluding the foreign exchange impact. Same store food sales increased 4.5% on top of a 3.4% increase last year. On a quarterly basis, same store food sales increased 3.8% in the first quarter followed by increases of 4.6%, 3.8% and 5.5% in the second, third and fourth quarter respectively. Canadian food sales increased 4.7% and International food sales increased 2.7% excluding the foreign exchange impact.

Consolidated general merchandise sales increased 4.0% compared to 2023 and were up 3.5% excluding the foreign exchange impact. Same store general merchandise sales increased 4.1% for the year compared to a 0.1% decrease last year. On a quarterly basis, same store general merchandise sales increased 3.9% in the first quarter followed by increases of 1.9%, 5.3% and 5.1% in the second, third and fourth quarter respectively. Canadian general merchandise sales increased 4.1% and International general merchandise sales increased 1.7% excluding the foreign exchange impact.

Other sales, which include airline revenue, financial services, fuel and pharmacy, increased 1.2% compared to 2023 mainly due to higher pharmacy sales. An increase in retail fuel sales and financial services revenue were also a factor. Other sales increased 13.6% compared to 2022 mainly due to higher airline revenue in North Star Air ("NSA") and sales gains in pharmacy and fuel.

Sales Blend The table below shows the consolidated sales blend over the past three years:

2024

2023

2022

Food

77.2 %

76.9 %

77.3 %

General merchandise and

22.8 %

other

23.1 %

22.7 %

Canadian Operations accounted for 57.3% of total sales (57.4% in 2023 and 56.2% in 2022) with International Operations accounting for the remaining 42.7% (42.6% in 2023 and 43.8% in 2022).

(1) See Non-GAAP Financial Measures section.

Gross Profit Gross profit increased 7.3% to $868.3 million compared to $809.4 million last year due to higher sales and a 95 basis point increase in the gross profit rate. The higher gross profit rate compared to last year was largely due to changes in sales blend, including a lower blend of wholesale sales. Lower markdowns, including more effective data-driven promotional activity as part of our Next 100 work, compared to last year was also a factor.

Selling, Operating and Administrative Expenses Selling, operating and administrative expenses ("Expenses") of $658.8 million increased $45.3 million or 7.4% compared to last year and were up 75 basis points as a percentage of sales. The increase in Expenses is largely due to higher staff costs related to inflationary and minimum wage increases and an investment in additional resources required to execute the Next 100 operational excellence work, an increase in depreciation and the impact of foreign exchange on the translation of International Operations Expenses. The impact of new stores, higher vessel repairs incurred through our investment in Transport Nanuk Inc., an increase in share-basedcompensation costs and onetime costs related to our Next 100 work were also factors. These factors were partially offset by the $3.7 million asset write-offfrom the loss of our store in Fox Lake, Alberta that was destroyed by wild fire last year. The investment in additional resources and Next 100 one-timecosts are required to unlock the future growth and incremental EBIT expected from the Next 100 initiatives. Further information on the Next 100 is provided in the Strategies and Outlook sections.

Earnings from Operations (EBIT) and EBITDA(1) Earnings from operations or earnings before interest and income taxes ("EBIT") increased $13.6 million or 7.0% to $209.5 million compared to $195.9 million last year, and increased $29.2 million or 16.2% compared to $180.3 million in 2022. Earnings before interest, income taxes, depreciation and amortization ("EBITDA(1)") increased 8.0% to $325.2 million compared to $301.2 million last year, and was up $46.5 million or 16.7% compared to 2022. The increase in EBIT and EBITDA compared to 2023 and 2022 is due to the sales, gross profit and Expense factors previously noted. Adjusted EBITDA(1), which excludes the impact of share-basedcompensation, one-timeNext 100 costs and the Fox Lake store fire loss last year, increased $22.4 million or 7.0% to $340.4 million compared to $318.0 million last year and was up $48.6 million or 16.7% compared to 2022. The impact of the Next 100 one-timecosts was more than offset by more effective data- driven promotional activity, including a reduction in print media and other cost savings initiatives.

MANAGEMENT'S DISCUSSION & ANALYSIS 7

Additional information on the financial performance of Canadian Operations and International Operations is provided on pages 9 and 11 respectively.

Interest Expense Interest expense decreased 3.9% to $18.3 million compared to $19.1 million last year. This decrease is due to lower

average debt levels and interest rates. Average debt levels decreased 1.3% compared to last year mainly due to a decrease in amounts drawn on revolving loan facilities. The average cost of debt was 4.3% compared to 4.7% last year. Further information on interest expense is provided in Note 19 to the consolidated financial statements.

Income Tax Expense Income taxes increased to $48.0 million compared to $42.6 million last year and the effective tax rate for the

year was 25.1% compared to 24.1% last year. The increase in income tax expense is due to higher earnings and the impact of a higher effective tax rate. The increase in the effective tax rate is substantially due to the impact of The Global Minimum Tax Act ("GMTA") - Pillar Two legislation included in Bill C-69 that was enacted in Canada on June 20, 2024. This legislation implements the Pillar Two global minimum tax regime developed by the Organisation for Economic Co-operation and Development ("OECD") which applies a minimum effective tax rate of 15% on income earned in each jurisdiction in which the Company operates. The Company operates retail stores in the Cayman Islands, Barbados and British Virgin Islands which are impacted by the GMTA - Pillar Two legislation. Changes in the effective income tax rate may also occur as a result of various factors, including changes in tax law, the impact of discrete items, including the taxation of share-based compensation and insurance gains, changes in tax estimates and the blend of earnings across the various tax rate jurisdictions. Further information on income tax expense, the effective tax rate and deferred tax assets and liabilities is provided in Note 10 to the consolidated financial statements.

Net Earnings Consolidated net earnings increased $9.0 million or 6.7% to $143.3 million compared to $134.3 million last year, and are up $17.4 million or 13.8% compared to 2022. Net earnings attributable to shareholders of the Company were $137.3 million compared to $129.4 million last year and diluted earnings per share were $2.83 per share compared to $2.67 per share last year due to the factors previously noted. Excluding the impact of the share- based compensation, one-time Next 100 costs and the Fox Lake store fire loss last year, adjusted net earnings(1) increased $7.8 million or 5.3% to $154.8 million compared to $147.0 million last year, and were up $18.7 million or 13.8% compared to 2022 adjusted net earnings(1) of $136.0 million. In 2024, the average exchange rate used to translate International Operations sales and expenses was 1.3775 compared to 1.3504 last year and 1.3088 in 2022.

The Canadian dollar's depreciation versus the U.S. dollar compared to 2023 had the following net impact on the 2024 results:

Sales

increase of $21.7 million or 2.0%

Earnings from operations

increase of $1.2 million

Net earnings

increase of $1.0 million

Diluted earnings per share

increase of $0.02 per share

Total Assets Consolidated total assets for the past three years is summarized in the following table:

($ in thousands)

2024

2023

2022

Total assets

$ 1,527,505

1,396,010

1,336,890

Consolidated assets increased $131.5 million or 9.4% compared to 2023 and were up $190.6 million or 14.3% compared to 2022. The increase in consolidated assets compared to last year and 2022 is mainly due to an increase in current assets, largely driven by higher inventories and cash, and an increase in property and equipment. Further information on the change in current assets is provided in the working capital section below. The increase in property and equipment is largely due to new stores, store renovations and investments in fixtures and equipment. An increase in property and equipment in NSA, including the replacement of a PC-12 aircraft and the start of construction of a hangar in Thunder Bay, Ontario, was also a factor. Further information on property and equipment is provided in Note 7 to the consolidated financial statements. The impact of foreign exchange was also a factor as the year-end exchange rate used to translate International Operations assets increased to 1.4485 compared to 1.3412 last year and 1.3382 in 2022.

Consolidated working capital for the past three years is summarized in the following table:

($ in thousands)

2024

2023

2022

Current assets

550,268

502,905

474,844

Current liabilities

(274,854)

(250,658)

(248,606)

Working capital

275,414

252,247

226,238

Working capital increased $23.2 million or 9.2% to $275.4 million compared to $252.2 million in 2023 and increased $49.2 million or 21.7% compared to $226.2 million in 2022. Current assets increased $47.4 million or 9.4% compared to last year and were up $75.4 million or 15.9% compared to 2022. The increase in current assets compared to 2023 and 2022 is primarily due to an increase in inventories, cash and prepaid expenses. Further information on current assets is provided in the net assets employed section under Canadian Operations and International Operations. Further information on the increase in cash is provided in the consolidated statements of cash flows and the Consolidated Liquidity and Capital Resources section.

Current liabilities increased $24.2 million or 9.7% to $274.9 million compared to $250.7 million last year and were up $26.2 million or 10.6% compared to $248.6 million in 2022. The increase compared to 2023 and 2022 is substantially due to an increase in accounts payable and accrued liabilities mainly due to the timing of payments of trade accounts payable. Further information on working capital for the Canadian Operations and International Operations is on page 10 and page 12 respectively.

8 THE NORTH WEST COMPANY INC. 2024

Disclaimer

The North West Company Inc. published this content on April 17, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 17, 2025 at 18:35 UTC.