The Descartes Systems Group Inc. (DSG) Earnings Call Transcript & Summary

Hello, and welcome to the Annual Meeting of Shareholders of The Descartes Systems Group Inc. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent or warrant to Computershare and the corporation that you first obtained all required consent for disclosure, recording, transfer and the use of such personal information for all appropriate persons before your disclosure. [Operator Instructions] It is now my pleasure to turn today's meeting over to Eric Demirian, Chair of the Board of Directors. The floor is yours.

Good morning, ladies and gentlemen, and welcome to the 2022 Annual Meeting of the Shareholders of The Descartes Systems Group Inc. My name is Eric Demirian, I am Chair of the Board of Directors of the corporation. Also with me on the line are Ed Ryan, our CEO; and Michael Verhoeve, our Assistant Corporate Secretary. The remainder of the Board of Directors is also on the line, but they will not be in speaking roles today during this meeting. This meeting will be primarily focused on the formal business required at an Annual Meeting of Shareholders, and then we will open it up for a question-and-answer session should shareholders have any questions for myself as Chair or Ed as CEO. I will now ask that the meeting secretary provide some instructions on voting procedures at how we will handle Q&A.

Good morning, everyone. On the virtual meeting platform you are logged into, you should see 4 interactive tabs in the top-right corner of your screen. To vote on any matter, click on the Vote tab. [Operator Instructions] The voting screen and the Q&A screen are not activated for any of you who are logged into the virtual meeting as a guest.

The meeting will now come to order, and I will ask Michael Verhoeve to act as secretary of the meeting. Unless there's an objection, Paul Allen of the Computershare Investor Services Inc. will act as scrutineer for the meeting. During the question-and-answer portion following this meeting, we may make statements containing forward-looking information. Displayed on the screen is a cautionary statement regarding such forward-looking information. Please take a moment to review the statement. I have been advised by the secretary that the notice calling this meeting, together with a form of proxy and management information circular and annual report containing the financial statements of The Descartes Systems Group Inc. for the financial year ended January 31, 2022, prepared in accordance with United States generally accepted accounting principles and the auditor's reports thereon have been properly sent to each director of the corporation, the auditors of the corporation and each intermediary and registered holder of common shares of the corporation of record as of April 21, 2022, the record date of the meeting. These materials are also posted on the Investor Relations section of the corporation's website at www.descartes.com. Accordingly, unless there's an objection, I will dispense with the reading of the Notice of Meeting. The scrutineers have provided me with the preliminary report regarding shareholder attendance at the meeting. The scrutineers' report that there are present, at this meeting or by proxy, 150 shareholders holding 75,952,829 common shares. Accordingly, I declare that the requisite quorum of shareholders is present and that the meeting is duly and properly constituted for the transaction of business. I direct that the confirmation of the mailing of the Notice of the Meeting received by Computershare Investor Services Inc. and the scrutineers' complete report on attendance be attached to the minutes of the meeting. There are several matters that must be dealt with during this formal part of the meeting. In order to expedite these matters, certain persons have been requested to make and second the formal motions set out in the meeting materials. Shareholders may make comments specific to these motions prior to the vote but should hold any comments on general matters until the question period to be held following the presentation on the corporation's business. [Operator Instructions] If there is any discussion or question, the secretary will read the question aloud. Minutes of the last meeting of shareholders of the corporation are available to all registered shareholders upon request from the Corporate Secretary. Unless there's an objection, I will dispense with reading of the minutes of such meeting. We will conduct the votes on the matters before us by a poll. On a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voting on the matter and held by that shareholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your vote. The first item of business is the presentation of the corporation's consolidated financial statements for the period ended January 31, 2022, as prepared in accordance with United States generally accepted accounting principles and the auditor's reports thereon. Unless there is an objection, I will dispense with the reading of the auditor's reports. The next item of business is the election of directors. The number of directors to be elected at this meeting has been set by the corporation's Board of Directors at 10. I declare the meeting open for nominations.

Mr. Chair, I've received a request from Scott Pagan, a shareholder and the President and Chief Operating Officer of the corporation, nominating each of the persons specified in the management information circular delivered with the Notice of Meeting, namely: Deepak Chopra, Deborah Close, Eric Demirian, Sandra Hanington, Kelley Irwin, Dennis Maple, Chris Muntwyler, Jane O'Hagan, Edward Ryan and John Walker, each to serve as directors of the corporation to hold office until the close of the next Annual Meeting of Shareholders or until their successors are duly elected or appointed in accordance with the articles and bylaws of the corporation.

As the corporation did not previously receive timely notice of any further nominations of persons for election as directors of the corporation as required by the advanced notice provisions of the corporation's bylaws, I declare the nominations closed. Do I have a motion for the election of the proposed nominees?

Mr. Chair, I confirm that we have received a motion from Scott Pagan that the 10 persons nominated as directors be so elected. And I further confirm that we have received confirmation that Allan Brett, a shareholder and the Chief Financial Officer of the corporation, seconds that motion.

Thank you, Mr. Secretary. Before I call for a vote on the motion, is there any discussion of this motion?

Mr. Chair, I confirm there is no discussion at this time.

As there's no discussion, I now call for a vote on the motion before the meeting. Would all registered shareholders and duly appointed proxyholders, please enter your votes using the Vote tab within the virtual meeting platform? [Voting]

The next item of business is the appointment of the auditors of the corporation. In order that a vote may be held on the matter, I request a motion that KPMG LLP, Chartered Professional Accountants, Licensed Public Accountants, be appointed as auditors of the corporation until the close of the next Annual Meeting of Shareholders or until a successor is appointed.

Mr. Chair, I confirm that we have received a motion from Scott Pagan that KPMG be appointed the auditors of the corporation until the close of the next Annual Meeting of Shareholders or until a successor is appointed. And I further confirm that we have received confirmation that Allan Brett seconds that motion.

Thank you, Mr. Secretary. Before I call for a vote on the motion, is there any discussion of this motion?

Mr. Chair, I confirm there is no discussion at this time.

As there is no discussion, I now call for a vote on the motion before the meeting. Would all registered shareholders and duly appointed proxyholders, please enter your votes within the Vote tab in the virtual meeting platform? [Voting]

The next item of business is the consideration of the proposed amendments to the corporation's Performance and Restricted Share Unit Plan, also known as the PRSU Plan. A summary of the proposed changes to the PRSU Plan are set out starting on Page 21 of the management information circular and the proposed form of resolution to be considered at this meeting in respect to those changes is settled on Page 24 of the management information circular. In order that a vote may be held on the matter, I would request a motion that the PRSU Plan, amendments, resolution as set out on Page 24 of the management information circular be approved.

Mr. Chair, I confirm that we have received a motion from Scott Pagan that the PRSU Plan amendments resolution be approved. And I further confirm that we have received confirmation that Allan Brett seconds that motion.

Thank you, Mr. Secretary. Before I call for a vote on the motion, is there any discussion of this motion?

Mr. Chair, I confirm there is no discussion at this time.

As there is no discussion, I now call for a vote on the motion before the meeting. Would all registered shareholders and duly appointed proxyholders, please enter your votes in the Vote tab within the virtual meeting platform? [Voting]

The next item of business is the consideration of the advisory vote on executive compensation, also known as the Say-On-Pay vote. While this Say-On-Pay vote is nonbinding, it gives shareholders an opportunity to provide important input to the Board regarding the corporation's executive compensation practices as disclosed in the management information circular. The proposed form of Say-On-Pay resolution to be considered at this meeting is set out on Page 25 of the management information circular. In order that a vote may be held on the matter, I would request a motion that the Say-On-Pay resolution as set out on Page 25 of the management information circular be approved.

Mr. Chair, I confirm that we have received a motion from Scott Pagan that the Say-On-Pay resolution be approved. And I further confirm that we have received confirmation that Allan Brett seconds that motion.

Thank you, Mr. Secretary. Before I call for a vote on the motion, is there any discussion of this motion?

I confirm that there is no discussion at this time.

As there is no discussion, I now call for a vote on the motion before the meeting. Would all registered shareholders and duly appointed proxyholders, please enter your votes in the Vote tab within the virtual meeting platform? [Voting]

Based on the preliminary voting results provided to me by the scrutineers and having regard to proxies that were received in advance of the meeting, I declare that all motions made today at this meeting have been passed. A report disclosing the number of votes cast in favor of, withheld from voting or voted against each item of business at this meeting will be filed on SEDAR promptly following the meeting and disclosed in a press release to be issued forthwith following the meeting. Is there any other formal business that may be properly brought before this meeting? Having received none, this concludes all matters before our annual meeting, and I now declare the annual meeting terminated. As the results of the first quarter of fiscal 2023 were just released 2 weeks ago, and there was a public conference call to discuss those results, which is recorded and available for a replay on the corporation's website, we did not intend to have management do any type of formal management presentation at this meeting. But we will open up the discussion platform for a question-and-answer session should there be any questions from shareholders at this time. [Operator Instructions]

Mr. Chair, I confirm we've received one question here. The question is, you recently published your first ESG report. Can you tell us how we should think about the company in the context of its profile as a sustainability investment?

Thank you, Mr. Secretary. Perhaps, Ed, you could take that question?

Yes. Thanks, Mike. Yes, so for the last 20 years, Descartes has been highly focused on helping its customers take paper-based processes out of its operations and vehicles and miles driven by our customers' vehicles off the road. Our customers have used our solutions to do this for 20 to 25 years now. Initially, they were focused on doing these things to save money. And over the last 10 or 15 years, as ESG and environmental issues have become more important, they have additionally used these solutions from Descartes to take miles off the road, trucks off the road and paper out of their processes in an effort to help save the environment. We noticed over the past 5 to 10 years, these issues become more and more important, that our customers are buying our software for both reasons, to save money and to save the environment. Some of the rating agencies that have gotten involved in handling ESG matters have mostly focused in their review of us of our own environmental impact, which is, because we're a software company, relatively minor. But the impact that we have on the environment through our customers is massive. We've taken tens of thousands of trucks off the road on behalf of our customers in an effort to save money and with the added benefit of saving the environment. And because some of the rating agencies didn't highlight that because of the procedures they have, which may change in the future, but right now, they don't look at a company like Descartes based on its impact that its customers may have on the environment using our software. We wanted to put a report out there so the people understood just how much of an impact we can have for our customers as we're helping them in their operations, not only to save money but to take trucks off the road and to take paper-based processes out of their business and that impact on the environment, which I think is important to the whole world and certainly, to our shareholders that are operating ESG funds. So we wanted to highlight that, and we put this ESG report out there to make that clear. I will stop there.

Mr. Chair, I don't see any other questions in the queue at this time.

Thank you. Thank you to everyone for joining us today and accommodating this online format. We wish each of you all the best.

This concludes the meeting. You may now disconnect.