Empire Company Limited

Good morning, ladies and gentlemen, and welcome to the Empire Company Q4 2026 conference call. At this time, all lines are in listen-only mode. While we're in the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, this press star is there for the operator. This call is being recorded on Thursday, June 18, 2026. I would now like to turn the conference over to Katie Bryant, VP, Investor Relations. Please go ahead.

Thank you, Joelle. Good morning and thank you for joining us today for Empire's fourth quarter fiscal 26 conference call. Today we will provide summary comments on our results and then open the call for questions. This call is being recorded and the audio recording will be available on the company's website at empireco.ca. There is a short summary document outlining the points of our quarter available on our website as well. Joining me on the call this morning are Pierre St. Laurent, President and Chief Executive Officer. Costa Pazanis, Chief Financial Officer. and Luc Barchelec, Chief Customer Officer. Before we begin, I would like to remind you that today's discussion includes forward-looking statements. We caution that these statements are based on management's assumptions and beliefs and are subject to risks and uncertainties that could cause actual results to differ materially. I refer you to our news release and MD&A for more information on these assumptions and factors. With that, I'll turn the call over to Pierre.

Thanks, Katie. Good morning, everyone. We delivered a very solid finish to fiscal 26. by disciplined execution across the business and continued progress against our strategic priorities. This translated into 8.7% adjusted EPS growth for the year, which is within our long-term financial framework and growth margin expansion that is also within our target. We also continued operating with LG&E discipline that generated operating leverage, especially in the back half of the year. I'll focus on two topics today, our four-quarter results and market trends, and our expectations going forward, including strategic priorities as we move into fiscal 2027. Starting with our fourth quarter, we delivered adjusted EPS of 94 cents, up 27% over the year. Excluding other income and share equity earnings largely real estate-related, EPS grew 14.8%. And looking at the full year in fiscal 26, we had a lower dependence on our real estate related income and delivered a core EPS growth of 11.9%. It is very important to management that we continue to build the strength of the core business and capitalize on market opportunities. Food sales grew 2.1% with same-store sales up 1.4. Our two-year same-store sales stack improved sequentially through the year and was 5.3% in the quarter. This was driven by a strong performance in our full-service network as well as continued momentum in discount. The solid performance that we are seeing across all of our formats give us confidence that customers continue to find value in our stores. Fiscal 26 marked a clear shift towards new store growth. Following a period that was heavily focused on renovation and conversions, we are now accelerating new stores opening. With more than 20 stores already planned in fiscal 27 and more than 70 new stores planned over the next three years, We expect total food sales growth to outpace same-store sales more meaningfully going forward. We will remain disciplined in how we allocate capital. Every new store must deliver healthy returns, but we see significant opportunity and white space to capture new customers and drive top-line growth. In Q4, gross margin excluding fuel was flat year over year. and expanded by 14 BPS into the full fiscal year, within our target range of 10 to 20 BPS annually. This includes some pressure from higher outbound fuel costs in the second half of the quarter. While our margin has grown significantly over the past decade, we continue to see opportunities for consistent expansion, including through enhancement of our merchandising tools and processes, growth of Empire MediaPlus, and expansion of our personalization capabilities. While quarterly performance may vary, we remain committed to our goal of delivering 10 to 20 basis points of annual margin expansion over time. Now, I'll comment on what we're seeing in the current environment. Reported CPI for food purchased from stores was 4.1% this quarter. and our internal inflation remain well below that level. While we continue to see cost increase requests from suppliers, our national sourcing teams remain disciplined in protecting customer value. Consistent to our approach on tariffs, we are pushing back on fuel-related surcharges. We know many customers remain stretched, and our focus is on continuing the strength of value proposition through the levers we have, including C-plus and targeted promotion, along with our value size and own brand assortment. As we look ahead, our focus is on discipline execution across our four strategic priorities, customers, stores, growth, and cost efficiency. Each of these pillars includes are supported by clear, tangible action, and we will highlight a few examples. First, customers. We continue to strengthen our value proposition across all formats and channels, ensuring customers have a great experience and see clear value wherever they shop. we saw continued engagement across key elements of our customer value equation, including growth in theme plus participation, strong response to our promotional programs, and continued momentum in our own brand and value size offerings. Our focus remains on being the banner of choice in every market by delivering a consistently strong experience and clear value to customers at every shop. Next, stores. We are improving retail performance by investing in our store network and enhancing the in-store experience for customers. In Q4, we completed 24 real estate projects, including five new stores opening, four in discount, and two conversions. Over the next three years, we plan to accelerate our level of activity, completing more than 90 projects annually, an increase of 25% compared to fiscal 25 and 26. At the same time, we are continuing to activate several in-stores programs to make it easier for teammates to serve customers. This includes efforts like continued rollout in electronic shelf labels nationally, as well as evolving in-store processes and ways of working. Turning to growth. we remain focused on driving growth within our existing network, capitalizing on market opportunities and accelerating a key growth in giants in areas such as discount, pharmacy, e-commerce, and retail media. In discount, we are expanding into Atlantic Canada with three fresco locations opening in fiscal 26. Similar to our Western expansion, we have identified markets where we believe the banner can perform well, including one conversion from our existing network and two new locations. We were also pleased to announce the acquisition of Meran in April, which provides us with an entry point into the Quebec discount wholesale segment. We recently received court and regulatory approval and expect this transaction to close in the coming days. Turning to pharmacies. The business is performing well, and we see opportunities ahead. We finished our last fiscal year with strong results and are looking to continue that momentum. In terms of our strategy, right now we're focusing on optimizing the existing business and driving growth. Some immediate action is we are taking include better leverage our central field capabilities and optimizing labor to improve both productivity and service to customers. In parallel, we will continue to expand selectively, including adding pharmacy to new stores and being on the lookout for targeted opportunities to grow our network. You should think of this as the beginning of our journey pharmacy, and we will share more details over time. In e-commerce, the closure of Alberta's TFCs represents another important step in improving the economics of the business. With continued sales growth and strong momentum, we see meaningful opportunities ahead through VOLA and our third-party partnerships, including DoorDash, which has performed well since launching nationally in April. The team continues to pursue other initiatives to drive growth in our e-commerce business, and we look forward to providing an update later this year. Lastly, cost efficiency. We are realizing the benefits of investment made over the past several years while maintaining a strong focus on cost assistance. Costa will speak to this in more detail shortly. We are excited by our strategic direction and have shared our plans with our board of directors with their full support. As we refine our three years outlook to drive earnings growth supported by a clear set of initiatives, we expect to be in a position to share additional details in due course. Stepping back on our strategic priorities, are closely aligned with our financial framework and support our objective of driving adjusted EPS growth through a combination of earnings growth and share repurchases. We are also announcing 10.2% increase to our dividend, reinforcing our commitment to deliver a strong return to shareholders. As we enter fiscal 2027, we are very confident in our positioning and the opportunities ahead. We expect adjusted EPS growth to be in the eye of our long-term financial framework, supported by food sales growth, margin expansion, cost discipline, and improving e-commerce economics. In closing, fiscal 2016 reinforced the resilience of our business and our ability to deliver strong results in a challenging environment. We remain focused on delivering value for our customers as well as consistent, sustainable returns for our shareholders. With that, I'll turn it over to Costa.