Pizza Pizza Royalty Corp.

Ladies and gentlemen, thank you for standing by and welcome to the Pizza Pizza Royalty Corp.'s earnings call for the second quarter of 2026. During the presentation, all participants will be in a listen-only mode. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star, then the number one on your telephone keypad. As a reminder, the conference is being recorded on August 5th, 2026. I will now turn the call over to Christine D'Sylva, CSO.

Thank you. Good afternoon everyone and welcome to Pizza Pizza Royalty Corp.'s earnings call for the second quarter ended June 30th, 2026. Joining me on the call today is Pizza Pizza Limited's President and Chief Executive Officer Paul Goddard and Chief Offering Officer Philip Goudreau. Just a quick note, our discussion today will contain forward-looking statements that may involve risks relating to future events. Actual events may differ materially from the projections discussed today, and all forward-looking statements should be considered in conjunction with the cautionary language in our earnings release and the risk factors included in our annual information form. Please refer to our earnings release and the MD&A in the investor relations section of our website for a reconciliation and other disclosures related to non-IFRS measures mentioned on this call. As a reminder, analysts are welcome to ask questions after the prepared remarks. Portfolio managers, media, and shareholders can contact us after the call. With that, I'd like to turn the call over to Paul to provide a brief business update.

Thank you and good afternoon, everyone. Thanks for joining the call. This afternoon, we released our results for the second quarter of 2026, which you can find posted on our website. The overall macroeconomic environment remained challenging throughout the second quarter. Persistent pressures on consumer confidence, discretionary spending, and overall QSR demand continued to weigh on our retail sales and guest traffic across both brands. So in the second quarter, our overall same store sales decreased by 5.0%. Pizza Pizza restaurants were down 4.9% while Pizza 73 restaurants were down 5.3%. Before addressing our operational highlights, I want to comment on the dividend adjustment we announced in May. In light of the ongoing macroeconomic headwinds and lower overall sales volume across the network, our board took the prudent step to reduce our monthly dividend by about 12.9%. It was 1 cent per share from 7.75 cents to 6.75 cents. And this decision was made to ensure our distribution payout ratio remains sustainable while preserving our working capital balance. Maintaining financial stability and protecting long-term shareholder value remain core priorities for our leadership team and our board. Beyond broader economic pressures, a few additional factors impacted our top line sales comparisons this quarter. First, tough prior year comps with the 2025 NHL playoff runs, which everyone I'm sure remembers. We faced a difficult comp against Q2 of 2025 as a result, and last year's second quarter benefited significantly from that deep extended NHL playoff runs, multiple runs by multiple Canadian teams, which generated exceptional home viewing, sorry, home viewing, apologies, event-based sales at our non-traditional locations and late-night pizza consumption that did not repeat to the same extent this year. Second, declines in international student enrollment affecting many of our non-traditional sites at colleges. So reduced numbers of international students across Canada at many of these post-secondary campuses, I think many are familiar with that. That just presented direct headwinds for our non-traditional locations at these campuses. we have across the country and nearby hubs as well. So this demographic traditionally represents a high frequency, late night customer base and the volume did drop significantly and impacted both transaction counts and overall sales at these sites. So navigating these shifting consumer dynamics requires us to be agile and creative and while input costs and market conditions remain challenging, we are focused on execution. And that means driving traffic through value and product innovation expanding our store network in key markets and really leading into operational efficiencies to build long-term customer loyalty and engagement. Starting with our value and product offerings, our core pizza category remains resilient, supported by strong value offerings across every price point. In this environment, value gets customers through the door, but continuous menu innovation and cultural relevance keeps them coming back. In the second quarter, we executed a comprehensive strategy focused on value leadership, Key Cultural Moments, and High Impact Product Launches. So as an example, first on value, we took aggressive steps to reinforce our value leadership position and support our walk-in channel. In mid-May, we introduced our Buck an Inch special, featuring Buck Martinez, as many will know from the Blue Jays, pricing every two-topping pizza at just $1 per inch for almost $10 small up to an $18 XXL pizza. And this simple, compelling value message resonated immediately quickly surging to our number one selling menu offer in our sales mix. The popularity of this offer has allowed us to remove a number of legacy deals, simplifying the menu and helping streamline operations at the restaurants. In late May, we increased the size of our pizza slices as well, nationally, by 25%, with only a nominal price adjustment to protect profitability. This move delivered a noticeable boost in perceived customer value and elevated the overall slice experience. This return to our famous XXL pizza slices has been extremely well received by customers. And alongside our slice refresh, our $5 meal deal, the slice and drink combo, continued to perform well, driving sustained improvements in walking traffic and sales throughout Q2. Second, we leaned heavily into culture to keep our brand top of mind, capitalizing on the immense viewer engagement during the FIFA World Cup. We introduced Dip Cup Nations, featuring dip trios matching participating country flags, which was quite fun and really had good take-up. We also launched the Pitch Party Pizza, transforming our party pizza box into an interactive table-top football or soccer game, complete with mini-nets, driving an increase in party pizza sales. A significant increase, I will say. We also capitalized on match-play momentum with something called Piedration Breaks instead of Hydration Breaks, So we had codes associated with that offering 25% off pizzas during match hydration breaks. And our media analysis of that showed that we were the number one searched pizza brand in Canada during the activation of the hydration break. So that was a great success. Together these activations established Pizza Pizza as the most searched pizza brand, like I said, and we're pretty proud of that. Finally, targeted menu innovation allowed us to drive incremental snack and individual consumption occasions across both brands. At Pizza 73, we expanded our core chicken category with the launch of Golden Crispy Chicken Tenders, reinforcing Pizza 73's strength in chicken and providing a premium, craveable option for family and group orders. We also brought back our popular 420 pre-rolls with new flavors, elevated packaging, and an attractive $2 for $5 value offer. This campaign doubled our pre-roll sales during 420 week and sustained strong momentum through its month-long LTO run. To capture the growing snacking market, we launched three new loaded poutine recipes at Pizza Pizza, driving a 36% year-over-year sales lift in our poutine category. So we're definitely encouraged by that. And so as you can see, hopefully by balancing everyday value, high-energy cultural campaigns, and smart product innovations, we are continuing to give consumers compelling reasons to choose our brands every day. Turning to our restaurant network, with well over 800 restaurants now from coast to coast, We have many points of convenience for our customers to experience our bread. During the quarter, we opened four traditional and two non-traditional Pizza Pizza locations and closed one traditional and six non-traditional Pizza Pizza restaurants and one non-traditional Pizza 73. It is worth noting that while our non-traditional locations saw the majority of the closures, our core high revenue traditional restaurants expanded net positive by three locations across BC, Ontario and Quebec. and as mentioned on numerous previous calls, our business is driven by two revenue streams, that traditional restaurant network which generates about 90% of our Royalty Corp. sales and our non-traditional and special event locations which typically generate the remaining 10%. And as I alluded to earlier, our non-traditional segment continues to face some headwinds, particularly those locations within colleges and universities where lower attendance tied to international student policies essentially, you know, left students essentially coming in from afar has resulted in reduced operating hours and overall sales and challenges for those colleges themselves. Looking ahead, we continue to look at growth opportunities across our network, and at the same time, we're taking a more disciplined approach than ever, carefully selecting locations and formats to ensure long-term profitability, particularly in the context of rising costs. We want sales growth, we want network growth, but we want viable, great locations. and I will say our long-term growth track record speaks for itself both for same store sales and network growth as we've grown from I think it was roughly 500 locations back in 2005 at our IPO to well over 800 as I said as of 25 and that's a 20-year period so if you know look at things on an ROE basis return on equity or CAGR growth rate I think we look quite good over time we've had a lot of institutional long-term holders and retail holders and as you well know, if you're familiar with our stock, our dividend is often in the 6% to 8% yield range, which represents a reliable, consistent investment for retail and institutional investors alike and we certainly look forward to getting more investors on board as well at these levels. So we are really now Canada's very own national pizza QSR chain leader and we're excited to grow beyond our borders, first in Mexico and then on to other countries that suit our system and our brand well. In closing, While we expect the macroeconomic environment to remain challenging in the near term, consumers are hurting and we know that, we are not standing idly by on the sidelines. We are proactively driving our business forward, leaning into our scale, sharpening our value proposition, and relentlessly focusing on menu innovation. With a resilient business model, a proven track record through these economic cycles, and the dedication of our franchisee partners across Canada, we are fully confident in our ability to navigate this period and strengthen our competitive position. and as always I want to do a little shout out to our owner operators. They are really the absolute key frontline people and an extension of our bigger team and also our employees internally. We work very seamlessly together and it's all about the passion and the hard work day in and day out and I think that's something that makes us real special and we're very proud of. So thank you again for joining us today and I'll now ask Christine to provide our detailed financial update.