A&W Food Services of Canada Inc. | Q3 2026 Financial Results - DEFI TECHNOLOGIES INC

Explicit Guidance:

• FY2026 Adjusted EBITDA: Maintained range of $103–105 million (up from $100 million in FY2025).
• FY2026 Restaurant Count: Forecast to end with 1,112–1,120 A&W restaurants (up from 1,094 at end of FY2025).
• FY2026 System Sales Growth: Forecast range of 2.5%–5.0% (vs. 2.8% achieved in FY2025).
• FY2026 Same-Store Sales Growth: Forecast range of 0.5%–3.0% (vs. 1.2% achieved in FY2025).
• Dividends: Committed to maintaining the current quarterly dividend level ($0.48/share paid Q3 2026) for the foreseeable future.
• Share Buybacks (NCIB): Authorization to purchase up to 600,000 shares for the 12-month period ending March 19, 2027 (61,000 shares repurchased year-to-date).

Business-Segment Outlook:

• A&W Restaurant Growth: Continued expansion focused on Quebec and Ontario; targeting new locations via lower-cost, freestanding designs.
• Pret-a-Manger Expansion: Expecting 3–4 franchised shops to open by end of FY2026 (plus 2 corporate locations); currently targeting new sites in Calgary, Vancouver, Toronto, and Montreal.
• Menu Innovation: Plan to boost appeal via distinctive menu items including premium beef burgers, chicken, plant-based options, and globally inspired offerings.
• Beverage Strategy: Will balance new beverage innovation with a reinforced focus on root beer as the core beverage driver.
• Service Fees: Ongoing migration of restaurants from 2.5% to 3.5% service fee rate (approx. 120 locations remaining at 2.5% as of Sept 6, 2026).
• Brand Portfolio: Evaluating complementary brands beyond A&W and Pret to leverage franchisor capital-light model and create franchisee opportunities.

Market and Competitive Outlook:

• Consumer Behavior: Addressing a bifurcated market where guests are value-conscious yet demand premium experiences, novelty, and social-media-driven trends.
• Industry Positioning: Aiming to become #1 in Canada for the next generation of QSR fans by combining iconic taste with scroll-stopping food.
• Competitive Dynamics: Expect to perform at or slightly ahead of the market despite broad consumer spending reticence; leveraging mobile app and coupon offers to drive affordability.

Macro / Industry Outlook:

• Economic Environment: Anticipates sustained pressure on household budgets due to elevated costs of living and disposable income constraints over the next few years.
• Gasoline Prices: Noted volatility but expects consumers to mentally budget for fuel, with high oil prices acting as a drag on discretionary income and caution against debt.
• Seasonal Trends: Observed uplift from domestic travel in Q3; noted potential headwinds during back-to-school periods due to increased household expenses.

Strategic Initiatives:

• New Mission: Evolved to "transform A&W to become number one in Canada for today's generation of QSR fans," prioritizing guest relevance, franchisee success, and capital-light growth.
• Store Formats: Developing lower-cost freestanding designs to broaden franchise ownership accessibility; continuing turnkey and equipment sales programs.
• Loyalty & Operations: Leveraging five-star operating system, A&W mobile app, and A&W Rewards loyalty program to drive return visits.
• Expansion Model: Pret growth to occur primarily through the franchise model; evaluating other complementary brands for potential acquisition or partnership.

Risks and Headwinds to Outlook:

• Economic Sensitivity: Continued consumer caution regarding discretionary spending and high cost of living may impact same-store sales growth.
• Inflation/Costs: Elevated energy/gasoline prices and general cost pressures affecting consumer wallets and franchisee profitability.
• Turnkey Revenue Volatility: Quarterly turnkey revenue fluctuations can temporarily depress Adjusted EBITDA margins due to lower margin recognition on equipment/turnkey sales.
• Competition: Shift in consumer preferences toward novelty and premium options requires continuous innovation to maintain market share.

Management Tone on the Future:

• Confidence: Expresses being "encouraged" by Pret momentum, new store designs, and the "strong" resonance of the Smashed Burger promotion.
• Strategic Focus: Tone is decisive and forward-looking, emphasizing a clear pivot to "premium value" and capitalizing on a "significantly changed" consumer environment.
• Hedges: Management explicitly cites general economic/geopolitical conditions and competitive environment as key variables that could cause actual results to differ materially from projections.
• Change vs. Prior: No changes to FY2026 guidance; reaffirms confidence in the existing trajectory despite macro headwinds.

Miscellaneous:

• Financial Efficiency: Net debt-to-Adjusted EBITDA ratio improved to 2.2x (down from 2.4x at end of Q3 2025).
• Share Count: 23.9 million common shares outstanding as of period end.