Good afternoon, ladies and gentlemen, and welcome to the A&W Food Services of Canada Q4 2024 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a Q&A session. If at any time during this call you require immediate assistance, please press *0 for the operator. This call is being recorded on Wednesday, March 12, 2025. I would now like to turn the conference over to Susan Senecal, CEO. Please go ahead. Thanks very much, and good afternoon, everyone. Thanks for taking the time to attend our call today. I'm Susan Senecal. I'm President and CEO of A&W Food Services of Canada, and with me on the call today is A&W's Chief Financial Officer, Kelly Blankstein. Together, we are presenting A&W's results for the fourth quarter and for the fiscal year ended December 29, 2024. As a reminder, my remarks on this call may include our expectations, future plans, and intentions that may constitute forward-looking information. Such forward-looking information is based on estimates and assumptions made by management regarding, among other things, the general economic and geopolitical conditions, as well as the competitive environment. Actual results may differ materially from the conclusions, forecasts, or projections expressed by the forward-looking information. We refer you to our most recently filed MD&A and Annual Information Form, which include a summary of the material assumptions as well as risks and factors that could affect A&W's future performance and our ability to deliver on the forward-looking information. We also refer you to the MD&A for definitions and reconciliations of any non-GAAP financial measures mentioned on today's call. Our Q4 2024 earnings release, financial statements, MD&A, and Annual Information Form are available on SEDAR+, as well as our investor website at www.awinvestors.ca. 2024 was a milestone year for A&W for many reasons. One of our corporate highlights was successfully bringing the two halves of A&W together through a strategic combination between Food Services and A&W Revenue Royalties Income Fund. The transaction, which closed on October 18, 2024, involved Food Services acquiring all of the issued and outstanding units of the fund that it did not already own to create a new publicly traded, growth-focused QSR franchisor. The Fund units were delisted from the TSX after the market closed on October 17, and the common shares of Food Services began trading on the TSX under the symbol AW on October 18. The elimination of the Fund and the royalty arrangement has simplified A&W's structure and positioned us well for future growth. Further information regarding the transaction can be found in Food Services' most recently filed MD&A and the Fund's Management Information Circular dated August 29, 2024, which is available on the Fund's SEDAR+ profile. We're pleased that in 2024 we were able to increase the pace at which we were growing the number of A&W restaurants in Canada, making A&W even more top of mind and convenient for our guests. We added 19 net new A&W restaurants in 2024 by opening 28 and closing 9, which is an improvement over the previous year of net 8 restaurants added, and that translates to net annual restaurant unit growth of 1.8% in 2024. The increasing pace of restaurant openings is a result of stabilizing construction timelines following the multi-year slowdown in real estate transactions and development timelines following the COVID-19 pandemic. On the menu and innovation side, in 2024, we introduced Spicy Piri Piri Buddy Burger lineup, which has been very popular with guests, and we also introduced the tremendously successful Veggie Masala Burger, which set new company records for sales in many communities. The Veggie Masala Burger is a unique spicy recipe created in partnership with Nanak, Canada's leading producer of South Asian-inspired ingredients. In 2024, we also made significant advances with the Pret A Manger brand in Canada. In January, we opened the doors to Canada's first standalone Pret shop in Toronto's business district. This first Pret location is owned and operated corporately by Food Services, with further expansion of the Pret brand expected to come in partnership with franchisees. Since the fall of 2024, A&W guests across Canada have benefited from the launch of Pret Coffee in all A&W restaurants. We also began testing Pret Pastries in select A&Ws across Canada, which is showing early signs of success. Finally, and most importantly, in 2024, we placed increased focus on improving profitability and operational efficiency for franchisees while at the same time creating a better experience for our guests. We've made significant strides in this area over the past year, and this work has led to advancements to A&W's restaurant operating systems, the development of revamped restaurant designs, and other innovation that has reduced the cost of investing in and operating in A&W. The success of our franchisees is of the utmost importance to us, and restaurant success has remained a core strategic focus for us through 2025. With that, I will now turn things over to Kelly, who will take us through A&W's financial highlights for Q4 and fiscal 2024. Okay, thank you, Susan, and good afternoon, everyone. I'll start by giving a high-level overview of our annual results for 2024, and then I'll switch into some commentary around the quarterly results before handing back to Susan, who will give us an update on some of our more strategic areas and initiatives and outlook. Despite A&W restaurants across the country facing headwinds on sales in 2024 due to a difficult QSR environment marked by intense price competition and financial pressures on consumers, I'm pleased to report that we were able to grow total annual system sales, adjusted EBITDA, and our total restaurant count in 2024. A&W system sales grew by 0.8% in 2024, which is in line with the average performance of our peers in the Canadian QSR industry. We reported CAD 1.87 billion in system sales for fiscal 2024, an all-time high for A&W, and adjusted EBITDA also grew by CAD 1.2 million year-over-year to CAD 93.5 million in 2024. Although we had an increase in system sales, Food Services' annual revenue declined 2% in 2024, and you might wonder why. Our strategic decision to reduce the capital outflow required by our new and existing franchisees in response to rising interest rates in Canada included finding innovative ways to reduce the cost of the initial capital investment to open an A&W restaurant and the cost of modernizations for existing franchisees. That strategic decision resulted in a decrease in franchising revenue, for example, from the sale of equipment. Despite the decline in revenue, this was more than offset by a decrease in expenses after normalizing for non-cash and non-recurring items that we add back to arrive at adjusted EBITDA, which resulted in positive growth in adjusted EBITDA for the year. Income before tax increased 6% year-over-year due to the cessation of the royalty that was payable to the Fund under the old structure. Now let me just turn to a few comments on the fourth quarter of 2024. The headwinds in sales I mentioned earlier were the strongest in Q4 and led to -1.9% same-store sales growth and -0.1% system sales growth in the fourth quarter. We had growth in same-store sales in Q1 and Q2, and then growth turned negative in Q3 and Q4. The decrease in the sales is the result of a decrease in guest counts, partially offset by an increase in average check size due in part to industry-wide inflation on goods, services, and labor. The decrease in guest count reflects A&W's proportionate share of an overall decline in traffic at burger QSRs across Canada. We believe that the declining traffic at A&W restaurants and burger QSR more generally is attributable to increased interest rates and inflation along with market uncertainty, which have impacted consumer discretionary spending. In response to these economic conditions, we continue to seek new and innovative ways to offer A&W's guests a delicious and affordable experience and, in turn, increase guest traffic. Food Services' revenue was down 9% quarter-over-quarter same period last year due to the reduction in sales of equipment to franchisees for the reasons that I mentioned on our annual results earlier in this call. All other revenue streams in the fourth quarter versus last year's fourth quarter were relatively flat. Despite the decrease in revenue, we grew adjusted EBITDA in the fourth quarter by $0.2 million as compared to Q4 2023, achieving $27.9 million for Q4 of 2024. The decrease in, or sorry, the increase, rather, in adjusted EBITDA is primarily attributable to a decrease in operating costs in general and administration expenses, partially offset by the decrease in revenue. Of course, due to the transaction, Food Services' IFRS profitability measures for Q4 2024 and for the full fiscal year, such as net income before and after tax and net income per share, are not directly comparable to previous reporting periods. We do encourage everyone on the call to read Food Services' 2024 annual financial statements, and particularly MD&A, which are available on SEDAR + as well as on our investor website to fully understand the impact of the transaction and what it had on our results. At a high level, the impacts related to the cessation of the royalty expense, cessation of recognition of income from associates, and cessation of the amortization of deferred gain following the transaction completion, as well as the incurrence of a $16.9 million in non-cash, non-recurring deferred tax expense that was recorded upon the transaction completion on October 18, had some material changes to our results. I'll now hand it back to Susan for an update on our key strategic initiatives and some closing remarks. Thank you, Kelly. In summary, we're pleased with a number of our performance highlights in both Q4 and fiscal 2024, and we remain focused on executing our long-term strategy. As Kelly mentioned, sales and traffic were a challenge in the QSR industry in 2024 as consumers became even more value-conscious and gravitated towards lower-priced offerings. A&W has responded to this shift in consumer behavior by renewing our marketing strategy to reflect the importance of affordability amid disposable income pressures and a very competitive market. Top-line growth at restaurants remains a clear focus for us, and we benefit from our many years of experience and the strong partnerships we have with suppliers to respond effectively to the changing conditions that impact our business. While inflationary pressures persist, we're actively managing costs and leveraging efficiencies to deliver value to our guests and protect the margins of our franchisees. Throughout 2024, Food Services invested resources to help A&W franchisees achieve improved profitability and increase their return on investment from capital spend. We have identified and begun the implementation of structural changes to our business that will directly benefit franchisees' bottom lines. We're pleased with the gains we achieved in 2024, and we're optimistic about the additional gains to be made as we continue progress on this work. We're also taking proactive measures to minimize the impact that tariffs on goods imported from the U.S. may have on A&W's business. As a business that's fully owned and operated in Canada, A&W's strategy is to look first to Canada for all sourcing, so we are already somewhat protected from these impacts should they come. For example, many of the key ingredients in A&W's products are sourced within Canada, where we have more exposure in food and on ingredients like lettuce and onions, which tend to be grown in the U.S. However, we're looking at alternative options. A&W also procures equipment sold to franchisees that is assembled in the U.S., but it's unclear on how tariffs might apply because equipment can cross the border multiple times during the process of assembly. Given our capital-light strategy, we are anticipating being in a cycle where there is less equipment being purchased overall, which should also mitigate these impacts. We believe that the likely and potentially bigger impact to A&W's business would stem from the impact that tariffs may have on disposable income for Canadian consumers, but those outcomes are still indeterminable. You know, what's good for Canadians is good for A&W, and we're aiming to bring the kind of affordability that allows guests to visit A&W restaurants as often as they would like. We expect Food Services to continue to achieve top and bottom-line growth, supported by menu innovation, our new loyalty program that will be launched in the coming months, and our continued focus on adding new A&W restaurants to the Canadian landscape. We're confident in our ability to deliver sustained growth through our franchise model, strategic initiatives, and commitment to an excellent guest experience. We appreciate the dedication of our employees, our franchisees, and all of our partners, and we thank our shareholders for their continued support. With that, I'll turn the call over to the operator for any questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press * followed by the 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press * followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Mark Petrie with CIBC. Your line is now open. Hey, good afternoon, Susan and Kelly. I appreciate you guys doing the call. I have got a few questions to run through, but feel free to cut me off if you want to move on to the next person in the queue. Maybe we could just start with the menu side. Obviously, you have taken some action with your menu and marketing to address the value-seeking consumer. I am just wondering if you could talk a little bit more about the impact those have had on your traffic and basket size. Yeah, thanks, Mark, and good afternoon to you too. Thanks for joining. I wanted to, you know, in terms of our menu innovation, it's clear that value is really important to guests, and at any time we do something that offers additional value, lower prices, increased accessibility through price, we've seen a good response from the public. We've done a few of those things already towards the end of 2024 that have yielded promise, and we intend to continue that type of activity through 2025 because we believe that that's exactly what the market needs right now. Yeah, understood. I guess the expectation would be that that sort of innovation would continue and would sort of span across other parts of the menu. Correct, that's right. I mean, we're very focused on beef and beef burgers, so it's less likely to dominate, but certainly we're looking at other things, for example, portioning sizes and things like that that allow people to have a few more options. Yeah, understood. Okay. The 2025 outlook, specifically on the same-store sales guidance, you know, it implies a pretty material acceleration in the same-store sales trends. Could you just talk about the building blocks for that? If you could add any comments just about sort of performance of Q1 to date and how you expect the same-store sales trends to sort of evolve throughout the year to get to that guidance range or that outlook range. Sure. I'll start by saying, you know, there's a lot more things that are not certain than there are that are certainties. While we've seen some trends that we've identified through 2024, it does feel like the marketplace and the market and consumers are a little bit confused and jumpy right now in terms of different things that are in the news and thoughts of what might be happening in the economy and so on. It's very hard for us to gauge, you know, what is the playing field that we're actually operating on and what will our market look like for the next months or weeks and so on. At this point, we're thinking about and are sort of betting on the same types of activities and the same types of growth that we saw when we first issued some of those forecasts in 2024 towards the fall of 2024. Those include things like increased focus on value. They include things like menu innovation, particularly menu innovation focused on the growing number of multicultural Canadians that are in markets across the country. Things like our beverage offerings that are opening up some new visits and also some new opportunities for franchisees to have a wider range. That's an area that we've under-indexed on. Earlier, we mentioned our loyalty program that's launching at the end of Q2, and that's certainly something that we think offers great promise to us as well. Mobile in general is an area where we've been a little bit later to the event than some others, and we feel like there's room for us to grow given our under-indexing. Those are just a few items of areas where we think that we can experience growth. Okay, yeah, that's helpful. Thanks for the recap. Could you talk at all about the sort of trends that you've seen in Q1? Are they materially different or notably different than what you saw in Q4? Maybe even more broadly, when you expect we could see an inflection back to positive comps? I wish I could pinpoint that for you. I would say that, you know, this year, what's been a bit unusual compared to last year was we had very severe weather across Canada in period two. That is, again, another factor that I know everyone talks about the weather, but I would say that this year had a material impact. We had days when there was, you know, double and triple-digit kind of declines due to intense cold or intense snow and so on. Given the fact that we're only sort of 10 weeks into the year, it's a little bit hard to separate that out from the rest. Again, I think anytime we run something that is value-oriented, we are seeing positive and promising results. We feel like the trends will be poised to improve once we get rid of some of the clouds that are overhanging us, whether that's economic fears or weather or others. If we can get to a stage where we have maybe four or eight weeks in a row where we can actually look at the impact of our own actions versus outside forces that seem to be a bit more powerful than anything we can do, we'll have a better sense of how we're performing against the market, but also against our prior year. Yeah, understood. Okay. Franchisee profitability is something you talked about in your prepared comments there, obviously, but hoping you can expand on that a little bit just in terms of some of the sort of specific initiatives or changes you've made to improve that. Maybe you could just run through some examples. Sure. One of the ways that we track sort of our progress in this area is to say, you know, we're not going to count anything that's commodities rising or falling because that's obviously something that's more market-based. We are looking at actual changes that we're making. Whether that's, you know, a change in the way that we produce a cup, for example, or a change in a product formulation or a change in how we distribute things or package things and so on. Anything that structurally changes, not just once, but every single time, representing savings for franchisees. That has been the focus of our work. We've also focused on training and awareness of profit opportunities in restaurants and have already conducted at least two rounds of city-by-city meetings where operators can share their best practices, where we can introduce some ideas for people in terms of cost savings. We've worked hard with our suppliers of different equipment to identify things like utility opportunities and are working with something we call total cost of ownership when it comes to equipment, for example, that can help operators have a better sense of the value of preventative maintenance and things like that. I think we started the work by saying we're going to look at every line of the P&L and see where we can help operators optimize their performance, and that's exactly what we're doing in the process of doing and will continue to do throughout the year. Okay, and I may have missed it, or maybe you didn't say. Did you specifically quantify where you're at in the sort of target to a 30% increase in franchisee profitability? I think it was 5% at Q3 2024. Is that something you're going to be updating quarterly, or how should we expect to be sort of updated on the franchisee profitability work? It was that through our strategy, we wanted a 30% improvement to operator profitability. That first result was kind of saying we're on track if you think about the fact that our strategies are five years long and we had anticipated sort of evenly distributing sort of some of those steps forward. 30% over the five years would be our target. Okay. Then. We are on track. Yeah, yeah, understood. Okay, thank you. Just my last question, I guess. Again, you touched on it. Just hoping you could expand a little bit more with regards to your latest thinking on Pret and when we could expect to, or you would be in a position to communicate more details about your plans there. Yeah, I mean, what I can share with you right now is that we're actively talking to landlords for a number of possible locations. Everything takes a little bit of time. I think by the time the next quarter or so rolls around, we'll start to have a bit more results from some of those inquiries. I think our plan is to say, let's identify some really good growth opportunities in specific locations. That's how we like to do our development plans, and we are absolutely working on that right as we speak. Hopefully we'll have better news and positive news and more precise news for you as we hit the next quarter. Yeah, understood. Okay, thank you for all your answers and all the comments, and wish you all the best. Thanks very much. Appreciate the question. Ladies and gentlemen, as a reminder, should you have a question, please press star one. There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.