Pizza Pizza Royalty (PZA) investor relations material

Executive summary

• Q2 2026 saw continued macroeconomic headwinds, with persistent pressures on consumer confidence and discretionary spending impacting retail sales and guest traffic across both brands.

• Same-store sales declined 5.0% year-over-year, with Pizza Pizza down 4.9% and Pizza 73 down 5.3%.

• Royalty Pool System Sales declined 3.6% to $155.6 million in Q2 2026 compared to the same quarter last year.

• The board reduced the monthly dividend by 12.9% in May 2026 to ensure payout ratio sustainability and preserve working capital.

• Adjusted earnings per share fell 5.4% in Q2 2026 year-over-year.

Financial highlights

• Royalty income decreased 3.6% year-over-year to CAD 10 million for the quarter.

• Administrative expenses fell to CAD 181,000 from CAD 283,000 in the prior year, reflecting lower professional and director fees.

• Interest paid on the CAD 47 million credit facility was CAD 439,000, with the all-in rate now at 3.51% for the next three years.

• Dividends declared for the quarter totaled CAD 5.2 million (CAD 0.2125 per share), down from CAD 5.7 million (CAD 0.2325 per share) year-over-year, with a payout ratio of 102%.

• Working capital at June 30, 2026: CAD 2.2 million, down from CAD 3.7 million at December 31, 2025.

Outlook and guidance

• The macroeconomic environment is expected to remain challenging in the near term, with continued focus on value, menu innovation, and operational efficiency.

• Early Q3 trends are not yet clear, but recent product launches and cultural activations are showing encouraging signs.

• Traditional restaurant network expected to grow 2–3% in 2026, with continued renovations.

• The company targets a payout ratio at or near 100% on an annualized basis going forward.

• Dividend policy aims for consistent monthly distributions, with future changes aligned to cash flow and market conditions.