Hello, this is the Chorus Call Conference Operator. Thank you for standing by. Welcome to Boston Pizza's Fourth Quarter Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded on February 13, 2026. After the presentation, there will be a question-and-answer session. Participants on the call may also pose their questions via email to Boston Pizza's Investor Relations Department at investorrelations@bostonpizza.com. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone.
At this time, I would like to turn the conference over to Michael Harbinson, Chief Financial Officer. Please go ahead.
Very good. Thank you, and welcome to the call. Today we'll be discussing the 2025 fourth quarter results for both Boston Pizza Royalties Income Fund or the Fund, and for Boston Pizza International or BPI. For complete details on our financial results, please see our fourth quarter materials filed earlier today on SEDAR+, or visit the Fund's website at www.bpincomefund.com. Should you require additional information after the call, you can reach out to our investor relations email address at investorrelations@bostonpizza.com. The Fund is a limited purpose, open-ended trust established under the laws of British Columbia to acquire indirectly certain trademarks and trade names used by BPI in its Boston Pizza restaurants in Canada. BPI pays royalty income and distribution income to the Fund based on franchise revenue of Royalty Pool restaurants.
For a complete description of the Fund and its business, please see the annual information form filed earlier today on SEDAR+. Before I turn the call over to Jordan Holm, President of BPI, I would like to note that certain information in the following discussion may constitute forward-looking information. For a more complete definition of forward-looking information and the associated risks, please refer to the Fund's management discussion and analysis issued earlier today. Forward-looking information is provided as of the date of this call, and except as required by law, we assume no obligation to update or revise forward-looking information to reflect new events or circumstances.
With that, I will now turn the call over to Jordan. Jordan?
Thank you, Michael, and welcome everyone to Boston Pizza's fourth quarter investor conference call. Today I'll be discussing our fourth quarter results and share a brief outlook, and Michael will summarize our key financial highlights. As usual, we'll leave time for your questions at the end of today's call. In the fourth quarter, Boston Pizza continued to deliver strong sales results, sustaining the momentum built throughout the preceding quarters of 2025. The strong performance was hallmarked by Boston Pizza restaurants achieving the highest annual total franchise sales ever recorded in 2025. These results were achieved despite mounting trade tensions and broader macroeconomic uncertainties, underscoring the resilience and strength of our business.
The Fund posted franchise sales from restaurants in the Royalty Pool of CAD 244.4 million for the fourth quarter and CAD 976.3 million for the year, representing increases of 4.3% and 4.8% respectively versus the same periods one year ago. Same-restaurant sales, or SRS, was 3.7% for the fourth quarter and 4.7% for the year. SRS for the fourth quarter was principally due to continued momentum in takeout and delivery and effective promotional initiatives. The Major League Baseball playoffs also positively impacted SRS for the period. For the year, SRS was principally due to continued momentum in takeout and delivery, effective promotional initiatives and favorable comparisons to a softer performance in the prior year. Hockey and baseball playoffs also positively impacted SRS for the year.
From a marketing perspective, we kicked off the fourth quarter with the exciting launch of our Game Day menu in coordination with the football season, offering value deals for food and beverages and holding weekly giveaways with prizes such as free food and football merchandise. Our Game Day promotion was complemented by extensive TV, digital, and social media coverage to boost guest engagement. The fourth quarter also saw the launch of our holiday menu, with new festive menu creations for both food and beverages. This included the Pepperoni Stinger Pizza and Stuffed Crust Mozza Sticks , both of which quickly became guest favorites and will become part of our core menu offering going forward. Complementing the holiday menu was our annual gift card incentive program. Guests who purchased CAD 50 or more in gift cards receive a CAD 10 promotional card redeemable from January to March of 2026.
In terms of restaurant development, nine Boston Pizza restaurants were renovated during the fourth quarter and 40 restaurants were renovated in total during the year. We have an array of exciting initiatives lined up for the first quarter of 2026, designed to maintain our strong sales momentum.
I'll continue or I'll share the details with you shortly, but first, let's hear from Michael about the Fund's financial performance. Michael?
Thank you, Jordan. The Fund posted royalty income of CAD 9.8 million for the fourth quarter and CAD 39.1 million for the year, compared to CAD 9.4 million and CAD 37.3 million, respectively, for the same periods one year ago. The Fund posted distribution income of CAD 3.2 million for the fourth quarter and CAD 12.8 million for the year, compared to CAD 3.1 million and CAD 12.2 million, respectively, for the same periods one year ago. Royalty income and distribution income for the fourth quarter and year were based on the 372 Boston Pizza restaurants in the Royalty Pool , which reported franchise sales of CAD 244.4 million and CAD 976.3 million, respectively.
For the same periods in 2024, the Royalty Pool reported franchise Sales of CAD 234.2 million and CAD 931.7 million. The Fund's net and comprehensive income was CAD 11.1 million for the fourth quarter, compared to CAD 6.6 million for the fourth quarter of 2024. The CAD 4.5 million dollar increase in the Fund's net and comprehensive income for the fourth quarter, compared to the same period in 2024, was primarily due to a CAD 5.7 million dollar increase in fair value gain and a CAD 0.6 million dollar increase in royalty income and distribution income, all partially offset by a CAD 1.5 million dollar increase in income tax expense and a CAD 0.3 million dollar increase in net interest expense.
The Fund's net and comprehensive income was CAD 42.2 million for the year, compared to CAD 31.9 million in 2024. The CAD 10.3 million increase in the Fund's net and comprehensive income for the year compared to 2024, was primarily due to a CAD 10.7 million increase in fair value gains, a CAD 2.4 million increase in royalty income and distribution income, and a CAD 2.2 million decrease in administrative expenses, partially offset by a CAD 2.6 million increase in income tax expense and a CAD 0.3 million increase in net interest expense. The Fund's cash flows generated from operating activities for the fourth quarter was CAD 9.9 million, compared to CAD 9.4 million in the fourth quarter of 2024.
The increase of CAD 0.5 million was primarily due to an increase in royalty income and distribution income of CAD 0.6 million, and an increase in royalty income and distribution income of, sorry, CAD 0.6 million, and an increase in changes in working capital of CAD 0.1 million, partially offset by an increase in income taxes paid of CAD 0.2 million. Cash flows generated from operating activities for the year was CAD 39.7 million, compared to CAD 38.1 million in 2024.
The increase of CAD 1.6 million was primarily due to an increase in royalty income and distribution income of CAD 2.4 million, a decrease in administrative expenses of CAD 0.2 million, partially offset by an increase in income taxes paid of CAD 0.7 million, a decrease in changes in working capital of CAD 0.2 million, and a decrease in interest received of CAD 0.1 million. While net and comprehensive income or loss and cash flows from operating activities are both measures under IFRS accounting standards or IFRS, the Fund is of the view that net income or loss and cash flows from operating activities do not provide the most meaningful measurement of the Fund's ability to pay distributions.
Net income contains non-cash items that do not affect the Fund's cash flows, whereas cash flows from operating activities is not inclusive of all of the Fund's cash required outflows and therefore is not indicative of the cash available for distribution to unitholders. Non-cash items include fair value adjustments on the investment in Boston Pizza Canada Limited Partnership, the Class B Unit liability, interest rate swaps, and changes in deferred income taxes. Consequently, the Fund reports the non-IFRS metrics of Distributable Cash and payout ratio to provide investors with, in the Fund's opinion, more meaningful information regarding the Fund's ability to pay distribution to unitholders. The Fund generated Distributable Cash of CAD 7.9 million for the fourth quarter, compared to CAD 7.5 million for the same period in 2024.
The increase in Distributable Cash of CAD 0.4 million or 5.1%, was primarily due to an increase in cash flows generated from operating activities of CAD 0.5 million, partially offset by a CAD 0.1 million increase in BPI Class B Unit entitlement. The Fund generated Distributable Cash of CAD 31.6 million for the year, compared to CAD 30.4 million in 2024. The increase in Distributable Cash of CAD 1.2 million or 4.1%, was primarily due to an increase in cash flows generated from operating activities of CAD 1.6 million, partially offset by higher Class B Unit entitlement of CAD 0.2 million and higher interest paid on debt of CAD 0.1 million.
The Fund generated Distributable Cash per unit of CAD 0.369 for the fourth quarter and CAD 1.487 for the year, compared to CAD 0.351 and CAD 1.429, respectively, for the same periods in 2024. The increase in Distributable Cash per unit of CAD 0.018 or 5.1% for the fourth quarter was primarily due to the increase in Distributable Cash discussed earlier. For the year, the increase in Distributable Cash per unit of CAD 0.058 or 4.1% was primarily due to the increase in Distributable Cash discussed earlier.
As Jordan highlighted previously, during the fourth quarter, Boston Pizza broke its record for the highest year for total franchise sales in the brand's history, enabling the Fund to issue a special cash distribution of CAD 0.11. This special distribution was declared on December 8, 2025, and paid to unitholders on December 31, 2025. The special distribution affected the Fund's payout ratio for the fourth quarter and year. The Fund's payout ratio for the fourth quarter was 127.3%, compared to 118.4% in the fourth quarter of 2024.
The increase in the Fund's payout ratio for the fourth quarter was due to distributions paid increasing by CAD 1.1 million or 13%, including the special distribution, partly offset by Distributable Cash increasing by CAD 0.4 million or 5.1%. For the year, the Fund's payout ratio was 101.9%, compared to 99.9% in 2024. The increase in the Fund's payout ratio for the year was due to distributions paid increasing by CAD 1.9 million, or 6.2%, including the special distribution, partially offset by Distributable Cash increasing by CAD 1.2 million or 4.1%.
For illustration, the payout ratio for the fourth quarter and the year would have been 97.5% and 94.5%, respectively, without taking the special distribution into account. The Fund's payout ratio fluctuates quarter to quarter, depending on the amount of distributions paid during a quarter and the amount of Distributable Cash generated during that quarter. On February 12, 2026, the trustees of the Fund approved a cash distribution for the period of January 1, 2026, to January 31, 2026, of CAD 0.12 per unit, and that will be paid on February 27, 2026, to unitholders of record at the close of business on February 21, 2026. The trustees' objective in setting a monthly distribution amount is simply that it be sustainable. The trustees will continue to closely monitor the Fund's available cash balances given the fluctuating economic outlook.
With that, I will turn the call back over to Jordan for more on the outlook. Jordan?
Thank you, Michael. We are excited to begin 2026 with a lineup of guest favorite campaigns. Boston Pizza launched its first quarter with the popular Pasta Tuesday all month long promotion in January, giving guests the chance to enjoy pastas every day of the week, starting at just CAD 11.99, with gourmet pastas available for CAD 15.99. Additionally, to celebrate the NFL playoff season, we partnered with Pepsi to offer guests the chance to win exclusive NFL prizes, including a trip to a regular season football game. Tomorrow, February 14th, we'll be celebrating one of our favorite traditions, Valentine's Day, with heart-shaped pizzas at Boston Pizza. For every pizza sold, CAD 1 will be donated to help support local charities in our communities.
Further into 2026, we'll be activating on marketing opportunities and supporting franchisees to engage with their communities to cheer on Canadian athletes in the Olympics and in the World Cup. As we enter 2026, we aim to build on the strong momentum of the past year, continuing to monitor the evolving trade landscape and proactively adapting our business to support Boston Pizza restaurants across Canada. We are encouraged by our sustained performance and remain committed to elevating the guest experience, supporting our franchisees, and driving long-term sustainable growth through innovation and operational excellence.
With that, I'd like to begin the question and answer session. Operator?
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on their touchtone phone, or send the question via email to investorrelations@bostonpizza.com. Please note, those questions that we do not get during the call will be answered via email immediately following the end of the investor conference call. The first question comes from Nick Corcoran with Acumen Capital. Please go ahead.
Morning, guys, and congrats on the record quarter and record year.
Thank you, Nick.
Just a couple questions for me. The first is you're lapping the GST Holiday that was the end of 2024 and went to 2025. I'm just wondering if you saw any impact either in your fourth quarter results or if you've seen anything in your. I understand you're only a few weeks into 2026, but any impact from that?
Michael, do you want to take that one?
So the GST Holiday last year stretched from December into January, and its impact, I think, on the business was most pronounced in December. So as we lapped kind of December with December, I think that's where we saw some impact. But just to put that in context, it wasn't, the magnitude of that wasn't overly significant. And then in terms of the forward kind of looking aspect of that, without saying anything kind of too substantive, the kind of January over January impact was negligible, I would say. It wasn't overly significant.
Good. And then, with the Olympics, are you expecting an uptick in traffic this month?
Yeah, it, we are. And, certainly, some of the events of the Winter Olympics are more popular for, I'll say, community viewing or viewing in restaurants versus other ones that are more often enjoyed at home. Hockey, women's and men's, tend to be the two larger team sport draws, I'll say. So as those progress into the medal rounds, we expect people to be coming out to Boston Pizza restaurants to celebrate the games together. And the further those go and the more meaningful the games are, there is, of course, the consideration of time zone when the Olympics are over in Europe.
But nonetheless, you know, a semifinal or a gold medal game, should we reach that for either men's or women's hockey or other sports when it's a gold medal on the line. We definitely have plans in place to make sure that Boston Pizza is the destination to watch those events.
Great. You had a pretty good year, I think, for renovations. Any indication what you're expecting for 2026?
Yeah. We had 40 renovations last year, which was an increase of 12 from 28 the prior year. So we were pleased with the number of renovations completed in 2025, and that's about the number that we're looking at for this year. Capacity-wise, it's a lot of projects, a lot of work with our franchisees to schedule with our construction teams those different upgrades to the interior and exterior of the restaurants. But we're really encouraged by the motivation, the engagement of our franchisees in moving forward with the renovations. They are required under our franchise agreement every seven years. So you know, that's the legal requirement.
But, nonetheless, we get, franchisees reaching out, talking to people who have just completed renovations, looking at things like audio visual investments tend to be a large part of the upgrade that the guest-facing element of a renovation impacts. So, yeah, we'll, we'll be in that neighborhood of about 40 renovations. In fact, in this time of year, when restaurants can be a little bit quieter in some locations, we'll often, take that opportunity to close down for a week or 10 days and complete a substantial renovation. So we're already off and running in renos for 2026.
Great. Maybe one last question from me. How's the pipeline for new restaurants?
Yeah. So, you know, Boston Pizza has a history of continuing to grow, and we have franchising and real estate teams east, west, and Quebec-based looking at new opportunities for growth. Traditionally, our growth has come kind of 50% with existing franchisees and 50% with new investors, and that has continued to be the case. We haven't had as many growth opportunities in the last couple of years, including no new restaurants opening in 2025. But we do have projects underway for 2026. We don't give a forecast of exactly the number, but—and then sometimes the reason we don't do that is that it does depend on construction schedules and permitting and those kinds of things.
But we two things, we have projects underway, one in BC and one in Ontario in particular, that were originally intended to be 2025 openings that got pushed into 2026. So they'll open at relatively new, you know, earlier in the year, just based on completing those projects. And then we've got others in the pipeline for later in the year. And beyond that, we have lots of pins in maps of locations that we have franchisees who have expressed interest in. We've got underserviced, full-service restaurant marketplaces out there.
Because of the resilience and the diversity of the guests, or the resilience of our platform, having takeout, delivery, dining room, sports bar, patio, we can go into markets like Hope, British Columbia, which we entered in 2024, that you know are relatively small communities, but have great trade areas, and can to grow into our national average of about CAD 3.3 million of average sales per location. So the development pipeline is heating up for us, and we're looking forward to reporting back as the quarters progress in 2026 on our new restaurant openings.
Great. That's really good color. Thanks for taking my questions.
Thank you, Nick.
This concludes our question-and-answer session. I would like to turn the conference back over to Jordan Holm. Any closing remarks?
Thank you, Operator. With no further questions, we'd like to thank you all for taking the time to join us today. As we have closed out 2025, and on behalf of everyone at Boston Pizza International, we want to express our deepest gratitude to our loyal guests, and thank you for your unwavering support. To our dedicated staff and franchisees, we appreciate your hard work and passion. To our business partners, we value your collaboration, and to the incredible communities we are honored to serve, thank you for your for welcoming us into your lives. You are an essential part of the Boston Pizza family. We wish you all a happy Valentine's Day, and we invite you to celebrate with a heart-shaped pizza at your local Boston Pizza, where CAD 1 from every pizza sold goes to a charitable cause in your local community.
We look forward to reconnecting with you all during our first quarter conference call in May 2026. Thank you all, and have a wonderful day.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.