Boston Pizza Royalties Income Fund Announces Record Franchise Sales and Strong Same Store Sales Growth of 5.1% Year-to-Date
Trustees Declare July Distribution to Unitholders of 9.8 Cents Per Unit
(firmenpresse) - VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 08/09/12 -- Boston Pizza Royalties Income Fund (TSX: BPF.UN) -
Highlights
Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") each reported today financial results for the period from April 1, 2012 to June 30, 2012 (the "Period") and from January 1, 2012 to June 30, 2012 ("YTD"). A copy of this press release, the consolidated interim financial statements for the Period and related Management's Discussion and Analysis of the Fund and BPI are available at and . The Fund will host a conference call to discuss the results on August 9, 2012 at 8:30 a.m. Pacific Time (11:30 a.m. Eastern Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until September 8, 2012 by dialling 1-800-319-6413 or 604-638-9010 and entering the pin code: 4452 followed by the # sign.
Same store sales growth ("SSSG"), a key driver of distribution growth for unitholders of the Fund, was 2.9% for the Period and 5.1% YTD compared to 5.8% and 3.6%, respectively, for the same periods in 2011. Franchise sales, the basis upon which royalties are paid by BPI to the Fund, exclude revenue from the sale of liquor, beer, wine and tobacco and approved national promotions and discounts. On a franchise sales basis, SSSG was 3.1% for the Period and 4.9% YTD compared to 5.8% and 4.0%, respectively, for the same periods in 2011. The positive SSSG in the Period and YTD was principally due to higher takeout and delivery sales resulting from continued promotion of Boston Pizza's online ordering system and higher chicken wing sales resulting from the introduction of "All Meat Wings" during the Period. Franchise sales of restaurants in the royalty pool were a record $183.6 million for the Period and a record $360.2 million YTD compared to $175.6 million and $338.7 million, respectively, in the same periods in 2011. The increases in franchise sales for the Period and YTD are largely attributed to positive SSSG.
"Boston Pizza's record franchise sales in the second quarter and strong SSSG of 5.1% achieved in the first half of 2012 are due in large part to our continued focus on menu innovation, including the high profile launch of 'All Meat Wings' and our popular 'Grill Therapy' promotion in the second quarter," said Mark Pacinda, President and CEO of BPI. "Last month, the Fund celebrated its 10 year anniversary on the Toronto Stock Exchange. We are very pleased that it has been a successful decade for Boston Pizza and that the results have been reflected in the investment performance for our unitholders with a total return, assuming reinvestment of the distributions, in excess of 300% over that time."
The Fund's net income was $6.2 million for the Period with a net loss of $0.7 million YTD compared to net income of $6.9 million and of $9.8 million, respectively, in the same periods in 2011. The decreases in net income for the Period and YTD were driven mainly by changes in the fair value adjustment on the Class B Unit liability. The Fund's net income under International Financial Reporting Standards ("IFRS") contains non-cash items, such as the fair value adjustment on the Class B Unit liability, that do not affect the Fund's operations or its ability to pay distributions to unitholders. In the Fund's view, net income is not the only or most meaningful measurement of the Fund's ability to pay distributions. Consequently, the Fund has provided the non-IFRS metrics of distributable cash(1) and payout ratio(2) to provide investors with more meaningful information regarding the amount of cash that the Fund has generated to pay distributions. Readers are cautioned that distributable cash(1) and payout ratio(2) are non-IFRS financial measures that do not have standardized meanings prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. For a reconciliation between cash flow from operating activities (the most directly comparable IFRS measure) and distributable cash(1) and a detailed discussion on the Fund's distributable cash(1) and payout ratio(2), please see the Fund's Management's Discussion and Analysis for the Period. The Fund's distributable cash was $4.3 million or $0.293 per unit of the Fund ("Unit") for the Period and $8.3 million or $0.568 per Unit YTD compared to $4.1 million or $0.280 per Unit and $7.7 million or $0.529 per Unit for the same periods, respectively, in 2011. This represents increases of 4.7% for the Period and 7.3% YTD compared to the same periods, respectively, one year ago. These increases were driven by higher royalty revenue partially offset by changes in non-cash working capital. Distributions for the Period and YTD were funded entirely by cash flow from operations. No debt was incurred at any point during the Period or YTD to fund distributions.
The Fund's payout ratio was 100.2% for the Period and 102.5% YTD compared to 89.9% and 95.3% in the same periods, respectively, one year ago. The Fund's payout ratio for the Period and YTD increased compared to the same periods one year ago primarily due to the distribution increase beginning with the February 2012 distribution to unitholders. The Fund strives to provide unitholders with regular monthly distributions, and as a result, the Fund will generally experience seasonal fluctuations in its payout ratio. On a trailing 12-month basis, the Fund's payout ratio was 98.9% as at June 30, 2012. The Fund's payout ratio is likely to be higher in the first and fourth quarters compared to the second and third quarters since Boston Pizza restaurants experience higher Franchise Sales during the summer months when restaurants open their patios and benefit from increased tourist traffic. Higher Franchise Sales generally result in increases in distributable cash. A key feature of the Fund is that it is a "top line" structure, in which BPI pays the Fund a royalty equal to 4% of franchise sales from restaurants in the Fund's royalty pool. Accordingly, Fund unitholders are not directly exposed to changes in the operating costs or profitability of BPI or of individual Boston Pizza restaurants. Given this structure, and that the Fund has no current mandate to retain capital for other purposes, it is expected that the Fund will maintain a payout ratio close to 100% over time as the trustees of the Fund continue to distribute all available cash in order to maximize returns to unitholders.
Subsequent to the Period, on July 23 the Fund announced that its subsidiary, Boston Pizza Royalties Limited Partnership (the "Partnership") had entered into an agreement with a Canadian Chartered Bank (the "Lender") pursuant to which the Lender provided the Partnership with up to $56.0 million of credit facilities (the "New Credit Facilities") having a five year term expiring on July 19, 2017 to supersede and replace the Partnership's previous credit facilities. The Partnership had $30.0 million of indebtedness drawn on its previous credit facilities. At today's interest rates, the New Credit Facilities, assuming existing debt to EBITDA levels are maintained, provide an improvement of 92 basis points over the Partnership's previous credit facilities. In connection with the New Credit Facilities, the Partnership concurrently entered into an interest rate swap under the International Swap Dealers Association Master Agreement previously entered into between the Partnership and the Lender (a copy of which is available on ), to fix the interest rate at 2.69% per annum (assuming existing debt to EBITDA levels are maintained) for a term of five years for the Partnership's existing $30.0 million of debt.
The trustees of the Fund announced a cash distribution to unitholders of 9.8 cents per Unit for July 2012. The distribution will be payable to unitholders of record at the close of business on August 21, 2012 and will be paid on August 31, 2012. The Fund periodically reviews distribution levels based on its policy of stable and sustainable distribution flow to unitholders. Since the Fund's initial public offering in 2002, unitholders have received 15 distribution increases. The most recent distribution increase of 6.5% was effective for the February distribution payable in March and increased the monthly distribution amount from 9.2 cents per Unit to 9.8 cents per Unit. Including the July 2012 distribution, which will be paid in August 2012, the Fund will have paid out 121 consecutive monthly distributions totalling $150.3 million or $12.29 per Unit.
FINANCIAL SUMMARY
The tables below sets out selected information from the consolidated interim financial statements of the Fund, which consolidates the accounts of the Partnership, together with other data and should be read in conjunction with the interim consolidated financial statements of the Fund.
OUTLOOK
The Canadian Restaurant and Foodservices Association has forecast overall sales growth of 3.0% for the Canadian full-service restaurant sector in 2012. BPI's management believes that Boston Pizza is well positioned to continue outperforming this growth rate by attracting a wide variety of guests into the restaurant, sports bar and take-out/delivery parts of each location, offering a compelling value proposition to our guests and continuing to open new Boston Pizza locations across Canada.
The two principal factors that affect SSSG are changes in customer traffic and changes in average guest cheque. BPI's strategies to drive higher guest traffic include a larger marketing budget versus the previous year along with a revised calendar of national and local store promotions. Increased average cheque levels will be achieved through a combination of culinary innovation and annual menu re-pricing. BPI management recognizes that franchise sales results during the last six months of 2011 were comparatively stronger than those posted in the first six months of 2011 and that results from the remainder of 2012 will be compared against those stronger sales levels. In addition, BPI's franchise agreement requires that each Boston Pizza restaurant undergo a complete store renovation every seven years and 22 locations have already completed renovations in 2012 with many more underway or planned for later this year. Restaurants typically close for two to three weeks to complete the renovation and experience an incremental sales increase in the year following the re-opening.
Boston Pizza remains well positioned for future expansion as evidenced by the two new Boston Pizza restaurants that have opened to date in 2012, with five more new locations under construction that are scheduled to open later in the year. BPI's management believe that Boston Pizza will continue to strengthen its position as the number one casual dining brand in Canada by pursuing further restaurant development opportunities across the country.
Certain information in this press release may constitute "forward-looking information" that involves known and unknown risks, uncertainties, future expectations and other factors which may cause the actual results, performance or achievements of the Fund, Boston Pizza Holdings Trust, the Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, Boston Pizza restaurants, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this press release, forward-looking information may include words such as "anticipate", "estimate", "may", "will", "expect", "believe", "plan" and other similar terminology. This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this press release. Except as required by law, the Fund and BPI assume no obligation to update previously disclosed forward-looking information.
For a complete list of the risks associated with forward-looking information and our business, please refer to the "Risks and Uncertainties" and "Note Regarding Forward-Looking Information" sections included in the Fund's most recent Management's Discussion and Analysis for the Period available at and . The trustees of the Fund have approved the contents of this press release.
Contacts:
Boston Pizza Royalties Income Fund
Jordan Holm
Vice President of Investor Relations
604-303-6083
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Datum: 09.08.2012 - 12:30 Uhr
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