Toronto Stock Exchange: BPF.UN
HIGHLIGHTS
- Franchise Sales1 of $233.7
million for the Period and $457.9
million YTD, representing an increase of 6.5% and 15.0%,
respectively, versus the same periods one year ago.
- Same Restaurant Sales2 of 6.6% for the Period and
15.2% YTD.
- Cash flows generated from operating activities of $9.8 million for the Period and $19.0 million YTD, representing increases of 7.0%
and 20.4%, respectively, versus the same periods one year ago.
- Distributable Cash3 increased 27.1% for the Period
and 38.3% YTD, and Distributable Cash per Unit4
increased 27.2% for the Period and 38.4% YTD.
- Payout Ratio5 of 88.0% for the Period, 89.7% YTD and
94.0% on a trailing 12-month basis. Cash balance at the end of the
Period was $6.4 million.
- Acquired 54,200 Units at an average price of $16.28 per Unit during the Period under the
Fund's NCIB (defined below).
- On August 3, 2023, the trustees
of the Fund declared a distribution for the period of July 1, 2023 to July 31,
2023 of $0.107 per Unit, which
will be payable on August 31, 2023 to
unitholders of the Fund ("Unitholders") of record on
August 21, 2023.
VANCOUVER, BC, Aug. 4, 2023
/CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and
Boston Pizza International Inc. ("BPI") reported financial
results today for the second quarter period from April 1, 2023
to June 30, 2023 (the
"Period") and January 1, 2023
to June 30, 2023 ("YTD"). A
copy of this press release, the condensed consolidated interim
financial statements and related management's discussion and
analysis ("MD&A") of the Fund and BPI are available at
www.sedar.com and www.bpincomefund.com. The Fund will host a
conference call to discuss the results on August 4, 2023 at 8:30 am
Pacific Time (11:30 am Eastern
Time). The call can be accessed by dialling 1-800-319-4610
or 604-638-5340. A replay will be available until September 4, 2023 by dialling 1-800-319-6413
or 604-638-9010 and entering the access code: 0275 followed by the
# sign. The replay will also be available
at www.bpincomefund.com. Capitalized terms used in this press
release that are not otherwise defined have the meanings ascribed
to them in the Fund's MD&A for the Period and YTD.
COVID-19 impacted the business of the Fund, BPI and Boston Pizza
Canada Limited Partnership ("BP Canada LP"), and the
operation of Boston Pizza restaurants significantly during 2020,
2021 and the first half of 2022. Since then, COVID-19 case counts
improved, government restrictions related to COVID-19 were largely
eliminated, and sales levels of Boston Pizza restaurants have
returned to more normal levels when compared to times prior to
COVID-19.
"We are pleased that positive sales momentum continued through
the second quarter of 2023 despite the current macroeconomic
conditions and industry challenges. The success can be attributed
to Boston Pizza's dedication to delivering exceptional guest
experiences and introducing innovative menu options," said
Jordan Holm, President of BPI. "As economic uncertainty and
inflationary pressures persist in 2023, we will continue to work
diligently to support our franchisees."
PERIOD AND YTD RESULTS
SRS, a key driver of distribution growth for Unitholders, was
6.6% for the Period compared to 64.9% reported in the second
quarter of 2022. SRS for the Period was principally due to an
increase in average guest cheque. SRS YTD was 15.2% compared to
52.3% reported in 2022. SRS YTD was principally due to an increase
in restaurant guest traffic and an increase in average guest cheque
compared to year-to-date in 2022. COVID-19 restrictions existed in
most of the country during the first quarter of 2022 and part of
the second quarter of 2022 that negatively impacted in-restaurant
guest traffic. Those restrictions were largely eliminated during
the second quarter of 2022.
Franchise Sales of Boston Pizza restaurants in the Royalty Pool
were $233.7 million for the Period
and $457.9 million YTD compared to
$219.4 million and $398.0 million, respectively, for the same
periods one year ago. The $14.3
million increase in Franchise Sales for the Period and
$59.9 million increase in Franchise
Sales YTD were primarily due to positive SRS.
The Fund's net and comprehensive income was $12.8 million for the Period compared to
$1.8 million for the second quarter
of 2022. The $11.0 million increase
in the Fund's net and comprehensive income for the Period compared
to the second quarter of 2022 was primarily due to a $12.9 million increase in fair value gain and a
$0.7 million increase in Royalty and
Distribution Income, partially offset by an increase in income tax
expense of $2.5 million. The Fund's
net and comprehensive income was $19.5
million YTD compared to $14.7
million year-to-date in 2022. The $4.8 million increase in the Fund's net and
comprehensive income YTD compared to the same period in 2022 was
primarily due to a $3.6 million
increase in fair value gain and a $3.1
million increase in Royalty and Distribution Income,
partially offset by an increase in income tax expense of
$1.9 million.
The Fund's cash flows generated from operating activities was
$9.8 million compared to $9.1 million in the second quarter of 2022. The
increase of $0.7 million was
primarily due to an increase of Royalty and Distribution Income of
$0.7 million and an increase in
changes in working capital of $0.1
million, partially offset by an increase in income taxes
paid of $0.3 million. Cash flows
generated from operating activities YTD was $19.0 million compared to $15.8 million in the same period in 2022. The
increase of $3.2 million was
primarily due to an increase of Royalty and Distribution Income of
$3.1 million and an increase in
changes in working capital of $0.7
million, partially offset by an increase in income taxes
paid of $0.7 million.
The Fund generated Distributable Cash of $7.9 million for the Period compared to
$6.2 million for the second quarter
of 2022. The increase in Distributable Cash of $1.7 million or 27.1% was primarily due to an
increase of cash flows generated from operating activities of
$0.7 million, lower repayments of
long-term debt of $1.0 million and
lower interest paid on long-term debt of $0.1 million, partially offset by increased BPI
Class B Unit entitlement of $0.1
million. The Fund generated Distributable Cash of
$15.0 million YTD compared to
$10.9 million year-to-date in 2022.
The increase in Distributable Cash of $4.1
million or 38.3% was primarily due to an increase of cash
flows generated from operating activities of $3.2 million, lower repayments of long-term debt
of $1.5 million and lower interest
paid on long-term debt of $0.1
million, partially offset by increased BPI Class B Unit
entitlement of $0.5 million and SIFT
Tax on Units adjustment of $0.1
million.
The Fund generated Distributable Cash per Unit of $0.365 for the Period and $0.699 YTD compared to $0.287 and $0.505,
respectively, for the same periods in 2022. The increase in
Distributable Cash per Unit of $0.078
or 27.2% for the Period and $0.194 or
38.4% YTD were primarily attributable to the increase in
Distributable Cash outlined above.
The Fund's Payout Ratio for the Period was 88.0% compared to
88.9% in the second quarter of 2022. The decrease in the Fund's
Payout Ratio for the Period was due to Distributable Cash
increasing by $1.7 million or 27.1%,
partially offset by distributions paid increasing by $1.4 million or 25.9%. YTD, the Fund's Payout
Ratio was 89.7% compared to 100.9% year-to-date in 2022. The
decrease in the Fund's Payout Ratio YTD was due to Distributable
Cash increasing by $4.1 million or
38.3%, partially offset by distributions paid increasing by
$2.5 million or 22.9%. Payout
Ratio is calculated by dividing the amount of distributions paid
during the applicable period by the Distributable Cash for that
period. The Fund's Payout Ratio is typically higher in the first
and fourth quarters compared to the second and third quarters since
Boston Pizza restaurants generally experience higher Franchise
Sales levels during the summer months when restaurants open their
patios and benefit from increased tourist traffic. On a trailing
12-month basis, the Fund's Payout Ratio was 94.0% as at
June 30, 2023.
NORMAL COURSE ISSUER BID
On June 15, 2023, the Fund announced that it had received
TSX approval of a Notice of Intention to Make a Normal Course
Issuer Bid through the facilities of the TSX, other designated
exchanges and/or alternative Canadian trading systems from
June 20, 2023 to no later than June 19, 2024 (the
"NCIB"). The NCIB permits the Fund to repurchase for
cancellation up to 400,000 Units, being approximately 1.86% of the
Fund's issued and outstanding Units (as at June 6, 2023). As at June
30, 2023, the Fund acquired 54,200 Units under the NCIB
at an average price of $16.28 per
Unit. Between July 1, 2023 and
August 3, 2023, inclusive, the Fund
acquired an additional 137,600 Units under the NCIB at an average
price of $16.59 per Unit.
Accordingly, as at August 3, 2023,
the Fund had acquired a total of 191,800 Units at an average price
of $16.50 per Unit. The Fund financed
Units purchased under the NCIB from cash on hand.
DISTRIBUTIONS
During the Period, the Fund declared distributions on the Units
in the aggregate amount of $6.9
million or $0.321 per Unit.
During the second quarter of 2022, the Fund declared distributions
on the Units in the aggregate amount of $5.5
million or $0.255 per Unit.
During the Period, the Fund paid distributions on the Units in the
aggregate amount of $6.9 million or
$0.321 per Unit. During the second
quarter of 2022, the Fund paid distributions on the Units in the
aggregate amount of $5.5 million or
$0.255 per Unit. The amount of
distributions declared during the Period increased by $1.4 million or $0.066 per Unit due to the monthly distribution
rate increasing from $0.085 per Unit
to $0.100 per Unit commencing with
the July 2022 distribution,
increasing again from $0.100 per Unit
to $0.102 per Unit commencing with
the November 2022 distribution, and
increasing again from $0.102 per Unit
to $0.107 per Unit commencing with
the March 2023 distribution
(collectively, the "2022-2023 Distribution
Increases"). Distributions paid during the Period increased by
$1.4 million or $0.066 per Unit due to the 2022-2023 Distribution
Increases. YTD, the Fund declared distributions on the Units in the
aggregate amount of $11.3 million or
$0.525 per Unit. During the same
period in 2022, the Fund declared distributions on the Units in the
aggregate amount of $9.1 million or
$0.425 per Unit. YTD, the Fund paid
distributions on the Units in the aggregate amount of $13.5 million or $0.627. During the same period in 2022, the Fund
paid distributions on the Units in the aggregate amount of
$11.0 million or $0.510 per Unit. The amount of distributions
declared YTD increased by $2.2
million or $0.100 per Unit due
to the 2022-2023 Distribution Increases. Distributions paid YTD
increased by $2.5 million or
$0.117 per Unit due to the 2022-2023
Distribution Increases.
On August 3, 2023, the trustees of
the Fund declared a distribution for the period of July 1, 2023 to July 31,
2023 of $0.107 per Unit, which
will be payable on August 31, 2023 to
Unitholders of record on August 21,
2023. Including the July 2023
distribution, which will be paid on August
31, 2023, the Fund will have paid out total distributions of
$411.4 million or $25.48 per Unit, which includes 247 monthly
distributions and two special distributions.
FINANCIAL SUMMARY
The tables below set out selected information from the Fund's
condensed consolidated interim financial statements together
with other data and should be read in conjunction with the
condensed consolidated interim financial statements and
MD&A of the Fund for the three month and six month periods
ended June 30, 2023 and June 30, 2022.
For the periods
ended June 30
|
Q2 2023
|
Q2 2022
|
YTD 2023
|
YTD 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
Number of restaurants
in Royalty Pool
|
377
|
383
|
377
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
233,650
|
219,384
|
457,851
|
397,986
|
|
|
|
|
|
Royalty6
income
|
9,346
|
8,775
|
18,314
|
15,919
|
Distribution
Income7
|
3,071
|
2,895
|
6,020
|
5,258
|
Total
revenue
|
12,417
|
11,670
|
24,334
|
21,177
|
Administrative
expenses
|
(401)
|
(349)
|
(792)
|
(687)
|
Interest expense on
debt and financing fees
|
(843)
|
(977)
|
(1,693)
|
(1,916)
|
Interest expense on
Class B Unit liability
|
(982)
|
(733)
|
(1,614)
|
(1,298)
|
Interest
income
|
79
|
10
|
147
|
15
|
Profit before fair
value gain (loss) and income taxes
|
10,270
|
9,621
|
20,382
|
17,291
|
Fair value gain (loss)
on investment in BP Canada LP
|
8,511
|
(14,622)
|
8,293
|
(3,056)
|
Fair value (loss) gain
on Class B Unit liability
|
(3,792)
|
6,515
|
(3,695)
|
1,361
|
Fair value gain on
Swaps
|
1,373
|
1,337
|
481
|
3,213
|
Current and deferred
income tax expense
|
(3,576)
|
(1,075)
|
(6,006)
|
(4,134)
|
Net and comprehensive
income
|
12,786
|
1,776
|
19,455
|
14,675
|
|
|
|
|
|
Basic earnings per
Unit
|
0.59
|
0.08
|
0.90
|
0.68
|
Diluted earnings (loss)
per Unit
|
0.59
|
(0.20)
|
0.90
|
0.55
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,759
|
9,118
|
18,979
|
15,769
|
BPI Class B Unit
entitlement8
|
(1,006)
|
(888)
|
(2,044)
|
(1,552)
|
Interest paid on
long-term debt
|
(848)
|
(954)
|
(1,762)
|
(1,838)
|
Principal repayments
on long-term debt
|
-
|
(1,000)
|
-
|
(1,500)
|
Current income tax
expense
|
(2,511)
|
(2,285)
|
(4,901)
|
(4,054)
|
Current income tax
paid
|
2,456
|
2,185
|
4,767
|
4,049
|
Distributable
Cash
|
7,850
|
6,176
|
15,039
|
10,874
|
Distributions
paid
|
6,909
|
5,488
|
13,494
|
10,976
|
Payout Ratio
|
88.0 %
|
88.9 %
|
89.7 %
|
100.9 %
|
Distributable Cash per
Unit
|
0.365
|
0.287
|
0.699
|
0.505
|
Distributions paid per
Unit
|
0.321
|
0.255
|
0.627
|
0.510
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
6.6 %
|
64.9 %
|
15.2 %
|
52.3 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
1
|
0
|
2
|
2
|
|
|
|
|
|
Jun 30, 2023
|
Dec 31, 2022
|
Total assets
|
|
|
423,572
|
413,701
|
Total
liabilities
|
|
|
135,720
|
133,123
|
SUMMARY OF QUARTERLY RESULTS
|
Q2 2023
|
Q1 2023
|
Q4
2022
|
Q3 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
377
|
377
|
383
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
233,650
|
224,201
|
227,163
|
229,848
|
|
|
|
|
|
Royalty
income
|
9,346
|
8,968
|
9,087
|
9,194
|
Distribution
Income
|
3,071
|
2,949
|
2,988
|
3,027
|
Total
revenue
|
12,417
|
11,917
|
12,075
|
12,221
|
Administrative
expenses
|
(401)
|
(391)
|
(369)
|
(334)
|
Interest expense on
debt and financing fees
|
(843)
|
(850)
|
(812)
|
(886)
|
Interest expense on
Class B Unit liability
|
(982)
|
(632)
|
(1,557)
|
(835)
|
Interest
income
|
79
|
68
|
61
|
31
|
Profit before fair
value gain (loss) and income taxes
|
10,270
|
10,112
|
9,398
|
10,197
|
Fair value gain (loss)
on investment in BP Canada LP
|
8,511
|
(218)
|
(1,146)
|
2,183
|
Fair value (loss) gain
on Class B Unit liability
|
(3,792)
|
97
|
510
|
(972)
|
Fair value gain (loss)
on Swaps
|
1,373
|
(892)
|
106
|
572
|
Current and deferred
income tax expense
|
(3,576)
|
(2,430)
|
(2,462)
|
(2,478)
|
Net and comprehensive
income
|
12,786
|
6,669
|
6,406
|
9,502
|
|
|
|
|
|
Basic earnings per
Unit
|
0.59
|
0.31
|
0.30
|
0.44
|
Diluted earnings per
Unit
|
0.59
|
0.24
|
0.26
|
0.41
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,759
|
9,220
|
8,919
|
9,667
|
BPI Class B Unit
entitlement
|
(1,006)
|
(1,038)
|
(1,044)
|
(1,083)
|
Interest paid on
long-term debt
|
(848)
|
(914)
|
(799)
|
(939)
|
Current income tax
expense
|
(2,511)
|
(2,390)
|
(2,422)
|
(2,438)
|
Current income tax
paid
|
2,456
|
2,311
|
2,585
|
2,270
|
Distributable
Cash
|
7,850
|
7,189
|
7,239
|
7,477
|
Distributions
paid
|
6,909
|
6,585
|
8,329
|
6,133
|
Payout Ratio
|
88.0 %
|
91.6 %
|
115.1 %
|
82.0 %
|
Distributable Cash per
Unit
|
0.365
|
0.334
|
0.336
|
0.347
|
Distributions paid per
Unit
|
0.321
|
0.306
|
0.387
|
0.285
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
6.6 %
|
25.7 %
|
24.5 %
|
8.4 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
1
|
1
|
3
|
1
|
SUMMARY OF QUARTERLY RESULTS (continued)
|
Q2 2022
|
Q1 2022
|
Q4 2021
|
Q3 2021
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
383
|
383
|
387
|
387
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
219,384
|
178,602
|
183,177
|
213,038
|
|
|
|
|
|
Royalty
income
|
8,775
|
7,144
|
7,327
|
8,522
|
Distribution
Income
|
2,895
|
2,363
|
2,423
|
2,815
|
Total
revenue
|
11,670
|
9,507
|
9,750
|
11,337
|
Administrative
expenses
|
(349)
|
(338)
|
(327)
|
(317)
|
Interest expense on
debt and financing fees
|
(977)
|
(939)
|
(939)
|
(1,000)
|
Interest expense on
Class B Unit liability
|
(733)
|
(565)
|
(1,037)
|
(450)
|
Interest
income
|
10
|
5
|
7
|
18
|
Profit before fair
value (loss) gain and income taxes
|
9,621
|
7,670
|
7,454
|
9,588
|
Fair value (loss) gain
on investment in BP Canada LP
|
(14,622)
|
11,566
|
11,294
|
(3,928)
|
Fair value gain (loss)
on Class B Unit liability
|
6,515
|
(5,154)
|
(5,032)
|
1,751
|
Fair value gain on
Swaps
|
1,337
|
1,876
|
730
|
262
|
Current and deferred
income tax expense
|
(1,075)
|
(3,059)
|
(1,804)
|
(2,230)
|
Net and comprehensive
income
|
1,776
|
12,899
|
12,642
|
5,443
|
|
|
|
|
|
Basic earnings per
Unit
|
0.08
|
0.60
|
0.59
|
0.25
|
Diluted (loss) earnings
per Unit
|
(0.20)
|
0.60
|
0.59
|
0.13
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,118
|
6,651
|
8,524
|
9,586
|
BPI Class B Unit
entitlement
|
(888)
|
(664)
|
(858)
|
(923)
|
Interest paid on
long-term debt
|
(954)
|
(884)
|
(892)
|
(991)
|
Principal repayments
on long-term debt
|
(1,000)
|
(500)
|
(679)
|
(1,036)
|
Current income tax
expense
|
(2,285)
|
(1,769)
|
(1,814)
|
(2,190)
|
Current income tax
paid
|
2,185
|
1,864
|
1,790
|
2,230
|
Distributable
Cash
|
6,176
|
4,698
|
6,071
|
6,676
|
Distributions
paid
|
5,488
|
5,488
|
5,488
|
4,196
|
Payout Ratio
|
88.9 %
|
116.8 %
|
90.4 %
|
62.9 %
|
Distributable Cash per
Unit
|
0.287
|
0.218
|
0.282
|
0.310
|
Distributions paid per
Unit
|
0.255
|
0.255
|
0.255
|
0.195
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
64.9 %
|
39.1 %
|
25.5 %
|
15.1 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
0
|
2
|
2
|
0
|
SHORT-TERM OUTLOOK
The two principal factors that affect SRS are changes in guest
traffic and changes in average guest cheque. BPI's and BP Canada
LP's strategies to drive higher guest traffic include attracting a
wide variety of guests into the restaurant, sports bar and take-out
and delivery parts of each location, offering a compelling value
proposition to guests and leveraging a larger marketing budget
versus the previous year along with a revised calendar of national
and local store promotions. Increased average cheque levels are
expected to be achieved through a combination of culinary
innovation and menu re-pricing.
The success of BPI, BP Canada LP and Boston Pizza restaurants,
and the amount of Franchise Sales, Royalty, Distribution Income and
Distributable Cash available for distribution to Unitholders, are
dependent upon many economic factors, including impacts of
inflation, increases in interest rates, unemployment rates,
consumer confidence, recession, supply chain disruption, labour
availability and other globally disruptive events. Despite the
current state of economic uncertainty, Boston Pizza restaurants
have been able to generate solid Franchise Sales and offer
affordable dining options, both on and off-premise, for guests in
economically uncertain times. As demonstrated during COVID-19, BPI,
BP Canada LP and Boston Pizza restaurants have the ability to adapt
to changes in operating environments and economic conditions.
However, with supply chain challenges, rising interest rates,
increasing input costs and labour shortages impacting most of the
restaurant industry, together with widespread focus on
sustainability and climate related issues, BPI's management remains
cautious. The focus of BPI's management is to adapt the business to
mitigate these challenges and maintain the positive sales momentum
achieved in 2022 and the first half of 2023.
The trustees of the Fund will continue to closely monitor the
Fund's available cash balances given the uncertain economic outlook
and industry challenges.
Forward Looking Information
Certain information in this press release constitutes
"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, Boston Pizza Royalties Limited
Partnership, Boston Pizza Holdings Limited Partnership, Boston
Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, BP Canada LP,
Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings
Partnership, 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. All statements, other than statements of historical
facts, included in this press release that address activities,
events or developments that the Fund or its trustees expect or
anticipate will or may occur in the future, including such things
as, continuing to work diligently to support franchisees and
continuing positive sales momentum, Boston Pizza restaurants
generally experiencing higher Franchise Sales levels during the
summer months when restaurants open their patios and benefit from
increased tourist traffic, BPI and BP Canada LP's ability to
implement strategies driving higher guest traffic and increased
average cheque levels, continued improved performance and guest
traffic due to the elimination of government-imposed COVID-19
restrictions in the Canadian restaurant industry, the persistence
of economic uncertainty and inflationary pressures in 2023, the
success of BPI, BP Canada LP and Boston Pizza restaurants, and the
amount of Franchise Sales, Royalty, Distribution Income and
Distributable Cash available for distribution to Unitholders, being
dependent upon many economic factors, including impacts of
inflation, increases in interest rates, unemployment rates,
consumer confidence, recession, supply chain disruption, labour
availability and other globally disruptive events, Boston Pizza
restaurants having the ability to adapt to changes in operating
environments and economic conditions, BPI's management remaining
cautious, the focus of BPI's management being to adapt the business
to mitigate challenges and maintain the positive sales momentum
achieved in 2022 and the first half of 2023, and the trustees of
the Fund continuing to closely monitor the Fund's available cash
balances given the uncertain economic outlook and industry
challenges, and other such matters are forward-looking information.
When used in this press release, forward-looking information may
include words such as "anticipate", "estimate", "may", "will",
"expect", "believe", "plan", "should", "continue" and other similar
terminology. The material factors and assumptions used to develop
the forward-looking information contained in this press release
include the following: the Fund maintaining the same distribution
policy, expectations related to future general economic conditions,
expectations that the Fund's Payout Ratio is typically higher
in the first and fourth quarter, Boston Pizza restaurants
maintaining operational excellence, the Fund having sufficient cash
on hand to fund repurchases under the NCIB, and that COVID-19 and
its negative impacts will eventually dissipate. Risks,
uncertainties and other factors that may cause actual results,
performance or achievements to be materially different from any
future results, performance or achievement expressed or implied by
the forward-looking information contained herein, relate to (among
others): competition, demographic trends, consumer preferences and
discretionary spending patterns, business and economic conditions,
legislation and regulation, reliance on operating revenues,
accounting policies and practices, the results of operations and
financial condition of BPI, BP Canada LP and the Fund, pandemics
and national health crises, in particular COVID-19, as well as
those factors discussed under the heading "Risks and Uncertainties"
in the most recent Annual Information Form of the Fund. 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, neither the Fund nor BPI
assumes any obligation to update previously disclosed
forward-looking information. For a complete list of the risks
associated with forward-looking information and the Fund's
business, please refer to the "Risks and Uncertainties" and "Note
Regarding Forward-Looking Information" sections included in the
most recent Annual Information Form of the Fund available at
www.sedar.com and www.bpincomefund.com.
The trustees of the Fund have approved the contents of this news
release.
® Boston Pizza
Royalties Limited Partnership. All Boston Pizza registered Canadian
trademarks and unregistered Canadian trademarks containing the
words "Boston", "BP", and/or "Pizza" are trademarks owned by the
Boston Pizza Royalties Limited Partnership and licensed by the
Boston Pizza Royalties Limited Partnership to Boston Pizza
International Inc.
|
|
© Boston Pizza
International Inc. 2023.
|
Notes – Non-GAAP, Specified Financial Measures and Other
Information
- "Franchise Sales" is the basis upon which Royalty and
Distribution Income are payable, and means the gross revenue: (i)
of the corporate Boston Pizza restaurants in Canada owned by BPI that are in the Royalty
Pool; and (ii) reported to BP Canada LP by franchised Boston Pizza
restaurants in Canada that are in
the Royalty Pool, without audit or other form of independent
assurance, and in the case of both (i) and (ii), after deducting
revenue from the sale of liquor, beer, wine and revenue from BP
Canada LP approved national promotions and discounts and excluding
applicable sales and similar taxes. Nevertheless, BP Canada LP
periodically conducts audits of the Franchise Sales reported to it
by its franchisees, and the Franchise Sales reported herein include
results from sales audits of earlier periods. Franchise Sales is
reported on a quarterly basis in the Fund's financial statements,
however, the financial statements do not report it on a monthly
basis. Therefore, when disclosed on a monthly basis herein, this is
a supplementary financial measure under National Instrument
52-112 Non-GAAP and Other Financial Measures Disclosure
("NI 52‑112"). The Fund believes that Franchise Sales
for this month provides useful information to investors regarding
recent performance of Boston Pizza.
- "Same Restaurant Sales" or
"SRS" is a supplementary financial measure
under NI 52-112 and therefore may not be comparable to similar
measures presented by other issuers. Prior to the fourth quarter of
2021, the Fund defined SRS as the change in gross
revenues of Boston Pizza restaurants in the Royalty Pool as
compared to the gross revenues for the same period in the previous
year (where restaurants were open for a minimum of 24 months).
Commencing with the fourth quarter of 2021, the Fund
defines SRS as the change in Franchise Sales of
Boston Pizza restaurants in the Royalty Pool as compared to the
Franchise Sales for the same period in the previous year (where
restaurants were open for a minimum of 24 months). The Fund
believes that the current method of calculating SRS
provides Unitholders more meaningful information regarding
the performance of Boston Pizza restaurants since Royalty and
Distribution Income are payable to the Fund by BPI and BP Canada LP
on Franchise Sales and not gross revenues of Boston Pizza
restaurants. All historical SRS figures contained in
this press release have been restated to conform to the current
method of calculating SRS.
- "Distributable Cash" is a non-GAAP
financial measure under NI 52-112. Distributable Cash is not a
standardized financial measure under IFRS and may not
be comparable to similar financial measures disclosed by other
issuers. The Fund defines Distributable Cash to be, in respect of
any particular period, the Fund's cash flows generated from
operating activities for that period (being the most comparable
financial measure in the Fund's primary financial statements) minus
(a) BPI's entitlement in respect of its Class B Units in respect of
the period (see note 8 below), minus (b) interest
paid on long-term debt during the period, minus
(c) principal repayments on long-term debt that
are contractually required to be made during the period, minus
(d) the current income tax expense in respect of
the period, plus (e) current income tax paid
during the period (the sum of (d) and (e)
being "SIFT Tax on Units"). Management believes
that Distributable Cash provides investors with useful information
about the amount of cash the Fund has generated and has available
for distribution on the Units in respect of any period. The tables
in the "Financial Highlights" section of this press release provide
a reconciliation from this non-GAAP financial measure to cash flows
generated from operating activities, which is the most directly
comparable IFRS measure. Current income tax
expense in respect of any period is prepared using reasonable and
supportable assumptions (including that the base rate of SIFT Tax
will not increase throughout the calendar year and that certain
expenses of the Fund will continue to be deductible for income tax
purposes), all of which reflect the Fund's planned courses of
action given management's judgment about the most probable set of
economic conditions. There is a risk that the federal government of
Canada could increase the base
rate of SIFT Tax or that applicable taxation authorities could
assess the Fund on the basis that certain expenses of the Fund are
not deductible. Investors are cautioned that if either of these
possibilities occurs, then the actual results for this component of
Distributable Cash may vary, perhaps materially, from the amounts
used in the reconciliation.
- "Distributable Cash per Unit" is a
non-GAAP ratio under NI 52-112. Distributable Cash per Unit is not
a standardized financial measure under IFRS and may
not be comparable to similar financial measures disclosed by other
issuers. The Fund defines Distributable Cash per Unit for any
period as the Distributable Cash generated in that period divided
by the weighted average number of Units outstanding during that
period. Management believes that Distributable Cash per Unit
provides investors with useful information regarding the amount of
cash per Unit that the Fund has generated and has available for
distribution in respect of any period.
- "Payout Ratio" is a non-GAAP ratio
under NI 52-112. Payout Ratio is not a
standardized financial measure under IFRS and may not
be comparable to similar financial measures disclosed by other
issuers. The Fund defines Payout Ratio for any
period as the aggregate distributions paid by the Fund during that
period divided by the Distributable Cash generated in that period.
Management believes that Payout Ratio provides
investors with useful information regarding the extent to which the
Fund distributes cash generated on Units.
- Boston Pizza Royalties Limited Partnership
("Royalties LP") licenses BPI the right to
use various Boston Pizza trademarks in return for BPI paying Boston
Pizza Royalties Limited Partnership a royalty equal to 4% of
Franchise Sales of Boston Pizza restaurants (the
"Royalty") in the Fund's royalty pool (the
"Royalty Pool").
- "Distribution Income" is income
received indirectly by the Fund on Class 1 LP Units and Class 2 LP
Units of BP Canada LP. See the "Overview – Purpose of the Fund /
Sources of Revenue" section of the Fund's MD&A for the Period
and YTD for more details.
- "BPI Class B Unit entitlement"
is a supplementary financial measure under NI 52-112 and therefore
may not be comparable to similar measures presented by other
issuers. The BPI Class B Unit entitlement is the interest expense
on Class B Units in respect of a period plus management's estimate
of how much cash BPI would be entitled to receive pursuant to the
limited partnership agreement governing Royalties LP (a copy of
which is available on www.sedar.com) on its Class B
Units if Royalties LP fully distributed any residual cash generated
in respect of that period after the Fund pays interest on long-term
debt, principal repayments on long-term debt and SIFT Tax on Units
in respect of that period. Management believes that the BPI Class B
Unit entitlement is an important component in calculating
Distributable Cash since it represents the amount of residual cash
generated that BPI would be entitled to receive and therefore would
not be available for distribution to Unitholders. Management
prepares such estimate using reasonable and supportable assumptions
that reflect the Fund's planned courses of action given
management's judgment about the most probable set of economic
conditions.
SOURCE Boston Pizza Royalties Income Fund