Toronto Stock Exchange: BPF.UN
HIGHLIGHTS
- Franchise Sales1 of $240.1
million for the Period and $698.0
million YTD, representing an increase of 4.5% and 11.2%,
respectively, versus the same periods one year ago.
- Same Restaurant Sales2 of 5.3% for the Period and
11.6% YTD.
- Cash flows generated from operating activities of $9.7 million for the Period, consistent with the
third quarter of 2022. Cash flows generated from operating
activities of $28.6 million YTD,
representing an increase of 12.6% versus the same period one year
ago.
- Distributable Cash3 increased 10.5% for the Period
and 27.0% YTD, and Distributable Cash per Unit4
increased 11.5% for the Period and 27.3% YTD.
- Payout Ratio5 of 82.9% for the Period, 87.3% YTD and
93.9% on a trailing 12-month basis. Cash balance at the end of the
Period was $3.9 million.
- Acquired 188,700 units of the Fund ("Units") at an
average price of $16.55 per Unit
during the Period under the Fund's NCIB (defined below).
- On November 8, 2023, the trustees
of the Fund declared a distribution for the period of October 1, 2023 to October
31, 2023 of $0.107 per Unit,
which will be payable on November 30,
2023 to unitholders of the Fund ("Unitholders") of
record on November 21, 2023.
VANCOUVER, BC, Nov. 9, 2023
/CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and
Boston Pizza International Inc. ("BPI") reported financial
results today for the third quarter period from July 1, 2023 to September
30, 2023 (the "Period") and January 1, 2023 to September 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.sedarplus.ca and www.bpincomefund.com. The Fund will host a
conference call to discuss the results on November 9, 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 December 9, 2023 by dialling
1-800-319-6413 or 604-638-9010 and entering the access code: 0410
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 levels more consistent with times prior to
COVID-19.
"We are pleased that the encouraging sales trend has continued
into the third quarter of 2023. This achievement is a testament to
our franchisees' dedication to delivering exceptional guest
experiences", stated Jordan Holm,
BPI's President. "In the midst of ongoing economic uncertainty,
inflationary pressures and high interest rates, we are dedicated to
the continued success of the Boston Pizza brand and our restaurant
network."
PERIOD AND YTD RESULTS
SRS, a key driver of distribution growth for Unitholders,
was 5.3% for the Period compared to 8.4% reported in the third
quarter of 2022. SRS was principally due to an increase in average
guest cheque due to a combination of menu pricing and larger per
guest ordering levels. SRS YTD was 11.6% compared to 32.6%
reported year-to-date in 2022. SRS was principally due to
increases in restaurant guest traffic compared to year-to-date in
2022 and average guest cheque due to a combination of menu pricing
and larger per guest ordering levels. 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 $240.1 million for the Period
and $698.0 million YTD compared to
$229.8 million and $627.8 million, respectively, for the same
periods one year ago. The $10.3
million increase in Franchise Sales for the Period and
$70.2 million increase in Franchise
Sales YTD were primarily due to positive SRS.
The Fund's net and comprehensive income was $4.9 million for the Period compared to
$9.5 million for the third quarter of
2022. The $4.6 million decrease in
the Fund's net and comprehensive income for the Period compared to
the third quarter of 2022 was primarily due to a $5.8 million increase in fair value loss and a
$0.1 million increase in net interest
expense, partially offset by a $0.8
million decrease in income tax expense and a $0.6 million increase in Royalty6 and
Distribution Income7. The Fund's net and comprehensive
income was $24.3 million YTD compared
to $24.2 million year-to-date in
2022. The $0.1 million increase in
the Fund's net and comprehensive income YTD compared to the same
period in 2022 was primarily due to a $3.7
million increase in Royalty and Distribution Income,
partially offset by a $2.2 million
decrease in fair value gain, a $1.1
million increase in income tax expense and a $0.1 million increase in net interest
expense.
The Fund's cash flows generated from operating activities was
$9.7 million for the Period compared
to $9.7 million in the third
quarter of 2022. An increase in income taxes paid of $0.5 million and a decrease in changes in
working capital of $0.1 million
were offset by an increase in Royalty and Distribution Income of
$0.6 million. Cash flows
generated from operating activities YTD was $28.6 million compared to $25.4 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
$3.7 million and an increase in
changes in working capital of $0.7 million, partially offset by an
increase in income taxes paid of $1.2 million.
The Fund generated Distributable Cash of $8.3 million for the Period compared to
$7.5 million for the third
quarter of 2022. The increase in Distributable Cash of $0.8 million or 10.5% was primarily due to
decreased BPI Class B Unit entitlement8 of
$0.3 million, SIFT Tax on Units
adjustment of $0.3 million and
lower interest paid on long-term debt of $0.1 million. The Fund generated
Distributable Cash of $23.3 million YTD compared to $18.4 million year-to-date in 2022. The
increase in Distributable Cash of $4.9 million or 27.0% was primarily due to
increased cash flows generated from operating activities of
$3.2 million, lower repayments
of long-term debt of $1.5 million, SIFT Tax on Units3
adjustment of $0.2 million and
lower interest paid on long-term debt of $0.2 million, partially offset by increased
BPI Class B Unit entitlement of $0.2 million.
The Fund generated Distributable Cash per Unit of $0.387 for the Period and $1.086 YTD compared to $0.347 and $0.853,
respectively, for the same periods in 2022. The increase in
Distributable Cash per Unit of $0.040
or 11.5% for the Period and $0.233 or
27.3% YTD were primarily attributable to the increase in
Distributable Cash outlined above and fewer Units outstanding
compared to the same period in 2022 due to the Fund's NCIB (defined
below).
The Fund's Payout Ratio for the Period was 82.9% compared to
82.0% in the third quarter of 2022. The increase in the Fund's
Payout Ratio for the Period was due to distributions paid
increasing by $0.7 million or
11.7%, partially offset by Distributable Cash increasing by
$0.8 million or 10.5%. YTD, the
Fund's Payout Ratio was 87.3% compared to 93.2% year-to-date in
2022. The decrease in the Fund's Payout Ratio YTD was due to
Distributable Cash increasing by $4.9 million or 27.0%, partially offset by
distributions paid increasing by $3.2 million or 18.9%. 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 93.9% as at September 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).
The Fund established an automatic securities purchase plan (the
"ASPP") with its broker to allow for the repurchase of Units under
the NCIB at any time, including when it ordinarily would not be
active in the market due to its own internal trading blackout
periods, insider trading rules or otherwise. The ASPP automatically
terminated by its terms on August 22, 2023 as a result of the
purchase limits specified in the ASPP having been attained. All
purchases under the ASPP were made on the open market through the
facilities of the TSX, other designated exchanges and/or
alternative Canadian trading systems.
As at June 30, 2023, the Fund acquired 54,200 Units
under the NCIB at an average price of $16.28 per Unit. During the Period, the Fund
acquired an additional 188,700 Units under the NCIB at an
average price of $16.55 per
Unit. Accordingly, as at September 30, 2023, the Fund acquired
a total of 242,900 Units at an average price of $16.49 per Unit. The Fund did not acquire
any additional Units under the NCIB after September 30, 2023.
The Fund financed Units purchased under the NCIB from cash on hand.
All Units that were or will be purchased under the NCIB were or
will be cancelled.
DISTRIBUTIONS
During the Period, the Fund declared distributions on the Units
in the aggregate amount of $6.8 million or $0.321 per Unit. During the third quarter of
2022, the Fund declared distributions on the Units in the aggregate
amount of $6.1 million or
$0.285 per Unit. During the
Period, the Fund paid distributions on the Units in the aggregate
amount of $6.8 million or
$0.321 per Unit. During the
third quarter of 2022, the Fund paid distributions on the Units in
the aggregate amount of $6.1 million or $0.285 per Unit. The amount of distributions
declared during the Period increased by $0.7 million or $0.036 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 $0.7 million
or $0.036 per Unit due to the
2022-2023 Distribution Increases. YTD, the Fund declared
distributions on the Units in the aggregate amount of $18.1 million or $0.846 per Unit. During the same period in
2022, the Fund declared distributions on the Units in the aggregate
amount of $15.3 million or
$0.710 per Unit. YTD, the Fund
paid distributions on the Units in the aggregate amount of
$20.3 million or $0.948. During the same period in 2022, the Fund
paid distributions on the Units in the aggregate amount of
$17.1 million or $0.795 per Unit. The amount of distributions
declared YTD increased by $2.8 million or $0.136 per Unit due to the 2022-2023 Distribution
Increases. Distributions paid YTD increased by $3.2 million or $0.153 per Unit due to the 2022-2023 Distribution
Increases.
On November 8, 2023, the trustees
of the Fund declared a distribution for the period of October 1, 2023 to October
31, 2023 of $0.107 per Unit,
which will be payable on November 30,
2023 to Unitholders of record on November 21, 2023. Including the October 2023 distribution, which will be paid on
November 30, 2023, the Fund will have
paid out total distributions of $418.2
million or $25.80 per Unit,
which includes 250 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 nine-month periods
ended September 30, 2023 and September 30, 2022.
For the
periods ended September 30
|
Q3 2023
|
Q3 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
|
240,139
|
229,848
|
697,990
|
627,834
|
|
|
|
|
|
Royalty
income
|
9,606
|
9,194
|
27,920
|
25,113
|
Distribution
Income
|
3,155
|
3,027
|
9,175
|
8,285
|
Total
revenue
|
12,761
|
12,221
|
37,095
|
33,398
|
Administrative
expenses
|
(350)
|
(334)
|
(1,142)
|
(1,021)
|
Interest expense on
debt and financing fees
|
(838)
|
(886)
|
(2,531)
|
(2,802)
|
Interest expense on
Class B Unit liability
|
(1,055)
|
(835)
|
(2,669)
|
(2,133)
|
Interest
income
|
72
|
31
|
219
|
46
|
Profit before fair
value (loss) gain and income taxes
|
10,590
|
10,197
|
30,972
|
27,488
|
Fair value (loss) gain
on investment in BP Canada LP
|
(7,857)
|
2,183
|
436
|
(873)
|
Fair value gain (loss)
on Class B Unit liability
|
3,501
|
(972)
|
(194)
|
389
|
Fair value gain on
Swaps
|
333
|
572
|
814
|
3,785
|
Current and deferred
income tax expense
|
(1,673)
|
(2,478)
|
(7,679)
|
(6,612)
|
Net and comprehensive
income
|
4,894
|
9,502
|
24,349
|
24,177
|
|
|
|
|
|
Basic earnings per
Unit
|
0.23
|
0.44
|
1.13
|
1.12
|
Diluted earnings per
Unit
|
0.06
|
0.41
|
1.06
|
1.00
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,659
|
9,667
|
28,638
|
25,436
|
BPI Class B Unit
entitlement
|
(740)
|
(1,083)
|
(2,784)
|
(2,635)
|
Interest paid on
long-term debt
|
(825)
|
(939)
|
(2,587)
|
(2,777)
|
Principal repayments
on long-term debt
|
-
|
-
|
-
|
(1,500)
|
Current income tax
expense
|
(2,603)
|
(2,438)
|
(7,504)
|
(6,492)
|
Current income tax
paid
|
2,770
|
2,270
|
7,537
|
6,319
|
Distributable
Cash
|
8,261
|
7,477
|
23,300
|
18,351
|
Distributions
paid
|
6,848
|
6,133
|
20,342
|
17,109
|
Payout Ratio
|
82.9 %
|
82.0 %
|
87.3 %
|
93.2 %
|
Distributable Cash per
Unit
|
0.387
|
0.347
|
1.086
|
0.853
|
Distributions paid per
Unit
|
0.321
|
0.285
|
0.948
|
0.795
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
5.3 %
|
8.4 %
|
11.6 %
|
32.6 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
0
|
1
|
2
|
3
|
|
|
|
|
|
Sep 30, 2023
|
Dec 31, 2022
|
Total assets
|
|
|
413,645
|
413,701
|
Total
liabilities
|
|
|
130,869
|
133,123
|
|
|
|
|
|
|
SUMMARY OF QUARTERLY RESULTS
|
Q3 2023
|
Q2 2023
|
Q1
2023
|
Q4 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
377
|
377
|
377
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
240,139
|
233,650
|
224,201
|
227,163
|
|
|
|
|
|
Royalty
income
|
9,606
|
9,346
|
8,968
|
9,087
|
Distribution
Income
|
3,155
|
3,071
|
2,949
|
2,988
|
Total
revenue
|
12,761
|
12,417
|
11,917
|
12,075
|
Administrative
expenses
|
(350)
|
(401)
|
(391)
|
(369)
|
Interest expense on
debt and financing fees
|
(838)
|
(843)
|
(850)
|
(812)
|
Interest expense on
Class B Unit liability
|
(1,055)
|
(982)
|
(632)
|
(1,557)
|
Interest
income
|
72
|
79
|
68
|
61
|
Profit before fair
value (loss) gain and income taxes
|
10,590
|
10,270
|
10,112
|
9,398
|
Fair
value (loss) gain on investment in BP
Canada LP
|
(7,857)
|
8,511
|
(218)
|
(1,146)
|
Fair value gain (loss)
on Class B Unit liability
|
3,501
|
(3,792)
|
97
|
510
|
Fair value gain (loss)
on Swaps
|
333
|
1,373
|
(892)
|
106
|
Current and deferred
income tax expense
|
(1,673)
|
(3,576)
|
(2,430)
|
(2,462)
|
Net and comprehensive
income
|
4,894
|
12,786
|
6,669
|
6,406
|
|
|
|
|
|
Basic earnings per
Unit
|
0.23
|
0.59
|
0.31
|
0.30
|
Diluted earnings per
Unit
|
0.06
|
0.59
|
0.24
|
0.26
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,659
|
9,759
|
9,220
|
8,919
|
BPI Class B Unit
entitlement
|
(740)
|
(1,006)
|
(1,038)
|
(1,044)
|
Interest paid on
long-term debt
|
(825)
|
(848)
|
(914)
|
(799)
|
Current income tax
expense
|
(2,603)
|
(2,511)
|
(2,390)
|
(2,422)
|
Current income tax
paid
|
2,770
|
2,456
|
2,311
|
2,585
|
Distributable
Cash
|
8,261
|
7,850
|
7,189
|
7,239
|
Distributions
paid
|
6,848
|
6,909
|
6,585
|
8,329
|
Payout Ratio
|
82.9 %
|
88.0 %
|
91.6 %
|
115.1 %
|
Distributable Cash per
Unit
|
0.387
|
0.365
|
0.334
|
0.336
|
Distributions paid per
Unit
|
0.321
|
0.321
|
0.306
|
0.387
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
5.3 %
|
6.6 %
|
25.7 %
|
24.5 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
0
|
1
|
1
|
3
|
SUMMARY OF QUARTERLY RESULTS (continued)
|
Q3 2022
|
Q2 2022
|
Q1 2022
|
Q4 2021
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
383
|
383
|
383
|
387
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
229,848
|
219,384
|
178,602
|
183,177
|
|
|
|
|
|
Royalty
income
|
9,194
|
8,775
|
7,144
|
7,327
|
Distribution
Income
|
3,027
|
2,895
|
2,363
|
2,423
|
Total
revenue
|
12,221
|
11,670
|
9,507
|
9,750
|
Administrative
expenses
|
(334)
|
(349)
|
(338)
|
(327)
|
Interest expense on
debt and financing fees
|
(886)
|
(977)
|
(939)
|
(939)
|
Interest expense on
Class B Unit liability
|
(835)
|
(733)
|
(565)
|
(1,037)
|
Interest
income
|
31
|
10
|
5
|
7
|
Profit before fair
value gain (loss) and income taxes
|
10,197
|
9,621
|
7,670
|
7,454
|
Fair value gain (loss)
on investment in BP Canada LP
|
2,183
|
(14,622)
|
11,566
|
11,294
|
Fair value (loss) gain
on Class B Unit liability
|
(972)
|
6,515
|
(5,154)
|
(5,032)
|
Fair value gain on
Swaps
|
572
|
1,337
|
1,876
|
730
|
Current and deferred
income tax expense
|
(2,478)
|
(1,075)
|
(3,059)
|
(1,804)
|
Net and comprehensive
income
|
9,502
|
1,776
|
12,899
|
12,642
|
|
|
|
|
|
Basic earnings per
Unit
|
0.44
|
0.08
|
0.60
|
0.59
|
Diluted (loss) earnings
per Unit
|
0.41
|
(0.20)
|
0.60
|
0.59
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,667
|
9,118
|
6,651
|
8,524
|
BPI Class B Unit
entitlement
|
(1,083)
|
(888)
|
(664)
|
(858)
|
Interest paid on
long-term debt
|
(939)
|
(954)
|
(884)
|
(892)
|
Principal repayments
on long-term debt
|
-
|
(1,000)
|
(500)
|
(679)
|
Current income tax
expense
|
(2,438)
|
(2,285)
|
(1,769)
|
(1,814)
|
Current income tax
paid
|
2,270
|
2,185
|
1,864
|
1,790
|
Distributable
Cash
|
7,477
|
6,176
|
4,698
|
6,071
|
Distributions
paid
|
6,133
|
5,488
|
5,488
|
5,488
|
Payout Ratio
|
82.0 %
|
88.9 %
|
116.8 %
|
90.4 %
|
Distributable Cash per
Unit
|
0.347
|
0.287
|
0.218
|
0.282
|
Distributions paid per
Unit
|
0.285
|
0.255
|
0.255
|
0.255
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
8.4 %
|
64.9 %
|
39.1 %
|
25.5 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
1
|
0
|
2
|
2
|
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 three quarters 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 in the challenging market
conditions, 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, continued delivery of exceptional guest experiences and
innovative menu selections, the persistence of economic uncertainty
and inflationary pressures in 2023, prevailing macroeconomic
conditions and industry challenges, 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, continued ability to offer
affordable dining options, 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
three quarters 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 related to guest traffic and average guest cheques,
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, interest rates and
inflationary pressures, 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,
extreme weather events, 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.sedarplus.ca 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.sedarplus.ca) 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