Toronto Stock Exchange:
BPF.UN
HIGHLIGHTS
- Franchise Sales1 of $227.7
million for the Period and $925.7
million for the Year, representing an increase of 0.2% and
8.3%, respectively, versus the same periods one year ago.
- Same Restaurant Sales2 of 0.6% for the Period and
8.7% for the Year.
- Cash flows generated from operating activities of $9.3 million for the Period and $37.9 million for the Year, representing an
increase of 4.1% and 10.4%, respectively, versus the same periods
one year ago.
- Distributable Cash3 increased 1.8% for the Period
and 19.8% for the Year, and Distributable Cash per Unit4
increased 3.0% for the Period and 20.4% for the Year.
- Payout Ratio5 of 92.7% for the Period and 88.6% for
the Year. Cash balance at the end of the Period was $4.6 million.
- On April 5, 2023, the Fund
increased its monthly distribution rate to $0.107 per unit of the Fund ("Unit") for
the March 2023 distribution from the
previous monthly rate of $0.102 per
Unit, being an increase of $0.005 per
Unit or 4.9%.
- In December 2023, the first new
Boston Pizza restaurant opened since 2020.
- On February 13, 2024, the
trustees of the Fund declared a distribution for the period of
January 1, 2024 to January 31, 2024 of $0.113 per Unit, which is payable on February 29, 2024 to unitholders of the Fund
("Unitholders") of record on February
21, 2024. This is an increase of $0.006 per Unit, or 5.6%, from the previous
monthly distribution rate of $0.107
per Unit. On an annualized basis, the new monthly distribution rate
equates to $1.356 per Unit compared
to $1.284 per Unit for the previously
monthly distribution rate.
VANCOUVER, BC, Feb. 14,
2024 /CNW/ - Boston Pizza Royalties Income Fund (the
"Fund") and Boston Pizza International Inc. ("BPI")
reported financial results today for the fourth quarter period from
October 1, 2023 to December 31, 2023 (the
"Period") and January 1, 2023 to December 31, 2023
(the "Year"). A copy of this press release, the
audited annual consolidated financial statements, related
Management's Discussion and Analysis ("MD&A") of the
Fund and BPI and the Annual Information Form of the Fund are
available at www.sedarplus.ca and www.bpincomefund.com.
The Fund will host a conference call to discuss the results on
February 14, 2024 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 March 14, 2024 by dialling 1-800-319-6413 or
604-638-9010 and entering the access code: 0605 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 the Year.
"We are pleased to announce a 5.6% increase to the monthly cash
distribution rate to Unitholders to a new rate of $0.113 per Unit the highest level since
COVID-19." said Marc Guay, Chair of
the Board of Trustees. "The strong financial performance of
Boston Pizza International Inc. and the Fund in 2023, along with
the Fund's growing cash balance, have enabled the trustees of the
Fund to increase the monthly distribution rate payable to
Unitholders. While this demonstrates the resiliency of the
Boston Pizza system, the trustees of the Fund remain cautious and
will continue to closely monitor the Fund's available cash balances
and distribution levels, based on our goal of stable and
sustainable distribution flow to Unitholders."
In deciding to increase monthly cash distributions from
$0.107 per Unit to $0.113 per Unit, the trustees of the Fund
considered, among other factors, the recent financial performance
of the Fund, Boston Pizza International Inc. and Boston Pizza
restaurants in the Fund's Royalty Pool, the Fund's cash position
and debt repayment obligations, internal financial projections for
the Fund and Boston Pizza restaurants in the Fund's Royalty Pool
for the remainder of 2024 and beyond.
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 strong Franchise Sales in the first
quarter of 2023 carried on throughout 2023 despite ongoing economic
uncertainty, inflationary pressures and high interest rates," said
Jordan Holm, President of BPI. "We
ended 2023 with the first opening of a new Boston Pizza restaurant
since 2020. This significant landmark is a testament to the
strength and future growth of the Boston Pizza brand. We are
dedicated to the continued success of the Boston Pizza brand and
our restaurant network."
PERIOD AND YEAR RESULTS
SRS, a key driver of distribution growth for Unitholders, was
0.6% for the Period compared to 24.5% reported in the fourth
quarter of 2022. SRS for the Period was principally due to an
increase in average guest cheque due to menu pricing. SRS was 8.7%
for the Year compared to 30.4% reported in 2022. SRS for the
Year was principally due to increases in restaurant guest traffic
compared to 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 2021, 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. The
COVID-19 restrictions that existed during 2021 were a significant
factor in why SRS in 2022 is greater than SRS in 2023.
Franchise Sales of Boston Pizza restaurants in the Royalty Pool
were $227.7 million for the Period
and $925.7 million for the Year
compared to $227.2 million and
$855.0 million, respectively, for the
same periods in 2022. The $0.5
million increase in Franchise Sales for the Period and
$70.7 million increase in Franchise
Sales for the Year were primarily due to positive SRS.
The Fund's net and comprehensive income was $5.2 million for the Period compared to
$6.4 million for the fourth quarter
of 2022. The $1.2
million decrease in the Fund's net
and comprehensive income for the Period compared
to the fourth quarter
of 2022 was primarily due to a $1.2
million increase in fair value loss and $0.2
million increase in income
tax expense for the Period, partially
offset by a $0.2 million decrease in interest
expense on Class B Unit liability. The Fund's net and comprehensive
income was $29.6 million for the Year
compared to $30.6 million in 2022.
The $1.0 million decrease in the
Fund's net and comprehensive income for the Year compared to the
same period in 2022 was primarily due to a $3.5 million increase in fair value loss and
$1.3 million increase in income tax
expense for the period, partially offset by a $3.7 million increase in
Royalty6 and Distribution Income7.
The Fund's cash flows generated from operating activities for
the Period was $9.3 million compared
to $8.9 million in the fourth quarter
of 2022. The increase of $0.4 million
was primarily due to an increase in changes in working capital of
$0.2 million and a decrease in income
taxes paid of $0.2 million. The
Fund's cash flows generated from operating activities for the Year
was $37.9 million compared to
$34.4 million in the same period in
2022. The increase of $3.5 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 $0.8
million, partially offset by an increase in income taxes
paid of $1.1 million.
The Fund generated Distributable Cash of $7.4 million for the Period compared to
$7.2 million for the fourth quarter
of 2022. The increase in Distributable Cash of $0.2 million or 1.8% was primarily due to
increased cash flows generated from operating activities of
$0.4 million, partially offset by a
SIFT Tax on Units3 adjustment of $0.2 million. The Fund generated Distributable
Cash of $30.7 million for the Year
compared to $25.6 million in 2022.
The increase in Distributable Cash of $5.1
million or 19.8% was primarily due to increased cash flows
generated from operating activities of $3.5
million, lower repayments of debt of $1.5 million and lower interest paid on debt of
$0.2 million, partially offset by
increased BPI Class B Unit entitlement8 of $0.2 million.
The Fund generated Distributable Cash per Unit of $0.346 for the Period compared to $0.336 per Unit for the fourth quarter of 2022.
The increase in Distributable Cash per Unit of $0.010 or 3.0% was primarily attributable to the
increase in Distributable Cash outlined above and fewer Units
outstanding compared to the same period in 2022 due to the normal
course issuer bid through the Toronto Stock Exchange that commenced
on June 20, 2023 under which the Fund
acquired and cancelled a total of 242,900 Units (the
"NCIB"). The Fund generated Distributable Cash per Unit of
$1.432 for the Year compared to
$1.189 per Unit in 2022. The increase
in Distributable Cash per Unit of $0.243 or 20.4% was primarily attributable to the
increase in Distributable Cash outlined above and fewer Units
outstanding compared to the same period in 2022 due to
the NCIB.
The Fund's Payout Ratio for the Period was 92.7% compared to
115.1% in the fourth quarter of 2022. The decrease in the Fund's
Payout Ratio for the Period was due to distributions paid
decreasing by $1.5 million or 18.0%
as a result of the 2022 Special Distribution (defined below) and
Distributable Cash increasing by $0.2
million or 1.8%. During the Year, the Fund's Payout Ratio
was 88.6% compared to 99.4% in 2022. The decrease in the
Fund's Payout Ratio for the Year was due to Distributable Cash
increasing by $5.1 million or 19.8%,
partially offset by distributions paid increasing by $1.8 million or 6.8%. 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.
DISTRIBUTIONS
During the Period, the Fund declared distributions on the Units
in the aggregate amount of $9.1
million or $0.428 per Unit.
During the fourth quarter of 2022, the Fund declared distributions
on the Units in the aggregate amount of $10.5 million or $0.489 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 fourth quarter of
2022, the Fund paid distributions on the Units in the aggregate
amount of $8.3 million or
$0.387 per Unit. The amount of
distributions declared during the Period decreased by $1.4 million or $0.061 per Unit due to the special one-time cash
distribution to Unitholders of $0.085
per Unit, which was declared on December 8,
2022 and was paid on December 30,
2022 (the "2022 Special Distribution"), partially
offset by the monthly distribution rate increasing from
$0.100 per Unit to $0.102 per Unit commencing with the
November 2022 distribution (the "November 2022
Distribution Increase"), and increasing again from $0.102 per Unit to $0.107 per Unit commencing with the
March 2023 distribution (the "March 2023
Distribution Increase"). Distributions paid during the
Period decreased by $1.5 million or
$0.066 per Unit due to the 2022
Special Distribution, partially offset by the November 2022 Distribution Increase and the
March 2023 Distribution Increase.
During the Year, the Fund declared distributions on the Units in
the aggregate amount of $27.3 million
or $1.274 per Unit. During the same
period in 2022, the Fund declared distributions on the Units in the
aggregate amount of $25.8 million or
$1.199 per Unit. During the Year, the
Fund paid distributions on the Units in the aggregate amount of
$27.2 million or $1.269. During the same period in 2022, the Fund
paid distributions on the Units in the aggregate amount of
$25.4 million or $1.182 per Unit. The amount of distributions
declared for the Year increased by $1.5
million or $0.075 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, the November 2022 Distribution Increase and the
March 2023 Distribution Increase
(collectively, the "2022-2023 Distribution Increases"),
partially offset by the 2022 Special Distribution. Distributions
paid for the Year increased by $1.8
million or $0.087 per Unit due
to the 2022-2023 Distribution Increases, partially offset by the
2022 Special Distribution.
The Fund pays distributions on the Units in respect of any
calendar month not later than the last business day of the
immediately subsequent month. Consequently, monthly distributions
payable by the Fund on the Units in respect of the Period were the
October 2023 distribution (which was
paid on November 30, 2023), the
November 2023 distribution (which was
paid on December 29, 2023) and the
December 2023 distribution (which was
paid on January 31, 2024). Similarly,
the distributions payable by the Fund on the Units in respect of
any other period are paid in the immediately subsequent month of
such period.
On February 13, 2024, the trustees
of the Fund declared a distribution for the period of January 1, 2024 to January
31, 2024 of $0.113 per Unit,
which will be payable on February 29,
2024 to Unitholders of record on February 21, 2024. This is an increase of
$0.006 per unit, or 5.6%, from the
previous monthly distribution rate of $0.107 per unit. On an annualized basis, the new
monthly distribution rate equates to $1.356 per Unit compared to $1.284 per Unit for the previously monthly
distribution rate. Including the January
2024 distribution, which will be paid on February 29, 2024, the Fund will have paid out
total distributions of $425.2 million
or $26.13 per Unit, which includes
253 monthly distributions and two special distributions.
FINANCIAL SUMMARY
The tables below set out selected information from the Fund's
audited annual consolidated financial statements together with
other data and should be read in conjunction with the audited
annual consolidated financial statements and MD&A of the Fund
for the years ended December 31, 2023 and 2022.
For the
years ended December 31
|
|
2023
|
2022
|
2021
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
|
377
|
383
|
387
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
|
925,655
|
854,997
|
660,051
|
|
|
|
|
|
Royalty
income
|
|
37,026
|
34,200
|
26,402
|
Distribution
Income
|
|
12,167
|
11,273
|
8,752
|
Total
revenue
|
|
49,193
|
45,473
|
35,154
|
Administrative
expenses
|
|
(1,489)
|
(1,390)
|
(1,299)
|
Interest expense on
debt and financing fees
|
|
(3,370)
|
(3,614)
|
(3,879)
|
Interest expense on
Class B Unit liability
|
|
(3,990)
|
(3,690)
|
(2,506)
|
Interest
income
|
|
276
|
107
|
94
|
Profit before fair
value (loss) gain and income taxes
|
|
40,620
|
36,886
|
27,564
|
Fair value gain (loss)
on investment in BP Canada LP
|
|
1,364
|
(2,019)
|
25,206
|
Fair value (loss) gain
on Class B Unit liability
|
|
(608)
|
899
|
(11,229)
|
Fair value (loss) gain
on Swaps
|
|
(1,436)
|
3,891
|
2,303
|
Current and deferred
income tax expense
|
|
(10,374)
|
(9,074)
|
(6,437)
|
Net and comprehensive
income
|
|
29,566
|
30,583
|
37,407
|
|
|
|
|
|
Basic earnings per
Unit
|
|
1.38
|
1.42
|
1.74
|
Diluted earnings per
Unit
|
|
1.34
|
1.31
|
1.74
|
|
|
|
|
|
Distributable
Cash / Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
|
37,926
|
34,355
|
30,475
|
BPI Class B Unit
entitlement
|
|
(3,865)
|
(3,679)
|
(2,770)
|
Interest paid on
long-term debt
|
|
(3,404)
|
(3,576)
|
(3,692)
|
Principal repayments
on long-term debt
|
|
-
|
(1,500)
|
(3,787)
|
Current income tax
expense
|
|
(9,949)
|
(8,914)
|
(6,307)
|
Current income tax
paid
|
|
9,961
|
8,904
|
6,520
|
Distributable
Cash
|
|
30,669
|
25,590
|
20,439
|
Distributions
paid
|
|
27,172
|
25,438
|
22,382
|
Payout
Ratio[*]
|
|
88.6 %
|
99.4 %
|
109.5 %
|
Distributable Cash per
Unit
|
|
1.432
|
1.189
|
0.950
|
Distributions paid per
Unit
|
|
1.269
|
1.182
|
1.040
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
|
8.7 %
|
30.4 %
|
8.5 %
|
Number of restaurants
opened
|
|
1
|
0
|
0
|
Number of restaurants
closed
|
|
6
|
6
|
4
|
|
|
|
As at December
31
|
2023
|
2022
|
2021
|
Total assets
|
|
413,055
|
413,701
|
411,313
|
Total
liabilities
|
|
134,169
|
133,123
|
135,514
|
___________________________________
|
*
|
Payout Ratio is
calculated by dividing the amount of distributions paid during the
applicable period by the Distributable Cash for that period.
Accordingly, the Payout Ratio for 2021 includes the special
distribution of $0.200 per Unit that was declared on December 16,
2020 and paid on January 29, 2021 to Unitholders of record at the
close of business on December 31, 2020 (the "2020 Special
Distribution"), even though the Distributable Cash generated to
fund the 2020 Special Distribution was generated during 2020.
If the 2020 Special Distribution was excluded in the calculation of
Payout Ratio for 2021, it would be 88.4%.
|
SUMMARY OF QUARTERLY RESULTS
|
Q4
2023
|
Q3
2023
|
Q2
2023
|
Q1 2023
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
377
|
377
|
377
|
377
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
227,665
|
240,139
|
233,650
|
224,201
|
|
|
|
|
|
Royalty
income
|
9,106
|
9,606
|
9,346
|
8,968
|
Distribution
Income
|
2,992
|
3,155
|
3,071
|
2,949
|
Total
revenue
|
12,098
|
12,761
|
12,417
|
11,917
|
Administrative
expenses
|
(347)
|
(350)
|
(401)
|
(391)
|
Interest expense on
debt and financing fees
|
(839)
|
(838)
|
(843)
|
(850)
|
Interest expense on
Class B Unit liability
|
(1,321)
|
(1,055)
|
(982)
|
(632)
|
Interest
income
|
57
|
72
|
79
|
68
|
Profit before fair
value (loss) gain and income taxes
|
9,648
|
10,590
|
10,270
|
10,112
|
Fair
value gain (loss) on investment in BP
Canada LP
|
928
|
(7,857)
|
8,511
|
(218)
|
Fair value (loss) gain
on Class B Unit liability
|
(414)
|
3,501
|
(3,792)
|
97
|
Fair value (loss) gain
on Swaps
|
(2,250)
|
333
|
1,373
|
(892)
|
Current and deferred
income tax expense
|
(2,695)
|
(1,673)
|
(3,576)
|
(2,430)
|
Net and comprehensive
income
|
5,217
|
4,894
|
12,786
|
6,669
|
|
|
|
|
|
Basic earnings per
Unit
|
0.25
|
0.23
|
0.59
|
0.31
|
Diluted earnings per
Unit
|
0.24
|
0.06
|
0.59
|
0.24
|
|
|
|
|
|
Distributable
Cash / Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
9,288
|
9,659
|
9,759
|
9,220
|
BPI Class B Unit
entitlement
|
(1,081)
|
(740)
|
(1,006)
|
(1,038)
|
Interest paid on
long-term debt
|
(817)
|
(825)
|
(848)
|
(914)
|
Current income tax
expense
|
(2,445)
|
(2,603)
|
(2,511)
|
(2,390)
|
Current income tax
paid
|
2,424
|
2,770
|
2,456
|
2,311
|
Distributable
Cash
|
7,369
|
8,261
|
7,850
|
7,189
|
Distributions
paid
|
6,830
|
6,848
|
6,909
|
6,585
|
Payout Ratio
|
92.7 %
|
82.9 %
|
88.0 %
|
91.6 %
|
Distributable Cash per
Unit
|
0.346
|
0.387
|
0.365
|
0.334
|
Distributions paid per
Unit
|
0.321
|
0.321
|
0.321
|
0.306
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
0.6 %
|
5.3 %
|
6.6 %
|
25.7 %
|
Number of restaurants
opened
|
1
|
0
|
0
|
0
|
Number of restaurants
closed
|
4
|
0
|
1
|
1
|
SUMMARY OF QUARTERLY RESULTS (continued)
|
Q4 2022
|
Q3 2022
|
Q2 2022
|
Q1 2022
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
383
|
383
|
383
|
383
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
227,163
|
229,848
|
219,384
|
178,602
|
|
|
|
|
|
Royalty
income
|
9,087
|
9,194
|
8,775
|
7,144
|
Distribution
Income
|
2,988
|
3,027
|
2,895
|
2,363
|
Total
revenue
|
12,075
|
12,221
|
11,670
|
9,507
|
Administrative
expenses
|
(369)
|
(334)
|
(349)
|
(338)
|
Interest expense on
debt and financing fees
|
(812)
|
(886)
|
(977)
|
(939)
|
Interest expense on
Class B Unit liability
|
(1,557)
|
(835)
|
(733)
|
(565)
|
Interest
income
|
61
|
31
|
10
|
5
|
Profit before fair
value (loss) gain and income taxes
|
9,398
|
10,197
|
9,621
|
7,670
|
Fair value (loss) gain
on investment in BP Canada LP
|
(1,146)
|
2,183
|
(14,622)
|
11,566
|
Fair value gain (loss)
on Class B Unit liability
|
510
|
(972)
|
6,515
|
(5,154)
|
Fair value gain on
Swaps
|
106
|
572
|
1,337
|
1,876
|
Current and deferred
income tax expense
|
(2,462)
|
(2,478)
|
(1,075)
|
(3,059)
|
Net and comprehensive
income
|
6,406
|
9,502
|
1,776
|
12,899
|
|
|
|
|
|
Basic earnings per
Unit
|
0.30
|
0.44
|
0.08
|
0.60
|
Diluted earnings (loss)
per Unit
|
0.26
|
0.41
|
(0.20)
|
0.60
|
|
|
|
|
|
Distributable
Cash / Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
8,919
|
9,667
|
9,118
|
6,651
|
BPI Class B Unit
entitlement
|
(1,044)
|
(1,083)
|
(888)
|
(664)
|
Interest paid on
long-term debt
|
(799)
|
(939)
|
(954)
|
(884)
|
Principal repayments
on long-term debt
|
-
|
-
|
(1,000)
|
(500)
|
Current income tax
expense
|
(2,422)
|
(2,438)
|
(2,285)
|
(1,769)
|
Current income tax
paid
|
2,585
|
2,270
|
2,185
|
1,864
|
Distributable
Cash
|
7,239
|
7,477
|
6,176
|
4,698
|
Distributions
paid
|
8,329
|
6,133
|
5,488
|
5,488
|
Payout Ratio
|
115.1 %
|
82.0 %
|
88.9 %
|
116.8 %
|
Distributable Cash per
Unit
|
0.336
|
0.347
|
0.287
|
0.218
|
Distributions paid per
Unit
|
0.387
|
0.285
|
0.255
|
0.255
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
24.5 %
|
8.4 %
|
64.9 %
|
39.1 %
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
3
|
1
|
0
|
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 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, the opening
of a new Boston Pizza restaurant being a testament of the strength
and future growth of the Boston Pizza brand, continued improved
performance and guest traffic due to the elimination of
government-imposed COVID-19 restrictions in the Canadian restaurant
industry, sales levels returning to levels consistent with times
prior to COVID-19, continued delivery of exceptional guest
experiences and innovative menu selections, the persistence of
economic uncertainty and inflationary pressures in 2024, 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 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, and the Fund
having sufficient cash on hand to fund repurchases under the NCIB.
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. 2024.
|
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 Year
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