Pizza Pizza Royalty Corp. Announces Third Quarter Financial Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 11/05/13 -- Attention Business Editors:
Pizza Pizza Royalty Corp. (the "Company" or "PPRC") (TSX: PZA), which owns the Pizza Pizza and Pizza 73 Rights and Marks, released financial results today for the third quarter ended September 30, 2013.
Third Quarter highlights:
Year-to-date highlights:
SALES
In the third quarter ended September 30, 2013 ("Quarter"), System Sales from the 694 restaurants in the Royalty Pool increased to $121 million from $119.3 million in the same quarter last year.
For the first nine months, Royalty Pool System Sales increased to $361.1 million from $354.2 million in the same period last year. Last year had an extra day of sales in February due to 2012 being a leap year. The extra day of sales is estimated by management to be $1.2 million.
Same store sales growth ("SSSG"), the key driver of yield growth for shareholders of the Company, increased by 1.9% (1.3% - 2012) for the Quarter and increased 2.2% (2.5% - 2012) for the nine months ended September 30, 2013, when compared to the same periods in 2012. The Company is reporting its thirteenth consecutive, positive SSSG quarter.
By brand, for the Quarter, SSSG for the Pizza Pizza restaurants was 1.9% and 2.0% for Pizza 73 restaurants (1.1% and 2.4% in 2012, respectively). For the nine month period, SSSG for Pizza Pizza restaurants was 1.9% and was 3.7% for the Pizza 73 restaurants (2.5% and 2.6% in 2012, respectively).
Restaurant sales benefited from an increase in both the average customer cheque and customer traffic counts during the quarter compared to the same quarter last year. For the nine month period, the average customer cheque increased while traffic was flat compared to the same period last year.
Paul Goddard, C.E.O., Pizza Pizza Limited, said: "Technology and innovation continue to play an important part in maintaining Pizza Pizza as the market leader. During the quarter we launched our Android mobile ordering app and also introduced our "Club 11-11" loyalty program. Both are sales-driven initiatives designed to encourage customer frequency and attract new customers."
MONTHLY DIVIDENDS AND WORKING CAPITAL RESERVE
The Company declared shareholder dividends of $4.25 million, or $0.195 per Share, for the Quarter compared to $3.9 million, or $0.18 per unit, for the prior year comparable quarter. This is an 8.3% increase on a quarter-over-quarter basis. The increase is a result of the thirteen consecutive, positive quarters of SSSG and the accumulation of the $4.7 million cash reserve. With this reserve now in place, going forward, the Company has begun to target a payout ratio closer to 100% as was the case with the current quarter. The payout ratio was 101% for the Quarter and was 90% in the prior year comparable quarter.
For the nine months ended September 30, 2013, the Company declared dividends of $12.5 million, or $0.5725 per Share, compared to distributions of $11.6 million, or $0.5336 per unit, in 2012; the payout ratio was 99% for the nine month period and was 91% in the comparable period in 2012.
In June 2013, the Company increased the monthly dividend by 4% to $0.065 ($0.78 annualized) from $0.0625 ($0.75 annualized). Prior to the June 2013 dividend increase, the Company had increased the dividend in January 2013 by 4.2% to $0.0625 per Share. In 2012, the shareholder dividend was increased in May of the second quarter by 2.7% to $0.06 per unit from $0.0584.
During the Quarter, the Company's working capital reserve decreased slightly by $44,000 to $4.73 million for the Quarter; the reserve has increased $167,000 for the nine month period. The reserve is available to stabilize dividends and fund other expenditures in the event of short- to medium-term variability in System Sales and, thus, the Company's royalty income. The Company does not have capital expenditure requirements or employees.
EARNINGS PER SHARE
Fully-diluted earnings (loss) per share for the Quarter was $0.20 compared to ($0.11) per unit in the same quarter last year; however, the Company considers adjusted earnings to be a more meaningful indicator of the Company's operating performance and, thus, also presents fully-diluted adjusted earnings per share ("EPS").
For the Quarter, adjusted EPS was unchanged at $0.207 per share compared to $0.207 per unit in the same quarter last year. For the nine months ended September 30, 2013, adjusted EPS increased 1.8% to $0.619 per share from $0.608 per unit in the same period last year.
Adjusted earnings and adjusted earnings per share are not recognized measures under International Financial Reporting Standards ("IFRS") and may be calculated in a manner that differs from that used by other issuers. For additional information about the calculation and use of these measures, please see "Reconciliation of Non-IFRS Measures" in the Company's Management's Discussion & Analysis ("MDA") for the Quarter.
CURRENT INCOME TAX EXPENSE
Current income tax expense for the Quarter was $994,000 and was $957,000 for the prior year comparable quarter. For the nine months ended September 30, 2013, current tax expense was $2,979,000 compared to $2,783,000 for the same period last year. The increase is due to increased taxable income and a decline in the tax amortization.
Of particular note is that the Company's earnings from operations before income taxes differs significantly from its taxable income due largely to the tax amortization of the Pizza Pizza and Pizza 73 Rights and Marks. The amount of the tax amortization deducted is based on a declining basis and will decrease yearly.
This tax amortization deduction and certain other minor deductions resulted in an effective tax rate of 18.4% through the first nine months of the year compared to the Company's applicable statutory tax rate of 26.5% (2012 - 26.5%).
RESTAURANT DEVELOPMENT
As previously announced, the number of restaurants in the Company's Royalty Pool increased to 694 on the January 1, 2013 Adjustment Date from 690 in 2012. The number of restaurants in the Royalty Pool will not change again until January 1, 2014.
During the Quarter, Pizza Pizza Limited ("PPL") opened a net, five additional restaurants, increasing the number of restaurants to 712 at September 30, 2013. By brand, Pizza Pizza opened three traditional restaurants and five non-traditional locations; three non-traditional locations were closed. One Pizza 73 non-traditional location opened and one non-traditional location closed during the quarter. For the nine month period, PPL has opened a net, 18 restaurants. By brand, Pizza Pizza has opened five traditional restaurants and fourteen non-traditional locations, and closed five non-traditional locations. Pizza 73 has opened one traditional and four non-traditional locations; one non-traditional closed during the 39-week period.
SELECTED FINANCIAL HIGHLIGHTS
The following tables set out selected financial information and other data of the Company, formerly Pizza Pizza Royalty Income Fund (the "Fund"), and should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements. For this discussion, references to the Company for the periods prior to December 31, 2012 are references to the Fund, and references to units are to the trust units of the Fund. Readers should note that the 2013 results are not directly comparable to the 2012 results because of an extra day of royalty revenue received from PPL in 2012 due to the leap year and the fact that there are 694 restaurants in the 2013 Royalty Pool compared to 690 restaurants in the 2012 Royalty Pool.
A copy of the Company's unaudited interim condensed consolidated financial statements and related Management's Discussion and Analysis for the Quarter will be available at and after the market closes on November 5, 2013.
As previously announced, the Company will host a conference call to discuss the results. The details of the conference call are as follows:
Forward-Looking Statements
Certain statements in this report, including under the heading "Restaurant Development", may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this report, such statements include such words as "may", "will", "expect", "believe", "plan", and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this report. These forward-looking statements involve a number of risks and uncertainties. The following are some factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking statements: competition; changes in demographic trends; changing consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; legislation and governmental regulation; accounting policies and practices; changes in the Company's distribution policy, tax position and availability and use of deductions and related structuring decisions; and the results of operations and financial condition of the Company. The foregoing list of factors is not exhaustive and should be considered in conjunction with the other risks and uncertainties described in the Company's 2012 Annual Information Form. The Company assumes no obligation to update these forward looking statements, except as required by applicable securities laws.
and or .
Contacts:
Pizza Pizza Limited
Curt Feltner
Chief Financial Officer
(416) 967-1010x307
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Datum: 05.11.2013 - 16:00 Uhr
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