Pizza Pizza Royalty Corp. Announces Third Quarter Financial Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 11/06/14 -- Pizza Pizza Royalty Corp. (the "Company") (TSX: PZA),which owns the Pizza Pizza and Pizza 73 Rights and Marks, released financial results today for the third quarter and nine months ended September 30, 2014.
Third Quarter highlights:
Year-to-date highlights:
SALES
In the third quarter ended September 30, 2014 ("Quarter"), System Sales from the 722 restaurants in the Royalty Pool increased 2.6% to $124.1 million from $121.0 million in the same quarter last year when there were 694 restaurants in the Pool. For the nine months, Royalty Pool System Sales increased 2.5% to $369.9 million from $361.1 million in the same period last year.
Same store sales growth ("SSSG"), the key driver of yield growth for shareholders of the Company, increased by 0.8% (1.9% increase - 2013) for the Quarter when compared to the same period in 2013, and has increased 0.7% (2.2% increase - 2013) for the nine month period.
SSSG is driven by growth in the average customer cheque and growth in customer traffic. Compared to the same quarter last year, the average customer cheque and customer traffic both increased. For the nine month period, the average customer cheque has increased while the traffic counts have decreased.
Paul Goddard, CEO, Pizza Pizza Limited ("PPL"), said: "During the third quarter, we employed several strategies which increased customer traffic and the average cheque, resulting in combined positive same store sales; this reversed the previous quarter''s results. While Pizza Pizza sales growth in Ontario is currently below our expectations, Pizza 73 has achieved exceptional growth in the stronger Alberta market. In the near-term future, our marketing campaigns will remain focused on promoting our high-quality menu offerings and delivering a strong value message to consumers; this strategy should continue to increase customer traffic."
MONTHLY DIVIDENDS AND WORKING CAPITAL RESERVE
The Company declared shareholder dividends of $4.4 million ($0.2001 per share) for the Quarter compared to $4.3 million ($0.195 per share) for the prior year comparable quarter which equates to a 2.6% increase. The payout ratio was 102% for the Quarter compared to 101% in the third quarter of 2013.
For the nine months ended September 30, 2014, the Company declared dividends of $13.1 million ($0.6003 per share) compared to $12.5 million ($0.5725 per share) for the same period in 2013; the payout ratio for the nine month period was 102% and was 99% in the same period of 2013.
In January 2014, the Company increased the monthly dividend by 2.6% to $0.0667 per share. On an annualized basis, the dividend was increased by $0.02 to $0.80. The previous dividend increase was in June 2013 when 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.
The Company''s working capital reserve is $3.7 million at September 30, 2014, which is a decrease of $79,000 for the Quarter and a decrease of $1.4 million for the nine month period. As previously announced, the majority of the decrease in the reserve was the result of a decision made by the Board of Directors, on the January 1, 2014 Adjustment Date, to compensate PPL in cash of $1.1 million in lieu of PPL receiving 85,571 equivalent Shares on account of Royalty Pool adjustments.
EARNINGS PER SHARE ("EPS")
Fully-diluted EPS for the Quarter was $0.201 per share compared to $0.195 per share in the same quarter last year. For the nine month period, EPS was $0.604 compared to $0.584 for the same period in 2013. However, instead of EPS, the Company considers "adjusted" EPS(1) to be a more meaningful indicator of the Company''s operating performance and, thus, also presents fully-diluted adjusted EPS.
For the Quarter, adjusted EPS increased 1.9% to $0.211 per share compared to $0.207 per share in the same quarter last year; for the nine month period, adjusted EPS increased 1.8% to $0.630 from $0.619 for the same period of 2013.
CURRENT INCOME TAX EXPENSE
Current income tax expense for the Quarter was $1.1 million and $3.2 million for the nine months. For the 2013 comparative quarter and period, the current tax expense was $1.0 million and $3.0 million. The increase is due to increased taxable income and a decrease 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.
CREDIT FACILITY INTEREST RATE DECREASE
For the rolling four quarter period ended March 31, 2014, the Company achieved a certain profitability threshold under its credit agreement at which the interest rate decreased by 0.25% effective April 22, 2014. The credit agreement contains a financial covenant which is customary for agreements of this nature, using a four quarter rolling basis in which the loan amount is divided by earnings before interest expense, taxes depreciation and amortization. The covenant will continue to be tested going forward.
RESTAURANT DEVELOPMENT
As previously announced, the number of restaurants in the Company''s Royalty Pool increased to 722 on the January 1, 2014 Adjustment Date from 694 in 2013. The number of restaurants in the Royalty Pool will remain unchanged through December 31, 2014.
During the Quarter, PPL opened 11 restaurants and closed eight, increasing the overall number of restaurants to 730. By brand, for the Quarter, Pizza Pizza opened four traditional restaurants and five non-traditional locations; eight non-traditional Pizza Pizza restaurants were closed. Pizza 73 opened two non-traditional locations and none were closed.
For the nine month period, PPL opened 24 restaurants and closed 17, increasing the overall number of restaurants by seven. By brand, for the nine months, Pizza Pizza opened nine traditional and eight non-traditional locations; 16 non-traditional locations were closed. Pizza 73 opened one traditional and six non-traditional locations; one non-traditional location was closed.
(1) Adjusted earnings and adjusted EPS 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 ("MD&A").
SELECTED FINANCIAL HIGHLIGHTS
The following tables set out selected financial information and other data of the Company and should be read in conjunction with the unaudited interim condensed consolidated financial statements of the Company. Readers should note that the 2014 results are not directly comparable to the 2013 results because there are 722 restaurants in the 2014 Royalty Pool compared to 694 restaurants in the 2013 Royalty Pool.
A copy of the Company''s unaudited interim consolidated financial statements and related MD&A will be available at and after the market closes on November 6, 2014.
As previously announced, the Company will host a conference call to discuss the results. The details of the conference call are as follows:
A recording of the call will also be available on the Company''s website .
Forward Looking Statements
Certain statements in this report, including under the heading "Sales", 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 Annual Information Form. The Company assumes no obligation to update these forward looking statements, except as required by applicable securities laws.
Contacts:
Pizza Pizza Limited
Curt Feltner
Chief Financial Officer
(416) 967-1010x307
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Datum: 06.11.2014 - 15:00 Uhr
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