Toronto Stock Exchange: BPF.UN
HIGHLIGHTS
- Franchise Sales1 of $227.2
million for the Period and $855.0
million for the Year, representing an increase of 24.0% and
29.5%, respectively, versus the same periods one year ago.
- Same Restaurant Sales2 of 24.5% for the Period and
30.4% for the Year. As COVID-19 began to adversely affect sales in
Boston Pizza restaurants in March of 2020, the Fund believes that
it is also useful to calculate and report SRS comparing 2022
Franchise Sales to 2019 Franchise Sales. If SRS were calculated
comparing Franchise Sales in the Period and the Year to Franchise
Sales in the same periods in 2019, SRS would be 10.8% and 3.2%,
respectively.
- Cash flows generated from operating activities of $8.9 million for the Period and $34.4 million for the Year, representing an
increase of 4.6% and 12.7%, respectively, versus the same periods
one year ago.
- Distributable Cash3 increased 19.2% for the Period
and 25.2% for the Year, and Distributable Cash per Unit4
increased 19.1% for the Period and 25.2% for the Year.
- Payout Ratio5 of 115.1% for the Period and 99.4% for
the Year. Cash balance at the end of the Period was $5.2 million.
- The Fund increased its monthly distribution rate twice during
the Year, first with the July 2022
distribution rate from $0.085 to
$0.100 per unit of the Fund
("Unit"), and then with the November
2022 distribution rate from $0.100 to $0.102
per Unit.
- The Fund declared and paid a special cash distribution to
unitholders of the Fund ("Unitholders") of $0.085 per Unit in December 2022.
- On February 8, 2023, the trustees
of the Fund declared a distribution for the period of January 1, 2023 to January
31, 2023 of $0.102 per Unit,
which is payable on February 28, 2023
to Unitholders of record on February 21,
2023.
VANCOUVER, BC, Feb. 9, 2023
/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,
2022 to December 31, 2022 (the "Period") and
January 1, 2022 to December 31, 2022 (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.sedar.com and
www.bpincomefund.com. The Fund will host a conference call to
discuss the results on February 9,
2023 at 6:30 am Pacific Time
(9:30 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 9, 2023
by dialling 1-800-319-6413 or 604-638-9010 and entering the access
code: 9701 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.
COVID-19 continued to impact the business of the Fund, BPI and
Boston Pizza Canada Limited Partnership ("BP Canada LP"), and the
operation of Boston Pizza restaurants during 2021 and the first
half of 2022. Since then, COVID-19 case counts have improved,
government restrictions related to COVID-19 have largely been
eliminated, and sales levels of Boston Pizza restaurants have
returned to more normal levels when compared to times prior to
COVID-19.
"We are pleased that total Franchise Sales for 2022 returned to
pre-pandemic levels despite the challenges faced due to COVID-19,"
said Jordan Holm, President of BPI.
"In addition, Boston Pizza continues to successfully manage through
supply chain disruptions and labour shortages experienced across
Canada. As economic uncertainty
and inflationary pressures persist in 2023, we will work diligently
to support our franchisees and continue the positive sales momentum
that was achieved in 2022."
PERIOD AND YEAR RESULTS
SRS, a key driver of distribution growth for Unitholders, was
24.5% for the Period compared to 25.5% reported in the fourth
quarter of 2021. If SRS were calculated comparing Franchise
Sales in the Period to Franchise Sales for the same period in 2019,
SRS would be 10.8%. SRS was 30.4% for the Year compared to 8.5%
reported in 2021. If SRS were calculated comparing Franchise Sales
for the Year to Franchise Sales in 2019, SRS would be 3.2%. The
increase in SRS for the Period and YTD was due to increases in
restaurant guest traffic as a result of the easing and elimination
of dining restrictions and increased average guest cheque.
Franchise Sales of Boston Pizza restaurants in the Royalty Pool
were $227.2 million for the Period
and $855.0 million for the Year
compared to $183.2 million and
$660.1 million, respectively, for the
same periods in 2021. The $44.0
million increase in Franchise Sales for the Period and
$194.9 million increase in Franchise
Sales for the Year were primarily due to positive SRS.
The Fund's net and comprehensive income was $6.4 million for the Period compared to
$12.6 million for the fourth quarter
of 2021. The $6.2 million decrease in
the Fund's net and comprehensive income for the Period compared to
the fourth quarter of 2021 was primarily due to a $7.5 million increase in fair value loss, an
increase in income tax expense of $0.7
million and an increase in interest on Class B general
partner units of Royalties LP ("Class B Units") of $0.6 million, partially offset by an increase in
Royalty and Distribution Income of $2.3
million and lower interest expense on long-term debt of
$0.2 million.
The Fund's net and comprehensive income was $30.6 million for the Year compared to
$37.4 million in 2021. The
$6.8 million decrease in the Fund's
net and comprehensive income for the Year compared to 2021 was
primarily due to a $13.5 million
decrease in fair value gain, an increase in income tax expense of
$2.6 million and an increase in
interest on Class B Units of $1.2
million, partially offset by an increase in Royalty and
Distribution Income of $10.3 million
and lower interest expense on long-term debt of $0.3 million.
The Fund's cash flows generated from operating activities was
$8.9 million for the Period compared
to $8.5 million in the fourth quarter
of 2021. The increase of $0.4 million
was due to an increase of Royalty and Distribution Income of
$2.3 million, partially offset by a
decrease in changes in working capital of $1.1 million and an increase in income taxes paid
of $0.8 million. The Fund's cash
flows generated from operating activities for the Year was
$34.4 million compared to
$30.5 million in 2021. The increase
of $3.9 million was due to an
increase of Royalty and Distribution Income of $10.3 million, partially offset by a decrease in
changes in working capital of $4.0
million and an increase in income taxes paid of $2.4 million.
The Fund generated Distributable Cash of $7.2 million for the Period compared to
$6.1 million for the fourth quarter
of 2021. The increase in Distributable Cash of $1.2 million or 19.2% was primarily due to lower
repayments of long-term debt of $0.7
million, an increase of cash flows generated from operating
activities of $0.4 million and SIFT
Tax on Units adjustment of $0.2
million, partially offset by increased BPI Class B Unit
entitlement of $0.2 million. The Fund
generated Distributable Cash of $25.6
million for the Year compared to $20.4 million in 2021. The increase in
Distributable Cash of $5.2 million or
25.2% was primarily due to an increase in cash flow generated from
operating activities of $3.9 million
and a decrease in repayments of long-term debt of $2.3 million, partially offset by increased BPI
Class B Unit entitlement of $0.9
million and SIFT Tax on Units adjustment of $0.2 million.
The Fund generated Distributable Cash per Unit of $0.336 for the Period compared to $0.282 per Unit for the fourth quarter of 2021.
The Fund generated Distributable Cash per Unit of $1.189 for the Year compared to $0.950 per Unit in 2021. The increases in
Distributable Cash per Unit of $0.054
or 19.1% for the Period and $0.239 or
25.2% for the Year were primarily attributable to the increase in
Distributable Cash outlined above.
The Fund's Payout Ratio for the Period was 115.1% compared to
90.4% in the fourth quarter of 2021. The increase in the Fund's
Payout Ratio for the Period was due to distributions paid
increasing by $2.8 million or 51.8%,
partially offset by Distributable Cash increasing by $1.2 million or 19.2%. The Fund's Payout Ratio
for the Year was 99.4% compared to 109.5% in 2021. The decrease in
the Fund's Payout Ratio for the Year was due to Distributable Cash
increasing by $5.2 million or 25.2%,
partially offset by distributions paid increasing by $3.0 million or 13.7%. 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 factors in the 2020 Special
Distribution (as defined below) that was paid on January 29, 2021 even though the 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, the Payout Ratio would be 88.4%. 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 $10.5
million or $0.489 per Unit.
During the fourth quarter of 2021, the Fund declared distributions
on the Units in the aggregate amount of $7.3
million or $0.340 per Unit.
During the Period, the Fund paid distributions on the Units in the
aggregate amount of $8.3 million or
$0.387 per Unit. During the fourth
quarter of 2021, the Fund paid distributions on the Units in the
aggregate amount of $5.5 million or
$0.255 per Unit. The amount of
distributions declared during the Period increased by $3.2 million or $0.149 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, and
increasing again from $0.100 per Unit
to $0.102 per Unit commencing with
the November 2022 distribution
(collectively, the "2022 Distribution Increases") and
the special cash distribution to Unitholders of $0.085 per Unit, which was declared on
December 8, 2022 and was paid on December 30, 2022 to
Unitholders of record at the close of business on December 21,
2022 (the "2022 Special Distribution"). Distributions paid
during the Period increased by $2.8
million or $0.132 per Unit due
to the 2022 Distribution Increases and the 2022 Special
Distribution.
During the Year, the Fund declared distributions on the Units in
the aggregate amount of $25.8 million
or $1.199 per Unit. During 2021, the
Fund declared distributions on the Units in the aggregate amount of
$18.5 million or $0.860 per Unit. During the Year, the Fund paid
distributions on the Units in the aggregate amount of $25.4 million or $1.182 per Unit. During 2021, the Fund paid
distributions on the Units in the aggregate amount of $22.4 million or $1.040 per Unit. The amount of distributions
declared for the Year increased by $7.3
million or $0.339 per Unit due
to the monthly distribution rate increasing from $0.065 per Unit to $0.085 per Unit commencing with the September 2021 distribution, the 2022
Distribution Increases and the 2022 Special Distribution. The
amount of distributions paid for the Year increased by $3.0 million or $0.142 per Unit due to the monthly distribution
rate increasing from $0.065 per Unit
to $0.085 per Unit commencing with
the September 2021 distribution, the
2022 Distribution Increases and the 2022 Special Distribution,
which was partially offset by 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").
On February 8, 2023, the trustees
of the Fund declared a distribution for the period of January 1, 2023 to January
31, 2023 of $0.102 per Unit,
which will be payable on February 28,
2023 to Unitholders of record on February 21, 2023. Including the January 2023 distribution, which will be paid on
February 28, 2023, the Fund will have
paid out total distributions of $397.7
million or $24.85 per Unit
which includes 241 monthly distributions, the 2022 Special
Distribution and the 2020 Special Distribution.
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, 2022 and 2021.
For the years ended
December 31
|
2022
|
2021
|
2020
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
Number of restaurants
in Royalty Pool
|
383
|
387
|
395
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
854,997
|
660,051
|
613,199
|
|
|
|
|
Royalty
income6
|
34,200
|
26,402
|
24,528
|
Distribution
Income7
|
11,273
|
8,752
|
8,114
|
Total
revenue
|
45,473
|
35,154
|
32,642
|
Administrative
expenses
|
(1,390)
|
(1,299)
|
(1,439)
|
Interest expense on
debt and financing fees
|
(3,614)
|
(3,879)
|
(3,360)
|
Interest expense on
Class B Unit liability
|
(3,690)
|
(2,506)
|
(2,085)
|
Interest
income
|
107
|
94
|
144
|
Profit before fair
value gain (loss) and income taxes
|
36,886
|
27,564
|
25,902
|
Fair value (loss) gain
on investment in BP Canada LP
|
(2,019)
|
25,206
|
(14,349)
|
Fair value gain (loss)
on Class B Unit liability
|
899
|
(11,229)
|
6,382
|
Fair value gain (loss)
on Swaps
|
3,891
|
2,303
|
(2,064)
|
Current and deferred
income tax expense
|
(9,074)
|
(6,437)
|
(6,301)
|
Net and comprehensive
income
|
30,583
|
37,407
|
9,570
|
|
|
|
|
Basic earnings per
Unit
|
1.42
|
1.74
|
0.44
|
Diluted earnings per
Unit
|
1.31
|
1.74
|
0.17
|
|
|
|
|
Distributable
Cash3/ Distributions / Payout
Ratio6
|
|
|
|
Cash flows generated
from operating activities
|
34,355
|
30,475
|
22,866
|
BPI Class B Unit
entitlement8
|
(3,679)
|
(2,770)
|
(2,450)
|
Interest paid on
long-term debt
|
(3,576)
|
(3,692)
|
(3,157)
|
Principal repayments
on long-term debt
|
(1,500)
|
(3,787)
|
(690)
|
Current income tax
expense
|
(8,914)
|
(6,307)
|
(6,141)
|
Current income tax
paid
|
8,904
|
6,520
|
5,871
|
Distributable
Cash3
|
25,590
|
20,439
|
16,299
|
Distributions
paid
|
25,438
|
22,382
|
11,120
|
Payout
Ratio5
|
99.4 %
|
109.5 %
|
68.2 %
|
Distributable Cash per
Unit4
|
1.189
|
0.950
|
0.756
|
Distributions paid per
Unit
|
1.182
|
1.040
|
0.516
|
|
|
|
|
Other
|
|
|
|
Same Restaurant
Sales2
|
30.4 %
|
8.5 %
|
(27.6 %)
|
Number of restaurants
opened
|
0
|
0
|
2
|
Number of restaurants
closed
|
6
|
4
|
11
|
|
|
|
As at
December 31
|
2022
|
2021
|
2020
|
Total assets
|
413,701
|
411,313
|
390,804
|
Total
liabilities
|
133,123
|
135,514
|
133,904
|
SUMMARY OF QUARTERLY RESULTS
|
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
|
SUMMARY OF QUARTERLY RESULTS (continued)
|
Q4 2021
|
Q3 2021
|
Q2 2021
|
Q1 2021
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
387
|
387
|
387
|
387
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
183,177
|
213,038
|
134,839
|
128,997
|
|
|
|
|
|
Royalty
income
|
7,327
|
8,522
|
5,393
|
5,160
|
Distribution
Income
|
2,423
|
2,815
|
1,797
|
1,717
|
Total
revenue
|
9,750
|
11,337
|
7,190
|
6,877
|
Administrative
expenses
|
(327)
|
(317)
|
(309)
|
(346)
|
Interest expense on
debt and financing fees
|
(939)
|
(1,000)
|
(999)
|
(941)
|
Interest expense on
Class B Unit liability
|
(1,037)
|
(450)
|
(605)
|
(414)
|
Interest
income
|
7
|
18
|
29
|
40
|
Profit before fair
value gain (loss) and income taxes
|
7,454
|
9,588
|
5,306
|
5,216
|
Fair value gain (loss)
on investment in BP Canada LP
|
11,294
|
(3,928)
|
6,274
|
11,566
|
Fair value (loss) gain
on Class B Unit liability
|
(5,032)
|
1,751
|
(2,796)
|
(5,152)
|
Fair value gain on
Swaps
|
730
|
262
|
193
|
1,118
|
Current and deferred
income tax expense
|
(1,804)
|
(2,230)
|
(1,235)
|
(1,168)
|
Net and comprehensive
income
|
12,642
|
5,443
|
7,742
|
11,580
|
|
|
|
|
|
Basic earnings per
Unit
|
0.59
|
0.25
|
0.36
|
0.54
|
Diluted earnings per
Unit
|
0.59
|
0.13
|
0.36
|
0.54
|
|
|
|
|
|
Distributable Cash /
Distributions / Payout Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
8,524
|
9,586
|
6,448
|
5,917
|
BPI Class B Unit
entitlement
|
(858)
|
(923)
|
(523)
|
(466)
|
Interest paid on
long-term debt
|
(892)
|
(991)
|
(929)
|
(880)
|
Principal repayments
on long-term debt
|
(679)
|
(1,036)
|
(1,036)
|
(1,036)
|
Current income tax
expense
|
(1,814)
|
(2,190)
|
(1,185)
|
(1,118)
|
Current income tax
paid
|
1,790
|
2,230
|
1,250
|
1,250
|
Distributable
Cash
|
6,071
|
6,676
|
4,025
|
3,667
|
Distributions
paid
|
5,488
|
4,196
|
4,197
|
8,501
|
Payout Ratio
|
90.4 %
|
62.9 %
|
104.3 %
|
231.8 %
|
Distributable Cash per
Unit
|
0.282
|
0.310
|
0.187
|
0.170
|
Distributions paid per
Unit
|
0.255
|
0.195
|
0.195
|
0.395
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
25.5 %
|
15.1 %
|
27.0 %
|
(24.9 %)
|
Number of restaurants
opened
|
0
|
0
|
0
|
0
|
Number of restaurants
closed
|
2
|
0
|
1
|
1
|
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 annual menu re-pricing.
The actions taken by BPI and BP Canada LP to strengthen its
business during COVID-19 have allowed BPI and BP Canada LP to be in
a good position to address any on-going COVID-19 related challenges
or other future challenges in the restaurant industry. The easing
and elimination of government-imposed restrictions in Canada related to COVID-19 has enabled Boston
Pizza to continue to drive improved performance and guest traffic.
However, with supply chain challenges, rising interest rates,
increasing input costs and labour shortages impacting most of the
restaurant industry, BPI's management remains cautious. The focus
of BPI's management is to adapt the business to mitigate these
challenges and capitalize on the recent sales momentum resulting
from the elimination of COVID restrictions in the restaurant
industry.
The trustees of the Fund will continue to closely monitor the
Fund's available cash balances given the volatile economic
outlook.
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, the continued impact of COVID-19 on the business of the Fund,
BPI and BP Canada LP and the operation of Boston Pizza restaurants;
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 easing and elimination of
government-imposed COVID-19 restrictions in the Canadian restaurant
industry; the focus of BPI's management to adapt the business to
mitigate challenges related to supply chain, rising interest rates,
increasing input costs and labour shortages; the trustees of the
Fund continuing to closely monitor the Fund's available cash
balances given the volatile economic outlook; 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;
implementation of culinary innovation and menu re-pricing;
expectations that the Fund's Payout Ratio is typically higher in
the first and fourth quarter; Boston Pizza restaurants maintaining
operational excellence; the COVID-19 pandemic continuing to
negatively impact the restaurant industry, Franchise Sales, SRS and
Distributable Cash; and that COVID-19 and its negative impacts will
eventually dissipate. Risks, uncertainties and other factors that
may cause actual results, performance or achievements to be
materially different from any future results, performance or
achievement expressed or implied by the forward-looking information
contained herein, relate to (among others): competition;
demographic trends; consumer preferences and discretionary spending
patterns; business and economic conditions; legislation and
government regulation; reliance on operating revenues; accounting
policies and practices; the results of operations and financial
condition of BPI, BP Canada LP and the Fund; pandemics and national
health crises, in particular COVID-19, as well as those factors
discussed under the heading "Risks and Uncertainties" in the most
recent Annual Information Form of the Fund. This information
reflects current expectations regarding future events and operating
performance and speaks only as of the date of this press release.
Except as required by law, neither the Fund nor BPI assumes any
obligation to update previously disclosed forward-looking
information. For a complete list of the risks associated with
forward-looking information and the Fund's business, please refer
to the "Risks and Uncertainties" and "Note Regarding
Forward-Looking Information" sections included in the most recent
Annual Information Form of the Fund available at www.sedar.com and
www.bpincomefund.com.
The trustees of the Fund have approved the contents of this news
release.
® Boston Pizza Royalties Limited Partnership. All Boston Pizza
registered Canadian trademarks and unregistered Canadian trademarks
containing the words "Boston", "BP", and/or "Pizza" are trademarks
owned by the Boston Pizza Royalties Limited Partnership and
licensed by the Boston Pizza Royalties Limited Partnership to
Boston Pizza International Inc.
© Boston Pizza International Inc. 2023.
_________________________
|
Notes – Non-GAAP,
Specified Financial Measures and Other Information
|
|
1
|
"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.
|
|
|
2
|
"Same Restaurant
Sales" or "SRS" is a supplementary financial measure
under National Instrument 52-112 Non-GAAP and Other Financial
Measures Disclosure ("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.
|
|
|
3
|
"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.
|
|
|
4
|
"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.
|
|
|
5
|
"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.
|
|
|
6
|
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").
|
|
|
7
|
"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 for more details.
|
|
|
8
|
"BPI Class B
Unit entitlement" is a supplementary financial measure under NI
52-112 and therefore may not be comparable to similar measures
presented by other issuers. The BPI Class B Unit entitlement is the
interest expense on Class B Units in respect of a period plus
management's estimate of how much cash BPI would be entitled to
receive pursuant to the limited partnership agreement governing
Royalties LP (a copy of which is available on www.sedar.com) on its
Class B Units if Royalties LP fully distributed any residual cash
generated in respect of that period after the Fund pays interest on
long-term debt, principal repayments on long-term debt and SIFT Tax
on Units in respect of that period. Management believes that the
BPI Class B Unit entitlement is an important component in
calculating Distributable Cash since it represents the amount of
residual cash generated that BPI would be entitled to receive and
therefore would not be available for distribution to Unitholders.
Management prepares such estimate using reasonable and supportable
assumptions that reflect the Fund's planned courses of action given
management's judgment about the most probable set of economic
conditions.
|
|
|
SOURCE Boston Pizza Royalties Income Fund