Toronto Stock Exchange: BPF.UN
July 2022 distribution increased to $0.100 per unit from $0.085 per unit
VANCOUVER, BC, Aug. 5, 2022 /CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") reported financial results today for the second quarter period from April 1, 2022 to June 30, 2022 (the "Period") and January 1, 2022 to June 30, 2022 ("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.sedar.com and www.bpincomefund.com. The Fund will host a conference call to discuss the results on August 5, 2022 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 September 5, 2022 by dialling 1-800-319-6413 or 604-638-9010 and entering the access code: 9115 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.
"The Fund is pleased to announce a 17.6% increase to the monthly cash distribution rate to unitholders. The second quarter generated the strongest sales results for Boston Pizza since the start of the COVID-19 pandemic," said Marc Guay, Chair of the Board of Trustees. "The trustees are pleased to see Boston Pizza franchise sales results exceed pre-pandemic levels. However, the trustees 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."
COVID-19 continues to impact the business of the Fund, BPI and Boston Pizza Canada Limited Partnership ("BP Canada LP"), and the operation of Boston Pizza restaurants. Despite the impact of COVID-19, Franchise Sales of Boston Pizza restaurants in the Royalty Pool, and the resulting Royalty and Distribution Income, for July 2022 increased by approximately 6.1% compared to July 2021 and approximately 4.6% compared to July 2019. SRS for July 2022 was approximately 6.5% when compared to the same period in 2021 and approximately 8.3% when compared to the same period in 2019.
SRS, a key driver of distribution growth for Unitholders, was positive 64.9% for the Period compared to 27.0% reported in the second 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 positive 4.6%. SRS was positive 52.3% YTD compared to negative 5.1% reported year-to-date in 2021. If SRS were calculated comparing Franchise Sales YTD to Franchise Sales year-to-date in 2019, SRS would be negative 2.8%. The increase in SRS during the Period and YTD was principally due to increases in restaurant guest traffic mainly due to the easing and elimination of dining restrictions.
Franchise Sales of Boston Pizza restaurants in the Royalty Pool were $219.4 million for the Period and $398.0 million YTD compared to $134.8 million and $263.8 million, respectively, for the same periods one year ago. The $84.5 million increase in Franchise Sales for the Period and $134.2 million increase in Franchise Sales YTD were primarily due to positive SRS.
The Fund's net and comprehensive income was $1.8 million for the Period compared to $7.7 million for the second quarter of 2021. The $6.0 million decrease in the Fund's net and comprehensive income for the Period compared to the second quarter of 2021 was primarily due to an increase in fair value loss of $10.4 million and an increase in interest expense on Class B Units of $0.1 million, partially offset by higher Royalty and Distribution Income of $4.5 million and a decrease in income tax expense of $0.2 million. The Fund's net and comprehensive income was $14.7 million YTD compared to $19.3 million year-to-date in 2021. The $4.6 million decrease in the Fund's net and comprehensive income YTD compared to the same period in 2021 was due to a decrease in fair value gain of
$9.7 million, an increase in income tax expense of $1.7 million and an increase in interest expense on Class B Units of $0.3 million, partially offset by higher Royalty and Distribution Income of $7.1 million.
The Fund's cash flows generated from operating activities was $9.1 million compared to $6.4 million in the second quarter of 2021. The increase of $2.7 million was due to an increase of Royalty and Distribution Income of $4.5 million, partially offset by a decrease in changes in working capital of $0.8 million and an increase in income taxes paid of $0.9 million. The Fund's cash flows generated from operating activities YTD was $15.8 million compared to $12.4 million for the same period one year ago. The increase of $3.4 million was due to an increase of Royalty and Distribution Income of $7.1 million, partially offset by a decrease in changes in working capital of $2.1 million and an increase in income taxes paid of $1.5 million.
The Fund generated Distributable Cash of $6.2 million for the Period compared to $4.0 million for the second quarter of 2021. The increase in Distributable Cash of $2.2 million or 53.4% was primarily due to an increase in cash flow generated from operating activities of $2.7 million, partially offset by increased BPI Class B Unit entitlement of $0.4 million and increased SIFT Tax on Units of $0.2 million. The Fund generated Distributable Cash of $10.9 million YTD compared to $7.7 million year-to-date in 2021. The increase in Distributable Cash of $3.2 million or 41.4% was primarily due to an increase in cash flow generated from operating activities of $3.4 million and a decrease in repayments of long-term debt of $0.6 million, partially offset by increased BPI Class B Unit entitlement of $0.6 million and increased SIFT Tax on Units of $0.2 million.
The Fund generated Distributable Cash per Unit of $0.287 for the Period compared to $0.187 per Unit for the second quarter of 2021. The increase in Distributable Cash per Unit of $0.100 or 53.5% was primarily attributable to the increase in Distributable Cash outlined above. The Fund generated Distributable Cash per Unit of $0.505 YTD compared to $0.357 per Unit year-to-date in 2021. The increase in Distributable Cash per Unit of $0.148 or 41.5% was primarily attributable to the increase in Distributable Cash outlined above.
The Fund's Payout Ratio for the Period was 88.9% compared to 104.3% in the second quarter of 2021. The decrease in the Fund's Payout Ratio for the Period was due to Distributable Cash increasing by $2.2 million or 53.4%, partially offset by distributions paid increasing by $1.3 million or 30.8%. The Fund's Payout Ratio YTD was 100.9% compared to 165.1% year-to-date in 2021. The decrease in the Fund's Payout Ratio YTD was due to Distributable Cash increasing by $3.2 million or 41.4% and distributions paid decreasing by $1.7 million or 13.6%. 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 year-to-date in 2021 factors in the Special Distribution (as defined below) that was paid on January 29, 2021 even though the cash generated to fund the Special Distribution was generated during 2020. If the Special Distribution was excluded in the calculation of Payout Ratio for year-to-date 2021, the Payout Ratio would be 109.1%. 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 87.5% as at June 30, 2022.
During the Period, the Fund declared and paid distributions on the Units in the aggregate amount of $5.5 million or $0.255 per Unit. During the second quarter of 2021, the Fund declared and paid distributions on the Units in the aggregate amount of $4.2 million or $0.195 per Unit. The amount of distributions declared and paid during the Period increased by $1.3 million or $0.060 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. YTD, the Fund declared distributions on the Units in the aggregate amount of $9.1 million or $0.425 per Unit. During the same period in 2021, the Fund declared distributions on the Units in the aggregate amount of $7.0 million or $0.325 per Unit. YTD, the Fund paid distributions on the Units in the aggregate amount of $11.0 million or $0.510 per Unit. During the same period in 2021, the Fund paid distributions on the Units in the aggregate amount of $12.7 million or $0.590 per Unit. The amount of distributions declared YTD increased by $2.1 million or $0.100 per Unit due to due to the monthly distribution rate increasing from $0.065 per Unit to $0.085 per Unit commencing with the September 2021 distribution. The amount of distributions paid YTD decreased by $1.7 million or $0.080 per Unit due to a combination of 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 "Special Distribution") without any special distribution being paid YTD, partially offset by the monthly distribution rate increasing from $0.065 per Unit to $0.085 per Unit commencing with the September 2021 distribution.
On August 4, 2022, the trustees of the Fund declared a distribution for the period of July 1, 2022 to July 31, 2022 of $0.100 per Unit, which will be payable on August 31, 2022 to Unitholders of record on August 21, 2022. This is an increase of $0.015 per Unit, or 17.6%, from the previous monthly distribution rate of $0.085 per Unit. On an annualized basis, the new monthly distribution rate equates to $1.20 per Unit compared to $1.02 per Unit for the previously monthly distribution rate. Including the July 2022 distribution, which will be paid on August 31, 2022, the Fund will have paid out total distributions of $382.8 million or $24.16 per Unit which includes 235 monthly distributions and the Special Distribution.
In deciding to increase monthly cash distributions from $0.085 per unit to $0.100 per unit, the trustees of the Fund considered, among other factors, the recent financial performance of the Fund, BPI and Boston Pizza restaurants in the Fund's Royalty Pool, the Fund's cash position and debt repayment obligations, and internal financial projections for the Fund and Boston Pizza restaurants in the Fund's Royalty Pool for the remainder of 2022 and beyond.
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 six month periods ended June 30, 2022 and June 30, 2021.
For the periods ended June 30 | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | |
(in thousands of dollars ? except restaurants, SRS, Payout Ratio and per Unit items) | |||||
Number of restaurants in Royalty Pool | 383 | 387 | 383 | 387 | |
Franchise Sales reported by restaurants in the Royalty Pool | 219,384 | 134,839 | 397,986 | 263,836 | |
Royalty6 income | 8,775 | 5,393 | 15,919 | 10,553 | |
Distribution Income7 | 2,895 | 1,797 | 5,258 | 3,514 | |
Total revenue | 11,670 | 7,190 | 21,177 | 14,067 | |
Administrative expenses | (349) | (309) | (687) | (655) | |
Interest expense on debt and financing fees | (977) | (999) | (1,916) | (1,940) | |
Interest expense on Class B Unit liability | (733) | (605) | (1,298) | (1,019) | |
Interest income | 10 | 29 | 15 | 69 | |
Profit before fair value (loss) gain and income taxes | 9,621 | 5,306 | 17,291 | 10,522 | |
Fair value (loss) gain on investment in BP Canada LP | (14,622) | 6,274 | (3,056) | 17,840 | |
Fair value gain (loss) on Class B Unit liability | 6,515 | (2,796) | 1,361 | (7,948) | |
Fair value gain on Swaps | 1,337 | 193 | 3,213 | 1,311 | |
Current and deferred income tax expense | (1,075) | (1,235) | (4,134) | (2,403) | |
Net and comprehensive income | 1,776 | 7,742 | 14,675 | 19,322 | |
Basic earnings per Unit | 0.08 | 0.36 | 0.68 | 0.90 | |
Diluted (loss) earnings per Unit | (0.20) | 0.36 | 0.55 | 0.90 | |
Distributable Cash / Distributions / Payout Ratio | |||||
Cash flows generated from operating activities | 9,118 | 6,448 | 15,769 | 12,365 | |
BPI Class B Unit entitlement8 | (888) | (523) | (1,552) | (989) | |
Interest paid on long-term debt | (954) | (929) | (1,838) | (1,809) | |
Principal repayments on long-term debt | (1,000) | (1,036) | (1,500) | (2,072) | |
Current income tax expense | (2,285) | (1,185) | (4,054) | (2,303) | |
Current income tax paid | 2,185 | 1,250 | 4,049 | 2,500 | |
Distributable Cash3 | 6,176 | 4,025 | 10,874 | 7,692 | |
Distributions paid | 5,488 | 4,197 | 10,976 | 12,698 | |
Payout Ratio5 | 88.9 % | 104.3 % | 100.9 % | 165.1 % | |
Distributable Cash per Unit4 | 0.287 | 0.187 | 0.505 | 0.357 | |
Distributions paid per Unit | 0.255 | 0.195 | 0.510 | 0.590 | |
Other | |||||
Same Restaurant Sales2 | 64.9 % | 27.0 % | 52.3 % | (5.1 %) | |
Number of restaurants opened | 0 | 0 | 0 | 0 | |
Number of restaurants closed | 0 | 1 | 2 | 2 | |
Jun 30, 2022 | Dec 31, 2021 | ||||
Total assets | 411,460 | 411,313 | |||
Total liabilities | 130,133 | 135,514 | |||
COVID-19 had sudden, unexpected and unprecedented impacts on the general economy, the restaurant industry and has specifically caused significant disruption to the business of the Fund, BPI and BP Canada LP. The focus of BPI's management is to continue to: (i) monitor carefully the continuously evolving COVID-19 situation; (ii) modify the operating procedures of Boston Pizza restaurants to ensure the safety of guests and staff of BP Canada LP's franchisees; (iii) responsibly and safely operate the dining rooms, sports bars and patios of Boston Pizza restaurants across Canada as permitted by applicable provincial health authorities; (iv) maximize the opportunity to grow its take-out and delivery business; and (v) review and adapt current and future plans to responsibly address the challenges and opportunities presented by COVID-19.
The trustees of the Fund will continue to closely monitor BPI's and BP Canada LP's business as the COVID-19 situation continues to develop and consider the best interests of the Fund and its stakeholders. While COVID-19 persists, the trustees of the Fund expect that Franchise Sales and SRS at Boston Pizza restaurants, and resulting Royalty, Distribution Income and Distributable Cash available for distribution to Unitholders will continue to be adversely affected.
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, that 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, that COVID-19 continues to impact the business of the Fund, BPI and BP Canada LP and the operation of Boston Pizza restaurants, that Boston Pizza restaurants generally experience higher Franchise Sales levels during the summer months when restaurants open their patios and benefit from increased tourist traffic, the focus of BPI's management to continue to: (i) monitor carefully the continuously evolving COVID-19 situation; (ii) modify the operating procedures of Boston Pizza restaurants to ensure the safety of guests and staff of BP Canada LP's franchisees; (iii) responsibly and safely operate the dining rooms, sports bars and patios of Boston Pizza restaurants across Canada as permitted by applicable provincial health authorities; (iv) maximize the opportunity to grow its take-out and delivery business; and (v) review and adapt current and future plans to responsibly address the challenges and opportunities presented by COVID-19, the trustees of the Fund continuing to closely monitor BPI's and BP Canada LP's business as the COVID-19 situation continues to develop and consider the best interests of the Fund and its stakeholders, the expectation that Franchise Sales and SRS at Boston Pizza restaurants, and resulting Royalty, Distribution Income and Distributable Cash available for distribution to Unitholders will continue to be adversely affected while COVID-19 persists, 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 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 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. 2022. |
SOURCE Boston Pizza Royalties Income Fund
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