COVID-19's continued impact on Boston
Pizza's business resulted in Same Restaurant Sales2 of
positive 25.5% for the fourth quarter of 2021 and negative 11.5% if
compared to the fourth quarter of 2019.
HIGHLIGHTS
- Franchise Sales[1] of $183.2
million for the Period and $660.1
million for the Year, representing an increase of 25.0% and
7.6%, respectively, versus the same periods one year ago.
- Same Restaurant Sales[2] of positive 25.5% for the Period and
positive 8.5% 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 2021 Franchise Sales to 2019 Franchise Sales. If
SRS were calculated comparing Franchise Sales in the Period and
Year to Franchise Sales in the fourth quarter of 2019 and the year
2019, SRS would be negative 11.5% and negative 21.5%,
respectively.
- Cash flows generated from operating activities of $8.5 million for the Period and $30.5 million for the Year, representing an
increase of 8.0% and 33.3%, respectively, versus the same periods
one year ago.
- Distributable Cash[3] increased 12.7% for the Period and 25.4%
for the Year, and Distributable Cash per Unit[4] increased 12.8%
for the Period and 25.7% for the Year.
- Payout Ratio[5] of 90.4% for the Period and 109.5% for the
Year. Cash balance at the end of the Period was $5.2 million.
- Boston Pizza did not open any new full-service restaurants and
closed four full-service restaurants in 2021.
- The monthly distribution rate was increased from $0.065 per unit of the Fund ("Unit") to
$0.085 per Unit beginning with the
September 2021 distribution that was
paid on October 29, 2021.
- Cash distribution of $0.085 per Unit declared for
January 2022, and payable on February 28, 2022 to
unitholders of record on February 21, 2022.
VANCOUVER, BC, Feb. 9, 2022 /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, 2021 to December 31, 2021
(the "Period") and January 1, 2021 to December 31,
2021 (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 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, 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 March 9,
2022 by dialling 1-800-319-6413 or 604-638-9010 and entering the
access code: 8275 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 encouraged to see our sales performance improve during
the year compared to 2020. However, 2021 continued to present
challenges brought on by the COVID-19 pandemic that had significant
impact on the business of Boston Pizza restaurants across
Canada for most of the year," said
Jordan Holm, President of BPI.
"Our focus continues to be the safety of our guests and staff in
restaurants, serving our communities with take-out, delivery and
in-restaurant dining where permitted, and supporting our
franchisees during these challenging times."
ONGOING EFFECTS OF COVID-19
COVID-19 had significant adverse effects on the business of the
Fund, BPI and Boston Pizza Canada Limited Partnership
("BP Canada LP") during the Period and the Year.
Throughout 2021, the business of Boston Pizza restaurants in the
Royalty Pool varied inversely with the severity of COVID-19 across
Canada. The beginning of 2021 saw various governmental
authorities across Canada impose
assorted restrictions on the operations of restaurants in an
attempt to control the spread of COVID-19. The restrictions
ranged from limiting operating hours, reductions in permitted hours
to serve alcohol, closures of indoor dining rooms and closures of
patio dining depending upon the particular regions and times.
As COVID-19 case counts declined in February and March of 2021, the
business of Boston Pizza restaurants in the Royalty Pool again
improved as the assorted governmental restrictions were
eased. However, that improvement was temporary as the third
wave of COVID-19 developed shortly thereafter and again various
governmental authorities across Canada imposed assorted restrictions on the
operations of restaurants in an attempt to control the spread of
COVID-19. As the third wave of COVID-19 subsided in May and
June of 2021, the business of Boston Pizza restaurants in the
Royalty Pool again improved as the assorted governmental
restrictions were once again eased. As the fourth wave of
COVID-19 developed in Canada, the
business of Boston Pizza restaurants again declined as various
governmental authorities across Canada again implemented assorted
restrictions, including vaccine card or vaccine passport systems
that require guests to show proof of vaccination when dining in
restaurants. See the "Operating Results" section of the
Fund's MD&A for the Period and Year for details.
COVID-19 continues to impact the business of the Fund, BPI and
BP Canada LP, and the operation of Boston Pizza
restaurants. Franchise Sales, and the resulting Royalty and
Distribution Income, for January 2022 were approximately 129%
of the level they were in January 2021 and approximately 70%
of the level they were in January 2019. SRS for
January 2022 was approximately
positive 29% when compared to the same period in 2021 and
approximately negative 28% when compared to the same period in
2019.
PERIOD AND YEAR RESULTS
SRS, a key driver of distribution growth for unitholders of
the Fund, was positive 25.5% for the Period and positive 8.5% for
the Year compared to negative 29.7% and negative 27.6%,
respectively, for the same periods one year ago. If SRS were
calculated comparing Franchise Sales in the Period and Year to
Franchise Sales for the same periods in 2019, SRS would be negative
11.5% and negative 21.5%, respectively. The increase in SRS
for the Period and Year was principally due to increases in
restaurant guest traffic due to the easing of dining restrictions
and increased take-out and delivery sales.
Franchise Sales were $183.2 million for the Period and
$660.1 million for the Year
compared to $146.6 million and
$613.2 million, respectively,
for the same periods in 2020. The $36.6 million and $46.9 million increase in Franchise Sales
for the Period and Year, respectively, were primarily due to
positive SRS.
The Fund's net and comprehensive income was $12.6 million for the Period compared to
$19.6 million for the fourth
quarter of 2020. The $7.0
million decrease in the Fund's net and comprehensive income
for the Period compared to the fourth quarter of 2020 was primarily
due to a $9.2 million decrease in
fair value gain, partially offset by higher Royalty and
Distribution Income of $1.9 million and a decrease in interest on
Class B Units of $0.4
million. The Fund's net and comprehensive income
was $37.4 million for the Year
compared to $9.6 million in
2020. The $27.8 million
increase in the Fund's net and comprehensive income for the Year
compared to the same period in 2020 was primarily due to a
$26.3 million increase in fair
value gain, higher Royalty and Distribution Income of $2.5 million and a decrease in
administrative expenses of $0.1
million, partially offset by higher interest on long-term
debt of $0.5 million, higher
interest on Class B Units of $0.4
million and higher current income tax expense of
$0.2 million.
The Fund's cash flows generated from operating activities was
$8.5 million for the Period
compared to $7.9 million for the
fourth quarter of 2020. The increase of $0.6 million was primarily due to an
increase of Royalty and Distribution Income of $1.9 million, partially offset by a decrease
in changes in working capital of $1.1 million and an increase in income taxes
paid of $0.2 million. The
Fund's cash flows generated from operating activities was
$30.5 million for the Year
compared to $22.9 million for
the same period in 2020. The increase of $7.6 million was primarily due to increased
changes in working capital of $5.7 million and an increase of Royalty and
Distribution Income of $2.5 million, partially offset by an
increase in income taxes paid of $0.6
million.
The Fund generated Distributable Cash of $6.1 million for the Period compared to
$5.4 million for the fourth
quarter of 2020. The increase in Distributable Cash of
$0.7 million or 12.7% was
primarily due to an increase in cash flow generated from operating
activities of $0.6 million and
an adjustment to income taxes of $0.1
million, partially offset by increased BPI Class B Unit
entitlement of $0.1 million. The Fund generated
Distributable Cash of $20.4 million for the Year compared to
$16.3 million in 2020. The
increase in Distributable Cash of $4.1 million or 25.4% was primarily due to
an increase in cash flow generated from operating activities of
$7.6 million and an adjustment
to income taxes of $0.5 million,
partially offset by higher contractually required debt repayments
of $3.1 million, an increase of
interest paid on long-term debt of $0.5 million and increased BPI Class B
Unit entitlement of $0.3 million.
The Fund generated Distributable Cash per Unit of $0.282 for the Period compared to $0.250 per Unit for the fourth quarter of
2020. The increase in Distributable Cash per Unit of
$0.032 or 12.8% was primarily
attributable to the increase in Distributable Cash outlined
above. The Fund generated Distributable Cash per Unit of
$0.950 for the Year compared to
$0.756 per Unit in 2020. The
increase in Distributable Cash per Unit of $0.194 or 25.7% was primarily attributable to the
increase in Distributable Cash outlined above and fewer Units
outstanding compared to the same period in 2020 due to the Fund's
normal course issuer bid that was then in effect.
The Fund's Payout Ratio for the Period was 90.4% compared to
77.9% in the fourth quarter of 2020. The increase in the
Fund's Payout Ratio for the Period was due to distributions paid
increasing by $1.3 million or
30.8%, partially offset by Distributable Cash increasing by
$0.7 million or 12.7%. The
Fund's Payout Ratio for the Year was 109.5% compared to 68.2% in
2020. The increase in the Fund's Payout Ratio for the Year
was due to distributions paid increasing by $11.3 million or 101.3%, partially offset by
Distributable Cash increasing by $4.1 million or 25.4%. Payout Ratio
for the Year factors in the Special Distribution (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 the Year, 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.
COVID-19 has resulted in material declines to Franchise Sales
and SRS when compared to periods prior to COVID-19. The
declines in Franchise Sales and SRS will result in significant
declines to Royalty and Distribution Income payable by BPI and BP
Canada LP to the Fund when compared to periods prior to COVID-19,
and significant declines in the amount of Distributable Cash
available for distribution to unitholders when compared to periods
prior to COVID-19. The effects of COVID-19 may materially
affect the Fund's Payout Ratio in the future.
DISTRIBUTIONS
During the Period, the Fund declared distributions on the Units
in the aggregate amount of $7.3 million or $0.340 per Unit. During the fourth
quarter of 2020, the Fund declared distributions on the Units in
the aggregate amount of $9.9 million or $0.460 per Unit. During the Period,
the Fund paid distributions on the Units in the aggregate amount of
$5.5 million or $0.255 per Unit. During the fourth
quarter of 2020, the Fund paid distributions on the Units in the
aggregate amount of $4.2 million
or $0.195 per Unit. The amount
of distributions declared during the Period decreased by
$0.120 per Unit due to the
special one-time cash distribution to unitholders of $0.20 per Unit, which was declared on
December 16, 2020 and was 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 declared during the Period, partially offset by
the monthly distribution rate increasing from $0.065 per Unit to $0.085 per Unit commencing with the September 2021 distribution. Distributions
paid during the Period increased by $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.
During the Year, the Fund declared distributions on the Units in
the aggregate amount of $18.5 million or $0.860 per Unit compared to $14.3 million or $0.664 per Unit in 2020. During the Year,
the Fund paid distributions on the Units in the aggregate amount of
$22.4 million or $1.040 per Unit, compared to $11.1 million or $0.516 per Unit for the same period in
2020. The amount of distributions declared for the Year
increased by $0.196 per Unit due to
the monthly distribution rate during the Year increasing from
$0.065 per Unit to $0.085 per Unit commencing with the September 2021 distribution and the Fund not
declaring distributions in the second or third quarters of 2020,
partially offset by a lower monthly distribution rate of
$0.065 per Unit for the first quarter
of the Year compared to $0.102 per
Unit for the first quarter of the prior year and by the Special
Distribution declared in the prior year. The amount of
distributions paid during the Year increased by $0.524 per Unit due to the Special Distribution,
the Fund not having paid distributions in respect of the second and
third quarters of 2020, and the Fund increasing the monthly
distribution rate from $0.065 per
Unit to $0.085 per Unit commencing
with the September 2021 distribution,
partially offset by decreases in the monthly distribution rates:
(a) from $0.115 per Unit that was in
effect for the December 2019
distribution that was paid on January 31,
2020 to $0.065 per Unit for
the December 2020 distribution that
was paid on January 29, 2021; and (b)
from $0.102 per Unit that was in
effect for the January and February
2020 distributions that were paid on February 28 and
March 31, 2020, respectively, to $0.065 per Unit for the January and February 2021 distributions that were paid on
February 26 and March 31, 2021, respectively.
On February 8, 2022, the trustees of the Fund declared a
distribution for the period of January 1, 2022 to
January 31, 2022 of $0.085 per Unit, which will be payable on
February 28, 2022 to unitholders of record on
February 21, 2022. Including the January 2022
distribution, which will be paid on February 28, 2022, the
Fund will have paid out total distributions of $371.5 million or $23.63 per Unit which includes
229 monthly distributions and the 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, 2021 and 2020.
For the years ended
December 31
|
|
2021
|
2020
|
2019
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
Number of restaurants
in Royalty Pool
|
|
387
|
395
|
396
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
|
660,051
|
613,199
|
853,728
|
|
|
|
|
|
Royalty[i]
income
|
|
26,402
|
24,528
|
34,149
|
Distribution
Income[ii]
|
|
8,752
|
8,114
|
11,246
|
Total
revenue
|
|
35,154
|
32,642
|
45,395
|
Administrative
expenses
|
|
(1,299)
|
(1,439)
|
(1,248)
|
Interest expense on
debt and financing fees
|
|
(3,879)
|
(3,360)
|
(2,830)
|
Interest expense on
Class B Unit liability
|
|
(2,506)
|
(2,085)
|
(4,133)
|
Interest
income
|
|
94
|
144
|
40
|
Profit before fair
value gain (loss) and income taxes
|
|
27,564
|
25,902
|
37,224
|
Fair value gain (loss)
on investment in BP Canada LP
|
|
25,206
|
(14,349)
|
(9,002)
|
Fair value (loss) gain
on Class B Unit liability
|
|
(11,229)
|
6,382
|
4,120
|
Fair value gain (loss)
on Swaps
|
|
2,303
|
(2,064)
|
(824)
|
Current and deferred
income tax expense
|
|
(6,437)
|
(6,301)
|
(9,015)
|
Net and comprehensive
income
|
|
37,407
|
9,570
|
22,503
|
|
|
|
|
|
Basic earnings per
Unit
|
|
1.74
|
0.44
|
1.03
|
Diluted earnings per
Unit
|
|
1.74
|
0.17
|
0.88
|
|
|
|
|
|
Distributable Cash / Distributions / Payout
Ratio
|
|
|
|
|
Cash flows generated
from operating activities
|
|
30,475
|
22,866
|
35,621
|
BPI Class B Unit
entitlement[iii]
|
|
(2,770)
|
(2,450)
|
(4,133)
|
Interest paid on
long-term debt
|
|
(3,692)
|
(3,157)
|
(2,821)
|
Principal repayments on
long-term debt
|
|
(3,787)
|
(690)
|
-
|
Current income tax
expense
|
|
(6,307)
|
(6,141)
|
(8,595)
|
Current income tax
paid
|
|
6,520
|
5,871
|
8,628
|
Distributable
Cash
|
|
20,439
|
16,299
|
28,700
|
Distributions
paid
|
|
22,382
|
11,120
|
30,067
|
Payout Ratio
|
|
109.5%
|
68.2%
|
104.8%
|
Distributable Cash per
Unit
|
|
0.950
|
0.756
|
1.317
|
Distributions paid per
Unit
|
|
1.040
|
0.516
|
1.380
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
|
8.5%
|
(27.6%)
|
(1.5%)
|
Number of restaurants
opened
|
|
0
|
2
|
5
|
Number of restaurants
closed
|
|
4
|
11
|
6
|
|
|
|
As at December 31
|
2021
|
2020
|
2019
|
Total assets
|
|
411,313
|
390,804
|
396,426
|
Total
liabilities
|
|
135,514
|
133,904
|
131,323
|
SUMMARY OF QUARTERLY RESULTS
|
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
|
SUMMARY OF QUARTERLY RESULTS (continued)
|
Q4 2020
|
Q3 2020
|
Q2 2020
|
Q1 2020
|
(in thousands of
dollars – except restaurants, SRS, Payout Ratio and per Unit
items)
|
|
|
|
|
Number of restaurants
in Royalty Pool
|
395
|
395
|
395
|
395
|
Franchise Sales
reported by restaurants in the Royalty Pool
|
146,561
|
185,420
|
107,149
|
174,069
|
|
|
|
|
|
Royalty
income
|
5,862
|
7,417
|
4,286
|
6,963
|
Distribution
Income
|
1,946
|
2,452
|
1,423
|
2,293
|
Total
revenue
|
7,808
|
9,869
|
5,709
|
9,256
|
Administrative
expenses
|
(301)
|
(392)
|
(352)
|
(394)
|
Interest expense on
debt and financing fees
|
(963)
|
(964)
|
(730)
|
(703)
|
Interest expense on
Class B Unit liability
|
(1,437)
|
-
|
-
|
(648)
|
Interest
income
|
54
|
61
|
24
|
5
|
Profit before fair
value gain (loss) and income taxes
|
5,161
|
8,574
|
4,651
|
7,516
|
Fair value gain (loss)
on investment in BP Canada LP
|
28,861
|
(12,821)
|
7,202
|
(37,591)
|
Fair value (loss) gain
on Class B Unit liability
|
(12,857)
|
5,712
|
(3,208)
|
16,735
|
Fair value gain (loss)
on Swaps
|
230
|
(296)
|
(158)
|
(1,840)
|
Current and deferred
income tax expense
|
(1,798)
|
(1,857)
|
(908)
|
(1,738)
|
Net and comprehensive
income (loss)
|
19,597
|
(688)
|
7,579
|
(16,918)
|
|
|
|
|
|
Basic earnings (loss)
per Unit
|
0.91
|
(0.03)
|
0.35
|
(0.78)
|
Diluted earnings (loss)
per Unit
|
0.91
|
(0.30)
|
0.35
|
(1.36)
|
|
|
|
|
|
Distributable Cash / Distributions / Payout
Ratio
|
|
|
|
|
Cash flows generated
from (used in) operating activities
|
7,889
|
6,185
|
(709)
|
9,501
|
BPI Class B Unit
entitlement
|
(787)
|
(1,015)
|
-
|
(648)
|
Interest paid on
long-term debt
|
(915)
|
(873)
|
(668)
|
(701)
|
Principal repayments on
long-term debt
|
(690)
|
-
|
-
|
-
|
Current income tax
expense
|
(1,748)
|
(1,817)
|
(858)
|
(1,718)
|
Current income tax
paid
|
1,640
|
2,971
|
-
|
1,260
|
Distributable
Cash
|
5,389
|
5,451
|
(2,235)
|
7,694
|
Distributions
paid
|
4,197
|
-
|
-
|
6,923
|
Payout Ratio
|
77.9%
|
0.0%
|
0.0%
|
90.0%
|
Distributable Cash per
Unit
|
0.250
|
0.253
|
(0.104)
|
0.355
|
Distributions paid per
Unit
|
0.195
|
-
|
-
|
0.319
|
|
|
|
|
|
Other
|
|
|
|
|
Same Restaurant
Sales
|
(29.7%)
|
(14.6%)
|
(50.3%)
|
(15.9%)
|
Number of restaurants
opened
|
0
|
1
|
0
|
1
|
Number of restaurants
closed
|
1
|
4
|
4
|
2
|
SHORT-TERM OUTLOOK
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.
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 potential for COVID-19 to continue to
materially affect the Fund's Payout Ratio in the future, COVID-19
continuing to result in material declines to Franchise Sales and
SRS, declines in Franchise Sales and SRS resulting in significant
declines to Royalty and Distribution Income payable to the Fund and
significant declines in the amount of Distributable Cash available
for distribution to unitholders, implementation of the pandemic
recovery plan, future distributions and dates distributions are to
be paid or payable, the significant uncertainties related to
COVID–19 and its impact on BPI and the Fund, the focus of BPI's
management on guest safety, maximizing the take-out and delivery
business and helping franchisees succeed during these challenging
times, the trustees of the Fund continuing to closely monitor the
Fund's available cash balances, future changes to calculations of
financial measures, 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 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. 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.
|
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 7 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 the
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.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