Click here to close now.


News Feed Item

Pizza Pizza Royalty Corp. Announces First Quarter Financial Results

TORONTO, ONTARIO -- (Marketwired) -- 05/01/14 --

Attention Business Editors:

Pizza Pizza Royalty Corp. (TSX:PZA) (the "Company"),which owns the Pizza Pizza and Pizza 73 Rights and Marks, released financial results today for the first quarter ended March 31, 2014.

First Quarter highlights:

--  Royalty Pool of restaurants increased by 28 
--  Dividends increased 2.6% in January 
--  Same store sales increased 1.6% 
--  Loan interest rate decreased 0.25% 
--  Adjusted earnings per share increased 1.9% 
--  Monthly dividend was 6.7% higher than the prior year quarter 


In the first quarter ended March 31, 2014 ("Quarter"), System Sales from the 722 restaurants in the Royalty Pool increased 2.8% to $124.4 million from $121.1 million in the same quarter last year.

Same store sales growth ("SSSG"), the key driver of yield growth for shareholders of the Company, was 1.6% (3.5% - 2013) for the Quarter when compared to the same periods in 2013. The Company is reporting its fifteenth consecutive quarter of positive SSSG.

                                                            First Quarter   
Same Store Sales Growth                                      2014     2013  
Pizza Pizza                                                  0.4      3.1   
Pizza 73                                                     7.2      5.1   
Combined                                                     1.6      3.5   

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 increased for the Quarter while the traffic counts decreased.

Paul Goddard, CEO, Pizza Pizza Limited ("PPL"), said: "The Company posted another solid sales growth quarter significantly bolstered by exceptional results at Pizza 73 in Alberta. This is our 15th consecutive quarter of reporting positive sales growth which has produced consistent dividend increases and a strong cash position over the period."


The Company declared shareholder dividends of $4.4 million ($0.2001 per share) for the Quarter compared to $4.1million ($0.1875 per share) for the prior year comparable quarter which equates to a 6.7% increase. The payout ratio was 100% for the Quarter compared to 96% in the first quarter 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.

As announced in early 2014, in what was in effect a stock buy-back, the Company's board of directors agreed to pay PPL, for new Pizza 73 restaurants included in the Royalty Pool, a cash amount of $1.1 million in lieu of issuing 85,571 Class D Units to PPL. In deciding to pay cash in lieu of increasing PPL's equivalent shares, the Company's board of directors concluded that the transaction was accretive to shareholders and that the working capital reserve balance after the payment would be at an appropriate level. The Company's working capital reserve is $4.0 million at March 31, 2014, which is a decrease of $1.1 million for the Quarter.

The reserve is available to stabilize dividends and fund other expenditures in the event of short- to medium-term variability in System Sales and, thus, the Company's royalty income. With this reserve now in place, going forward the Company will target a payout ratio closer to 100%. The Company does not have capital expenditure requirements or employees.


Fully-diluted earnings per share ("EPS") for the Quarter was $0.206 per share compared to $0.197 per share in the same quarter last year. However, the Company considers "adjusted" earnings to be a more meaningful indicator of the Company's operating performance and, thus, also presents fully-diluted adjusted EPS.

For the Quarter, adjusted EPS increased 1.9% to $0.212 per share compared to $0.208 per share in the same quarter last year.

Adjusted earnings and adjusted earnings per share are not recognized measures under International Financial Reporting Standards ("IFRS") and may be calculated in a manner that differs from that used by other issuers. For additional information about the calculation and use of these measures, please see "Reconciliation of Non-IFRS Measures" in the Company's Management's Discussion & Analysis ("MD&A").


Current income tax expense for the Quarter was $1.1 million and was $1.0 million for the prior year comparable quarter. The increase is due to increased taxable income and a decline in the tax amortization.

Of particular note is that the Company's earnings from operations before income taxes differs significantly from its taxable income due largely to the tax amortization of the Pizza Pizza and Pizza 73 Rights and Marks. The amount of the tax amortization deducted is based on a declining basis and will decrease yearly.


The Company's $47,000,000 credit facility agreement contains a financial covenant which is customary for agreements of this nature. In particular, the Company has agreed to a financial covenant using a four quarter rolling basis in which the loan amount is divided by earnings before interest expense, taxes depreciation and amortization. For the four quarter period ended March 31, 2014, the Company achieved a certain threshold at which the interest rate decreased by 0.25% effective April 22, 2014. The covenant will continue to be tested going forward.


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 for the year.

During the Quarter, Pizza Pizza Limited ("PPL") opened two additional restaurants and closed five restaurants, decreasing the overall number of restaurants to 720. By brand, for the Quarter, Pizza Pizza opened one traditional restaurant and one non-traditional location; four non-traditional Pizza Pizza restaurants and one non-traditional Pizza 73 restaurant were closed.


The following tables set out selected financial information and other data of the Company, formerly Pizza Pizza Royalty Income Fund (the "Fund"), and should be read in conjunction with the 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.

(in thousands of dollars, except number of    3 months ended 3 months ended 
 restaurants and per Share amounts)           March 31, 2014 March 31, 2013 
Restaurants in Royalty Pool                              722            694 
Same store sales growth(1)                               1.6%           3.5%
Days in Period                                            90             90 
System Sales reported by Pizza Pizza                                        
 restaurants in the Royalty Pool(5)            $     102,412  $     100,616 
System Sales reported by Pizza 73 restaurants                               
 in the Royalty Pool(5)                               22,021         20,466 
Total System Sales                             $     124,433  $     121,082 
Royalty - 6% on Pizza Pizza System Sales       $       6,145  $       6,037 
Royalty - 9% on Pizza 73 System Sales                  1,982          1,842 
Royalty income                                 $       8,127  $       7,879 
Interest paid on borrowings(2)                          (514)          (514)
Administrative expenses                                 (124)          (128)
Adjusted earnings available for distribution                                
 to the Company and Pizza Pizza Limited        $       7,489  $       7,237 
Pizza Pizza Limited's distribution(3)                 (2,073)        (1,976)
Adjusted earnings available for distribution                                
 to the Company                                $       5,416  $       5,261 
Current income tax expense                            (1,066)        (1,006)
                                               $       4,350  $       4,255 
Add back:                                                                   
Pizza Pizza Limited's distribution on Class B                               
 and Class D Exchangeable Shares                       2,073          1,976 
Adjusted earnings from operations(4)           $       6,423  $       6,231 
Adjusted earnings per share(4)                 $       0.212  $       0.208 
Basic earnings per share                       $       0.206  $       0.197 
Dividends/distributions declared by the                                     
 Company                                       $       4,366  $       4,091 
Dividend/distributions per share               $      0.2001  $      0.1875 
Payout ratio                                             100%            96%
                                                   March 31,      March 31, 
                                                        2014           2013 
Working capital                                $       3,953  $       4,735 
Total assets                                   $     334,377  $     328,062 
Total liabilities                              $      59,907  $      57,949 

(1) Same store sales growth ("SSSG") means the change in annual gross revenue of a particular Pizza Pizza or Pizza 73 restaurant as compared to sales in the previous period, where the restaurant has been open at least 13 months. Additionally, for a Pizza 73 restaurant whose restaurant territory was adjusted due to an additional restaurant, a Step-Out Payment may be added to sales to arrive at SSSG.

(2) The Company, indirectly through the Pizza Pizza Royalty Limited Partnership (the "Partnership"), incurs interest expense on the $47,000 outstanding bank loan. Interest paid on the bank loan for the three months ended March 31, 2014 was $514 (March 31, 2013 - $514). Interest expense also includes amortization of loan fees. See "Interest Expense" in the Company's MD&A.

(3) Represents the distribution to PPL from the Partnership on Class B and Class D Units of the Partnership. The Class B and D Units are exchangeable into common shares of the Company based on the value of the Class B Exchange Multiplier and the Class D Exchange Multiplier at the time of exchange as defined in the amended and restated Pizza Pizza license and royalty agreement (the "Pizza Pizza License and Royalty Agreement") and the amended and restated Pizza 73 license and royalty agreement (the "Pizza 73 License and Royalty Agreement"), respectively, and represents 28% of the fully diluted Shares at March 31, 2014 (March 31, 2013 - 27.1%). During the quarter ended March 31, 2014, as a result of the final calculation of the equivalent Class B and Class D Share entitlements related to the January 1, 2013 Adjustment to the Royalty Pool, PPL returned a distribution on additional equivalent Shares as if such Shares were outstanding as of January 1, 2013. Included in the three months ended March 31, 2014, is the return of a dividend amount of $41 pursuant to the true-up calculation (2013 - PPL received $57).

(4) "Adjusted earnings from operations" and "Adjusted earnings per Share" do not have any standardized meaning under International Financial Reporting Standards ("IFRS"). Therefore, these figures are unlikely to be comparable to similar figures presented by other companies. See "Reconciliation of Non-IFRS Measures" in the Company's MD&A.

(5) System Sales (as defined in the License and Royalty Agreements) reported by Pizza Pizza and Pizza 73 restaurants include the gross sales of Pizza Pizza company-owned, jointly-controlled and franchised restaurants, excluding sales and goods and service tax or similar amounts levied by any governmental or administrative authority. System Sales do not represent the consolidated operating results of the Company but are used to calculate the royalties payable to the Partnership as presented above.

A copy of the Company's interim consolidated financial statements and related MD&A will be available at and after the market closes on May 1, 2014.

As previously announced, the Company will host a conference call to discuss the results. The details of the conference call are as follows:

Date:                         Thursday, May 1, 2014                         
Time:                         5:30 p.m. ET                                  
Call-in number:               416-340-2216 / 866-223-7781 / 800-6578-9898   
Conference ID:                4189978                                       
Recording call in number:     905-694-9451 / 800-408-3053 / 800-3366-3052   
                              Available until midnight, May 15, 2014        
                              Passcode: 7042112                             

Forward Looking Statements

Certain statements in this report, including under the heading "Restaurant Development", may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this report, such statements include such words as "may", "will", "expect", "believe", "plan", and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this report. These forward-looking statements involve a number of risks and uncertainties. The following are some factors that could cause actual results to differ materially from those expressed in or underlying such forward-looking statements: competition; changes in demographic trends; changing consumer preferences and discretionary spending patterns; changes in national and local business and economic conditions; legislation and governmental regulation; accounting policies and practices; changes in the Company's distribution policy, tax position and availability and use of deductions and related structuring decisions; and the results of operations and financial condition of the Company. The foregoing list of factors is not exhaustive and should be considered in conjunction with the other risks and uncertainties described in the Company's Annual Information Form. The Company assumes no obligation to update these forward looking statements, except as required by applicable securities laws. and or

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Most of the IoT Gateway scenarios involve collecting data from machines/processing and pushing data upstream to cloud for further analytics. The gateway hardware varies from Raspberry Pi to Industrial PCs. The document states the process of allowing deploying polyglot data pipelining software with the clear notion of supporting immutability. In his session at @ThingsExpo, Shashank Jain, a development architect for SAP Labs, discussed the objective, which is to automate the IoT deployment proces...
Culture is the most important ingredient of DevOps. The challenge for most organizations is defining and communicating a vision of beneficial DevOps culture for their organizations, and then facilitating the changes needed to achieve that. Often this comes down to an ability to provide true leadership. As a CIO, are your direct reports IT managers or are they IT leaders? The hard truth is that many IT managers have risen through the ranks based on their technical skills, not their leadership ab...
In his General Session at DevOps Summit, Asaf Yigal, Co-Founder & VP of Product at, explored the value of Kibana 4 for log analysis and provided a hands-on tutorial on how to set up Kibana 4 and get the most out of Apache log files. He examined three use cases: IT operations, business intelligence, and security and compliance. Asaf Yigal is co-founder and VP of Product at log analytics software company In the past, he was co-founder of social-trading platform Currensee, which...
The revocation of Safe Harbor has radically affected data sovereignty strategy in the cloud. In his session at 17th Cloud Expo, Jeff Miller, Product Management at Cavirin Systems, discussed how to assess these changes across your own cloud strategy, and how you can mitigate risks previously covered under the agreement.
Countless business models have spawned from the IaaS industry – resell Web hosting, blogs, public cloud, and on and on. With the overwhelming amount of tools available to us, it's sometimes easy to overlook that many of them are just new skins of resources we've had for a long time. In his general session at 17th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, an IBM Company, broke down what we have to work with, discussed the benefits and pitfalls and how we can best use them ...
We all know that data growth is exploding and storage budgets are shrinking. Instead of showing you charts on about how much data there is, in his General Session at 17th Cloud Expo, Scott Cleland, Senior Director of Product Marketing at HGST, showed how to capture all of your data in one place. After you have your data under control, you can then analyze it in one place, saving time and resources.
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data...
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
DevOps is about increasing efficiency, but nothing is more inefficient than building the same application twice. However, this is a routine occurrence with enterprise applications that need both a rich desktop web interface and strong mobile support. With recent technological advances from Isomorphic Software and others, rich desktop and tuned mobile experiences can now be created with a single codebase – without compromising functionality, performance or usability. In his session at DevOps Su...
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningf...
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
In his General Session at 17th Cloud Expo, Bruce Swann, Senior Product Marketing Manager for Adobe Campaign, explored the key ingredients of cross-channel marketing in a digital world. Learn how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects).
The buzz continues for cloud, data analytics and the Internet of Things (IoT) and their collective impact across all industries. But a new conversation is emerging - how do companies use industry disruption and technology enablers to lead in markets undergoing change, uncertainty and ambiguity? Organizations of all sizes need to evolve and transform, often under massive pressure, as industry lines blur and merge and traditional business models are assaulted and turned upside down. In this new da...
In recent years, at least 40% of companies using cloud applications have experienced data loss. One of the best prevention against cloud data loss is backing up your cloud data. In his General Session at 17th Cloud Expo, Sam McIntyre, Partner Enablement Specialist at eFolder, presented how organizations can use eFolder Cloudfinder to automate backups of cloud application data. He also demonstrated how easy it is to search and restore cloud application data using Cloudfinder.
The Internet of Everything is re-shaping technology trends–moving away from “request/response” architecture to an “always-on” Streaming Web where data is in constant motion and secure, reliable communication is an absolute necessity. As more and more THINGS go online, the challenges that developers will need to address will only increase exponentially. In his session at @ThingsExpo, Todd Greene, Founder & CEO of PubNub, exploreed the current state of IoT connectivity and review key trends and t...