VAUGHAN, ON, Nov. 8, 2018 /CNW/ - Recipe Unlimited Corporation (formerly Cara Operations) reported financial results today for the 13 and 39 weeks ending September 30, 2018.
"Our franchisees, brand and shared service teams delivered another successful Quarter. I want to thank them for their hard work and commitment to focus on continual improvement on our Four Pillars of Food, Service, Value and Ambiance. Their efforts helped increase Same Restaurant Sales by 1.8% for the Quarter," commented Frank Hennessey, Chief Executive Officer.
Highlights for the 13 and 39 weeks ended September 30, 2018:
($ millions unless otherwise stated)¹
Total System Sales from continuing operations
Total System Sales Growth²
Number of restaurants (at period end)
Corporate restaurant sales
Number of corporate and joint venture restaurants
Contribution from Corporate segment
Contribution as a % of corporate sales
Franchise restaurant sales
Number of franchised restaurants
Contribution from Franchise segment
Contribution as a % of Franchise sales
Contribution from Food Processing and Distribution
Contribution from Central segment
Contribution as a % of Total System Sales
Contribution from Central segment (excluding net royalty expense)
Contribution as a % of Total System Sales
Total gross revenue
Operating EBITDA before Keg royalty
Operating EBITDA Margin on Total System Sales before Keg royalty
Operating EBITDA Margin on System Sales
Operating EBITDA Margin
Earnings before income taxes
Adjusted net earnings
Earnings per share from continuing operations attributable to common shareholders
Adjusted Basic EPS
Adjusted Diluted EPS
(1) See "Non-IFRS Measures" for definitions of System Sales, System Sales Growth, SRS Growth, Operating EBITDA, Adjusted Net Earnings, Adjusted Basic EPS and Adjusted Diluted EPS
(2) East Side Mario restaurants in the United States are excluded from System Sales totals
(3) Results from New York Fries located outside of Canada, East Side Mario restaurants in the United States, Casey's restaurants are excluded from SRS Growth
The Company's unaudited interim unaudited consolidated financial statements for the 13 and 39 weeks ended September 30, 2018 and Management's Discussion and Analysis are available under the Company's profile on SEDAR at www.sedar.com.
Management is pleased with the third quarter results and continued growth in all segments, Operating EBITDA and SRS. In the third quarter, Total Systems Sales grew $195.1 million or 28.5% to $879.8 million, Operating EBITDA before the net royalty expense increased 9.3% to $52.4 million with a contribution margin of 6.0% as a percentage of Total System Sales, and Adjusted Net Earnings increased to $32.1 million.
With the full year impact of The Keg merger, the Company will add approximately $612.0 million in System Sales, taking the Company to approximately $3.4 billion in 2018 compared to the initial 2015 IPO target range for 2020-2022 of $2.5 billion to $3.0 billion, and the updated target range provided in 2016 after the St-Hubert acquisition of $2.9 billion to $3.7 billion. For a full year on a pro forma basis using prior year results, The Keg merger will add approximately $23.5 million of Operating EBITDA resulting in combined proforma Operating EBITDA of approximately $211.0 million, also within Recipe's updated target EBITDA range of $203.0 million to $296.0 million (based on 7% to 8% of System Sales). However, while The Keg will add EBITDA dollars, because of net central overhead costs and royalty payments to the Keg Royalty Income Fund in the medium term, The Keg merger will reduce Recipe's Operating EBITDA margin on System Sales below the target 7% to 8% range. Management's focus will continue to be on improving the earnings efficiency of our assets and our increased sales base to grow Operating EBITDA as a percentage of System Sales back to within our 7% to 8% target range by 2020-2022.
Management provides the following comments regarding its strategies and initiatives:
The foregoing description of Recipe's outlook is based on management's current strategies and its assessment of the outlook for the business and the Canadian Restaurant Industry as a whole, may be considered to be forward‑looking information for purposes of applicable Canadian securities legislation. Readers are cautioned that actual results may vary. See "Forward‑Looking Information" and "Risk & Uncertainties" for a description of the risks and uncertainties that impact the Company's business and that could cause actual results to vary.
These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses non IFRS measures including "System Sales", "SRS Growth", "Operating EBITDA", "Operating EBITDA Margin", "Operating EBITDA Margin on System Sales", "Adjusted Earnings before income tax", "Adjusted Earnings", "Adjusted Basic EPS", and "Adjusted Diluted EPS", to provide investors with supplemental measures of its operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. The Company also believes that securities analysts, investors and other interested parties frequently use non IFRS measures in the evaluation of issuers. The Company's management also uses non IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets, and to determine components of management compensation.
"System Sales" represents top line sales from restaurant guests at both corporate and franchise restaurants including take out and delivery customer orders. System Sales includes sales from both established restaurants as well as new restaurants. System sales also includes sales received from its food processing and distribution division. Management believes System Sales provides meaningful information to investors regarding the size of Recipe's restaurant network, the total market share of the Company's brands sold in restaurant and grocery and the overall financial performance of its brands and restaurant owner base, which ultimately impacts Recipe's consolidated financial performance.
"System Sales Growth" is a metric used in the restaurant industry to compare System Sales over a certain period of time, such as a fiscal quarter, for the current period against System Sales in the same period in the previous year.
"SRS Growth" is a metric used in the restaurant industry to compare sales earned in established locations over a certain period of time, such as a fiscal quarter, for the current period against sales in the same period in the previous year. SRS Growth helps explain what portion of sales growth can be attributed to growth in established locations and what portion can be attributed to the opening of net new restaurants. Recipe defines SRS Growth as the percentage increase or decrease in sales during a period of restaurants open for at least 24 complete fiscal months relative to the sales of those restaurants during the same period in the prior year. Recipe's SRS Growth results excludes Casey's restaurants as the Company is in the process of winding down its operations; and sales from international operations from 44 New York Fries and 3 US East Side Mario's.
"EBITDA" is defined as net earnings (loss) before: (i) net interest expense and other financing charges; (ii) income taxes; (iii) depreciation of property, plant and equipment; (iv) amortization of other assets and deferred gain.
"Operating EBITDA" is defined as net earnings (loss) before: (i) net interest expense and other financing charges; (ii) income taxes; (iii) depreciation of property, plant and equipment; (iv) amortization of other assets and deferred gain; (v) impairment of assets, net of reversals; (vi) losses on early buyout / cancellation of equipment rental contracts; (vii) restructuring and other; (viii) conversion fees; (ix) net (gain) / loss on disposal of property, plant and equipment; * stock based compensation and costs related to its restricted share units; (xi) changes in onerous contract provision;; (xii) expense impact from fair value inventory adjustment resulting from the St-Hubert purchase relating to inventory sold during the period; (xiii) acquisition related transaction costs; (xiv) change in fair value of non-controlling interest liability; (xv) change in fair value of Exchangeable Partnership units; (xvi) the Company's proportionate share of equity accounted investment in joint ventures; and (xvii) interest income from the Partnership units.
"Operating EBITDA Margin" is defined as Operating EBITDA divided by total gross revenue.
"Operating EBITDA Margin on System Sales" is defined as Operating EBITDA divided by System Sales.
"Adjusted Net Earnings" is defined as net earnings plus (i) deferred income tax expense (reversal); (ii) non-cash amortization of inventory fair value increases related to inventory sold during the period resulting from the St-Hubert purchase determined at acquisition date; (iii) change in fair value of non-controlling interest liability; (iv) change in fair value of Exchangeable Partnership units; (v) one-time transaction costs; (vi) non-cash impairment charges; and (vii) restructuring and other.
"Adjusted Basic EPS" is defined as Adjusted Net Earnings divided by the weighted average number of shares outstanding.
"Adjusted Diluted EPS" is defined as Adjusted Net Earnings divided by the weighted average number of shares outstanding plus the dilutive effect of stock options and warrants issued.
Certain statements in this press release may constitute "forward-looking" statements within the meaning of applicable Canadian securities legislation which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or the industry in which they operate, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this press release, such statements use words such 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 news release. These forward-looking statements involve a number of risks and uncertainties, including those related to: (a) the Company's ability to maintain profitability and manage its growth including SRS Growth, System Sales Growth, increases in net income, Operating EBITDA and Operating EBITDA Margin on System Sales, and Adjusted net earnings (b) competition in the industry in which the Company operates; (c) the general state of the economy; (d) integration of acquisitions by the Company; (e) risk of future legal proceedings against the Company. These risk factors and others are discussed in detail under the heading "Risk Factors" in the Company's Annual Information Form dated March 29, 2018. New risk factors may arise from time to time and it is not possible for management of the Company to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance or achievements of the Company to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Although the forward-looking statements contained in this press release are based upon what management believes to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this press release.
Frank Hennessey, Chief Executive Officer and Ken Grondin, Chief Financial Officer, will hold an investor conference call to discuss 2018 third quarter results at 9:00 am Eastern Time on Friday November 9, 2018.
To access the call, please call (647) 427-7450 or 1-888-231-8191, five to ten minutes prior to the start time. The conference ID is 5817279. A telephone replay of the call will be available until midnight on December 7, 2018. To access the replay, please dial (416) 849-0833 or 1-855-859-2056 and enter passcode 5817279.
Founded in 1883, Recipe Unlimited Corporation (formerly Cara Operations) is Canada's oldest and largest full-service restaurant company. The Company franchises and/or operates some of the most recognized brands in the country including Swiss Chalet, Harvey's, St-Hubert, The Keg, Milestones, Montana's, Kelsey's, East Side Mario's, New York Fries, Prime Pubs, Bier Markt, Landing, Original Joe's, State & Main, Elephant & Castle, The Burger's Priest, The Pickle Barrel and 1909 Taverne Moderne.
Recipe's iconic brands have established the organization as a nationally recognized franchisor of choice. As at September 30, 2018, Recipe had 1,370 restaurants, 1,311 of which were located in Canada and the remaining 59 locations were located internationally. 85% of Recipe's restaurants are operated by franchisees and joint venture partners. Recipe's shares trade on the Toronto Stock Exchange under the ticker symbol RECP. More information about the Company is available at www.recipeunlimited.com.
SOURCE Recipe Unlimited Corp.