VAUGHAN, ON, May 9, 2019 /CNW/ - Recipe Unlimited Corporation (formerly Cara Operations) reported financial results today for the 13 weeks ending March 31, 2019.
"In the first quarter, System Sales grew by $94.8 million or 12.5% to $850.7 million, contributing to Operating EBITDA and Operating EBITDA Margin improvements. Operating EBITDA increased to $50.1 million, representing 8.4% growth over last year. Our steady Operating EBITDA growth continues to drive our strong Free Cash Flow position, leaving us well positioned to take advantage of future growth opportunities. Our Corporate, Franchise and Retail & Catering segments all demonstrated year-over-year growth in absolute dollars and as a percent of sales. The new pie production line that was added in the third quarter of 2018 has increased production capacity and has helped us meet the increased demand for our St-Hubert and Swiss Chalet frozen pie products, contributing to the growth in the Retail & Catering segment in the first quarter. We are excited about further growth in this segment in 2019 as we continue to expand our Recipe branded retail product offerings in grocery," commented Frank Hennessey, Chief Executive Officer.
"While we are satisfied with the growth of System Sales and Operating EBITDA, we continue to focus on Same Restaurant Sales which decreased 1.6% in the quarter. Our ongoing goal is to increase guest visits into our restaurants by improving their overall experience. We are in the early days of our 4-Pillar operational strategy which will drive ongoing improvements in the areas of Quality of Food, Quality of Service, Value for Experience and Ambience. While the metrics we use to measure our progress demonstrate recent improvement on all 4 Pillars, there is still much work to be done and upside to be realized," Mr. Hennessey added.
Highlights for the 13 weeks ended March 31, 2019:
Free Cash Flow per share before growth capex, dividends, and NCIB on a diluted basis was $0.55 for the 13 weeks ended March 31, 2019 compared to $0.53 for 2018, an increase of $0.02 per share or 3.8%.
($ millions unless otherwise stated)¹
Total System Sales from continuing operations
Total System Sales Growth²
Number of restaurants (at period end)
Operating EBITDA before Keg royalty
Operating EBITDA Margin on Total System Sales before Keg royalty
Operating EBITDA Margin on System Sales
Corporate restaurant sales
Number of corporate restaurants
Contribution from Corporate segment
Contribution as a % of corporate sales
Franchise restaurant System Sales
Number of franchised & JV restaurants
Contribution from Franchise segment
Contribution as a % of Franchise sales
Contribution from retail and catering
Contribution from Central segment (excluding net royalty expense)
Contribution as a % of total System Sales
Total gross revenue
Operating EBITDA Margin on gross revenue
Earnings before income taxes
Adjusted Net Earnings
EPS attributable to common shareholders of the Company (in dollars)
Adjusted Basic EPS
Adjusted Diluted EPS
Free Cash Flow before growth capex, dividends and NCIB
Free Cash Flow per share - basic (in dollars)
Free Cash Flow per share - diluted (in dollars)
Quarterly Dividend declared per share (in dollars)
(1) See "Non-IFRS Measures" for definitions of System Sales, System Sales Growth, SRS Growth, Operating EBITDA, Adjusted Net Earnings,
(2) East Side Mario restaurants in the United States are excluded from System Sales and number of restaurants.
(3) Results from New York Fries located outside of Canada, East Side Mario restaurants in the United States and Casey's restaurants are excluded
The Company's unaudited interim consolidated financial statements for the 13 weeks ended March 31, 2019 and Management's Discussion and Analysis are available under the Company's profile on SEDAR at www.sedar.com.
Despite negative SRS, the Company saw improvements with Operating EBITDA and Operating EBITDA Margin for the quarter. System Sales grew $94.8 million or 12.5% to $850.7 million, Operating EBITDA before the net royalty expense increased $6.3 million or 13.2% to $53.9 million with a contribution margin of 6.3% as a percentage of Total System Sales.
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 and may constitute "forward-looking" statements within the meaning of applicable Canadian securities legislation, which involve known and unknown risks, uncertainties and other factors that may cause actual results to vary. A description of the risks and uncertainties that impact the Company's business are discussed in detail under the heading "Risk Factors" in the Company's Annual Information Form dated March 29, 2019, available on SEDAR. See "Forward Looking Information."
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", "EBITDA", "Operating EBITDA", "Operating EBITDA Margin", "Operating EBITDA Margin on System Sales", "Adjusted Net Earnings", "Adjusted Basic EPS", "Adjusted Diluted EPS", and "Free Cash Flow" 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 45 New York Fries and 3 US East Side Mario's.
"EBITDA" is defined as net earnings 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 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; (xvii) interest income from the Partnership units; and the rent expense impact related to the implementation of IFRS 16, "Leases".
"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.
"Free Cash Flow before capex, dividends and NCIB" is defined as Operating EBITDA less (i) cash interest paid; (ii) maintenance capex; and (iii) cash taxes paid.
"Free Cash Flow after capex, dividends and NCIB" is defined as Operating EBITDA less (i) cash interest paid; (ii) maintenance capex; (iii) cash taxes paid; (iv) growth capex; (vi) dividends paid; (vi) shares repurchased under the NCIB; and (vii ) proceeds from sale of assets.
"Adjusted Net Earnings" is defined as net earnings plus (i) change in fair value of non-controlling interest liability; (ii) change in fair value of Exchangeable Partnership units; (iii) one-time transaction costs; (iv) non-cash impairment charges; and (v) 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 RSUs.
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, 2019. 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 2019 first quarter results at 9:00 am Eastern Time on Friday, May 10, 2019.
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 2755034. A telephone replay of the call will be available until midnight on May 31, 2019. To access the replay, please dial (416) 849-0833 or 1-855-859-2056 and enter passcode 2755034.
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, Marigolds & Onions, and 1909 Taverne Moderne.
RECIPE's iconic brands have established the organization as a nationally recognized franchisor of choice. As at March 31, 2019, Recipe had 22 brands and 1,382 restaurants, 85% of which 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.