News
Tim Hortons launches new stock buyback program
February 25, 2010
Tim Hortons Inc. has announced board approval of a new 12-month $200 million (Canadian) share repurchase program to begin in March, subject to receipt of final regulatory approval.
The company expects to complete its current program by March 1, 2010, after which the new plan will begin. A notice of intention to make a normal course issuer bid was filed with the Toronto Stock Exchange on Feb. 23, 2009, for a stock repurchase program authorizing the repurchase of up to $200 million in common shares, not to exceed a maximum of 5 percent of the company's outstanding common shares as of Feb. 19, 2009.
Under terms of the new $200 million program, the company is authorized to purchase up to $200 million in common shares, not to exceed the regulatory maximum of 5 percent of the outstanding common shares at the time of regulatory approval.
"Our confidence in future growth and proven capacity to generate strong free cash flow positions us well to continue our number one priority of funding our business growth investment needs while still returning value to shareholders in the form of increased dividends and a new share repurchase program," said Cynthia Devine, Tim Hortons chief financial officer in a news release.
Consistent with the previous program, shares will be repurchased through a combination of a 10b5-1, or automatic trading plan, and in accordance with management's discretion considering regulatory requirements, and market, cost and other considerations. Repurchases will be made by Tim Hortons on either the Toronto Stock Exchange or the New York Stock Exchange. Tim Hortons may discontinue purchases at any time, subject to compliance with applicable regulatory requirements. Shares purchased pursuant to the share repurchase program will be cancelled.
The maximum number of shares that may be purchased during any trading day may not exceed 25 percent of the average daily trading volume on the Toronto Stock Exchange, based on the previous six completed calendar months, excluding purchases made by Tim Hortons under its current normal course issuer bid, which will terminate on March 1. This limit, for which there are permitted exceptions, is determined in accordance with regulatory requirements.
Q4, FY09 earnings
Tim Hortons also released its fourth quarter and full year earnings for the period ended Jan. 3. For the quarter, same-store sales were up 3.4 percent in Canada and up 2.1 percent in the United States. U.S. Cold Stone Creamery co-branded locations continued to contribute significantly to comps growth as did promotional, marketing and menu initiatives. In Canada, promotional programs aimed to reinforce value largely offset the benefit of pricing in the system during the fourth quarter, but drove transaction growth, contributing to the positive sales performance.
　
On a full-year basis, same-store sales were up in Canada 2.9 percent, slightly below the company's targeted range of 3 percent to 5 percent. The company reported a total of 131 restaurants opened in 2009, within the targeted range of 120 to 140 locations. In the United States, same-store sales growth increased 3.2 percent, surpassing the targeted range of 0 percent to 2 percent growth. A total of 45 sites were opened in the U.S. during 2009, compared to the target of 30 to 40 restaurant locations.
Total revenues were $615.3 million, an increase of 9.2 percent compared to $563.7 million last year. Revenues benefited from higher sales, consisting primarily of distribution sales, and from higher rents and royalties. These factors were partially offset by lower franchise fee revenues, due primarily to timing of franchise sales, and from lower sales from fewer company-operated restaurants.
Net income in the fourth quarter was up 31.6 percent at $91.0 million, compared to $69.1 million last year. In 2008, net income was negatively impacted by $15.4 million in after-tax costs associated with the asset impairment charge and related restaurant closure costs.
For the year, total revenues were up by 9.7 percent to $2.24 billion, compared to $2.04 billion in the prior year. Net income was up 4.1 percent at $296.4 million, to $284.7 million last year.
"Our focus on being relevant to our customers and responding to their needs continues to position Tim Hortons among the leaders in the North American restaurant sector. Our record revenue and earnings performance in 2009 once again demonstrated the resiliency of our brand in difficult economic circumstances and we were pleased with the ability of our system to continue to successfully grow in challenging times," said Don Schroeder, Tim Hortons president and CEO.
Upcoming conferences
Tim Hortons will broadcast its investor conference on March 5 over the Internet starting at 8:30 a.m. Eastern time). The live webcast will be available at www.timhortons-invest.com under the Events and Presentations tab. The company will announce its 2010 outlook in parallel with its overall strategic plan and growth initiatives.
The company's annual meeting of shareholders will be held May 14 at 10:30 a.m. Eastern time at the School of Hospitality Management, Ryerson University, 55 Dundas St. West, 7th Floor Auditorium in Toronto.
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