Tim Hortons Inc. (THI, Financial) filed Quarterly Report for the period ended 2009-06-28.
Tim Hortons Inc. is Canada\'s largest quick service restaurant chain and features coffee fresh-baked goods soups and sandwiches. Tim Hortons Inc. has a market cap of $5.38 billion; its shares were traded at around $29.74 with a P/E ratio of 20 and P/S ratio of 2.7. The dividend yield of Tim Hortons Inc. stocks is 1.4%.
On a year-to-date basis, our revenues increased $92.3 million, or 9.5%, in the period ended June 28, 2009 to $1,063.3 million from $971.0 million in the year-to-date period ended June 29, 2008, primarily as a result of higher distribution sales and an increase in rents and royalties due to higher systemwide sales. Operating income grew $11.9 million, or 5.5%, in the 2009 year-to-date period as a result of the higher revenues and higher contributions from our U.S. operations. The U.S. operating segment performance year-to-date includes a $2.4 million benefit from the impairment and restaurant closures mentioned above. Partially offsetting operating income growth was lower other income, lower equity income, lower contribution from franchise sales and higher general and administrative costs.
Based on performance year-to-date and managements plans and outlook for the remainder of 2009, we expect to meet our previously announced 2009 operating income growth target, excluding the impact of $6 million to $7 million in transactional costs associated with our proposed reorganization as a Canadian corporation. Approximately $4.1 million has been incurred year-to-date on this transaction. Absent these costs, our operating income growth target is 11% to 13%, or is 6% to 8%, when factoring in the impact of asset impairment and related closure costs incurred in the fourth quarter of 2008. We also currently expect to meet our same-store sales growth target of 3% to 5% in Canada, and we expect we may exceed our targets of 0% to 2% same-store sales growth and break-even operating income in the U.S.
Net income attributable to Tim Hortons Inc. increased $2.8 million, or 3.7%, during the second quarter of 2009 as compared to the second quarter of 2008 and $7.4 million, or 5.4%, in the year-to-date period, resulting primarily from higher operating income. Net interest expense was essentially flat in the second quarter and year-to-date period compared to the prior year, and the effective income tax rate was relatively unchanged. The foregoing resulted in a similar level of operating income and net income growth in both periods. Diluted earnings per share attributable to Tim Hortons Inc. (EPS) increased to $0.43 in the second quarter of 2009 from $0.41 in the second quarter of 2008 and $0.80 in the 2009 year-to-date period compared to $0.74 in the 2008 comparable period. The diluted weighted average number of shares outstanding in the second quarter and year-to-date periods of 2009 were 1.8% and 2.1% lower, respectively, than the diluted weighted average share count in the comparable periods of 2008, due primarily to our share repurchase programs. This contributed to growth in EPS of 5.6% and 7.7% in the second quarter of 2009 and year-to-date period of 2009.
In the first quarter of 2009, we spent $16.7 million to purchase approximately 0.6 million shares of Company common stock as part of our 2009 share repurchase program at an average cost of $29.85 per share. As a result of our Boards decision in May 2009 to approve a transaction to reorganize as a public Canadian company (see below), subject to stockholder approval and additional conditions, we have decided to defer future purchases in the 2009 share repurchase program until a full review of capital allocation activities after the reorganization can be undertaken. Given the decision to defer the program, we do not expect to complete the full authorized amount of the share repurchase program.
Our Board of Directors approved an 11.1% increase in the quarterly dividend to $0.10 per share in February 2009. The Company declared and paid its March 2009 and June 2009 dividends at this new rate. Our Board of Directors declared a quarterly dividend payable on September 1, 2009 to shareholders of record as of August 18, 2009 at the $0.10 rate per share. The Companys current dividend policy is to pay a total of 20% to 25% of prior year, normalized annual net income attributable to Tim Hortons Inc. in dividends each year, returning value to shareholders based on the Companys earnings growth. The payment of future dividends, however, remains subject to the discretion of our Board of Directors.
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Tim Hortons Inc. is Canada\'s largest quick service restaurant chain and features coffee fresh-baked goods soups and sandwiches. Tim Hortons Inc. has a market cap of $5.38 billion; its shares were traded at around $29.74 with a P/E ratio of 20 and P/S ratio of 2.7. The dividend yield of Tim Hortons Inc. stocks is 1.4%.
Highlight of Business Operations:
Operating income increased $4.3 million, or 3.7%, in the second quarter of 2009 compared to the second quarter of 2008 primarily as a result of higher revenues, as discussed above, higher contribution from our U.S. operations due, in part, to a $1.2 million benefit from the impairment and restaurant closures which occurred primarily in the fourth quarter of 2008, and lower general and administrative expenses. Partially offsetting operating income growth were lower franchise fee income, lower equity income and lower other income. We incurred $2.7 million of professional advisory and filing fees related to our proposed public company reorganization in the second quarter of 2009 ($4.1 million year-to-date). These costs were not included in our 2009 annual operating income target and impacted our operating income growth rate. These costs also impacted our diluted earnings per share by slightly more than $0.01 per share in the second quarter ($0.02 per share in 2009 year-to-date).On a year-to-date basis, our revenues increased $92.3 million, or 9.5%, in the period ended June 28, 2009 to $1,063.3 million from $971.0 million in the year-to-date period ended June 29, 2008, primarily as a result of higher distribution sales and an increase in rents and royalties due to higher systemwide sales. Operating income grew $11.9 million, or 5.5%, in the 2009 year-to-date period as a result of the higher revenues and higher contributions from our U.S. operations. The U.S. operating segment performance year-to-date includes a $2.4 million benefit from the impairment and restaurant closures mentioned above. Partially offsetting operating income growth was lower other income, lower equity income, lower contribution from franchise sales and higher general and administrative costs.
Based on performance year-to-date and managements plans and outlook for the remainder of 2009, we expect to meet our previously announced 2009 operating income growth target, excluding the impact of $6 million to $7 million in transactional costs associated with our proposed reorganization as a Canadian corporation. Approximately $4.1 million has been incurred year-to-date on this transaction. Absent these costs, our operating income growth target is 11% to 13%, or is 6% to 8%, when factoring in the impact of asset impairment and related closure costs incurred in the fourth quarter of 2008. We also currently expect to meet our same-store sales growth target of 3% to 5% in Canada, and we expect we may exceed our targets of 0% to 2% same-store sales growth and break-even operating income in the U.S.
Net income attributable to Tim Hortons Inc. increased $2.8 million, or 3.7%, during the second quarter of 2009 as compared to the second quarter of 2008 and $7.4 million, or 5.4%, in the year-to-date period, resulting primarily from higher operating income. Net interest expense was essentially flat in the second quarter and year-to-date period compared to the prior year, and the effective income tax rate was relatively unchanged. The foregoing resulted in a similar level of operating income and net income growth in both periods. Diluted earnings per share attributable to Tim Hortons Inc. (EPS) increased to $0.43 in the second quarter of 2009 from $0.41 in the second quarter of 2008 and $0.80 in the 2009 year-to-date period compared to $0.74 in the 2008 comparable period. The diluted weighted average number of shares outstanding in the second quarter and year-to-date periods of 2009 were 1.8% and 2.1% lower, respectively, than the diluted weighted average share count in the comparable periods of 2008, due primarily to our share repurchase programs. This contributed to growth in EPS of 5.6% and 7.7% in the second quarter of 2009 and year-to-date period of 2009.
In the first quarter of 2009, we spent $16.7 million to purchase approximately 0.6 million shares of Company common stock as part of our 2009 share repurchase program at an average cost of $29.85 per share. As a result of our Boards decision in May 2009 to approve a transaction to reorganize as a public Canadian company (see below), subject to stockholder approval and additional conditions, we have decided to defer future purchases in the 2009 share repurchase program until a full review of capital allocation activities after the reorganization can be undertaken. Given the decision to defer the program, we do not expect to complete the full authorized amount of the share repurchase program.
Our Board of Directors approved an 11.1% increase in the quarterly dividend to $0.10 per share in February 2009. The Company declared and paid its March 2009 and June 2009 dividends at this new rate. Our Board of Directors declared a quarterly dividend payable on September 1, 2009 to shareholders of record as of August 18, 2009 at the $0.10 rate per share. The Companys current dividend policy is to pay a total of 20% to 25% of prior year, normalized annual net income attributable to Tim Hortons Inc. in dividends each year, returning value to shareholders based on the Companys earnings growth. The payment of future dividends, however, remains subject to the discretion of our Board of Directors.
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