Tim Hortons Q4 Profit Edges Up, Hikes Dividend; Announces New Buyback

(RTTNews) - Canadian quick-service restaurant chain Tim Hortons Inc. (THI.TO, THI) Thursday said profit for the fourth quarter rose marginally from the prior year, while revenues climbed 10.7 percent. Further, the company announced a new share repurchase program and increased its quarterly dividend.

Net income attributable to the company edged up to C$100.6 million or C$0.69 per share from C$100.34 million or C$0.65 per share in the previous year, as the impact of a lower effective tax rate was offset by reduced operating income.

The Cold Stone Creamery de-branding costs and corporate reorganization expenses hurt latest results by C$0.11 per share, while corporate reorganization expenses impacted last year's results by C$0.04 per share.

On average, 14 analysts polled by Thomson Reuters expected earnings of C$0.76 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter climbed to C$898.50 million from C$811.6 million in the previous year. Analysts estimated revenues of C$836.81 million.

Sales improved 4.8 percent to C$597.66 million while Franchise revenues climbed 24.5 percent to C$300.85 million, amid increases in Rents and royalties as well as Franchise fees.

Same-store sales advanced 1.6 percent compared to a 2.6 percent growth last year. U.S. same-store sales were 3.1 percent higher compared to a growth of 3.2 percent last year.

Operating income slid 1.8 percent to C$147.8 million, affected by decisions to de-brand Cold Stone Creamery within Tim Hortons locations in Canada, and to close certain underperforming restaurants in the U.S.

In 2014, the company expects continued growth. Tim Hortons expects earnings per share of C$3.17 to C$3.27 and same-store sales growth of 1 to 3 percent in Canada and 2 to 4 percent in the U.S.

The company's Board of Directors also approved a 23.1 percent increase in quarterly dividend to C$0.32 per common share, payable on March 18.

Separately, Tim Hortons said it plans to commence a new share repurchase program for up to C$440 million in common shares.

Cynthia Devine, CFO, said, "The new share repurchase program is comprised of the remaining portion of our previously announced target of repurchasing $1 billion of shares in the 12 months ended August 2014, plus an additional amount of approximately $200 million."

THI closed down around 1 percent on Wednesday.

THI.TO advanced 0.3 percent at C$57.94.