OAKVILLE, ONT. – Fiscal-year net income more than doubled for Tim Hortons following the October 2010 sale of its 50% joint-venture interest in Maidstone Bakeries, the Oakville-based restaurant chain said Feb. 23. The company also announced a new share repurchase program for up to $445 million in common shares and an increase in quarterly dividend of 31% to C$0.17 per common share.
Net income attributable to Tim Hortons Inc. in the fiscal year ended Jan. 2 was C$623,959,000 ($627,969,000) or C$3.58 diluted earnings per share, which compared to C$296,367,000 ($298,271,000), or C$1.64 diluted earnings per share, in the previous fiscal year.
Fiscal-year operating income of C$872.2 million included a gain of C$36.1 million from the sale of the joint-venture interest in Maidstone Bakeries, which was offset partly by C$30 million related to the sale. Even though fiscal-year 2010 had one less week of operations than fiscal-year 2010, Tim Hortons reported fiscal-year revenue growth of 4% to C$2,536,495,000 from C$2,438,853,000.
In the United States, same-store sales growth was 3.9% in 2010, which was at the high end of the targeted range of 2% to 4%. Tim Hortons opened 96 units in the United States in 2010. The U.S. segment had a fiscal-year operating loss of C$18.4 million, which reflected C$28.3 million in asset impairment and related closure costs in the New England region.
“In 2011 we plan to further prioritize U.S. restaurant development capital spending among our core growth markets which are most developed,” Tim Hortons said.
In Canada, same-store sales growth was 4.9% in fiscal year 2010, which was at the high end of a targeted range of 3% to 5%. Tim Hortons opened 149 restaurants in Canada in 2010. The Canadian segment had fiscal-year operating income of C$904.8 million.
Companywide in the fourth quarter ended Jan. 2, net income attributable to Tim Hortons Inc. was C$377,121,000, or C$2.19 diluted earnings per common share, which compared to C$90,989,000, or C$0.51 diluted earnings per common share, in the previous year’s fourth quarter. Total fourth-quarter revenues of C$643,501,000 were down 3.5% from C$666,973,000 in the previous year’s fourth quarter.
Tim Hortons has established 2011 targets of C$2.30 to C$2.40 in diluted earnings per share, U.S. segment operating income of $13 million to $16 million, same-store sales growth of 3% to 5% in both Canada and the United States, 160 to 180 restaurant openings in Canada, 70 to 80 openings in the United States, capital expenditures between $180 million to $200 million, and an effective tax rate of about 30%.
Tim Hortons on Feb. 23 reported it had obtained regulatory approval from the Toronto Stock Exchange to begin its share repurchase program for up to $445 million in common shares, not to exceed the regulatory maximum of 14,881,870 shares that represent 10% of the company’s public float as of Feb. 17. The 2011 repurchase program represents $200 million in cash flow generation and cash-on-hand and up to $245 million from the remaining undistributed net proceeds from the Maidstone Bakeries sales.