BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES 2024 THIRD QUARTER RESULTS AND OCTOBER 2024 CASH DISTRIBUTION OF $0.113 PER UNIT

Toronto Stock Exchange: BPF.UN

HIGHLIGHTS

Franchise Sales1 of $238.6 million for the Period and $697.4 million YTD, representing decreases of 0.6% for the Period and 0.1% YTD, versus the same periods one year ago.

Same Restaurant Sales2 of negative 0.6% for the Period and positive 0.1% YTD.

Cash flows generated from operating activities of $10.0 million for the Period and $28.7 million YTD, representing increases of 3.4% and 0.2%, respectively, versus the same periods one year ago.

Distributable Cash3 decreased 1.8% for the Period and 1.6% YTD, and Distributable Cash per Unit4 decreased 1.6% for the Period and 0.8% YTD.

Payout Ratio5 of 88.9% for the Period, 93.8% YTD and 93.6% on a trailing 12-month basis. Cash balance at the end of the Period was $6.2 million.

On November 6, 2024, the trustees of the Fund declared a distribution for the period of October 1, 2024 to October 31, 2024 of $0.113 per Unit, which will be payable on November 29, 2024 to unitholders of the Fund ("Unitholders") of record on November 21, 2024.

VANCOUVER, BC, Nov. 7, 2024 /CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") reported financial results today for the third quarter period from July 1, 2024 to September 30, 2024 (the "Period") and January 1, 2024 to September 30, 2024 ("YTD").  A copy of this press release, the unaudited condensed consolidated interim financial statements and related management's discussion and analysis ("MD&A") of the Fund and BPI are available at www.sedarplus.ca and www.bpincomefund.com.  The Fund will host a conference call to discuss the results on November 7, 2024 at 8:30 am Pacific Time (11:30 am Eastern Time).  The call can be accessed by dialling 1-844-763-8274 or +1-647-484-8814.  A replay will be available until December 7, 2024 by dialling 1-855-669-9658 or +1-412-317-0088 and entering the access code: 9136743 followed by the # sign.  The replay will also be available at www.bpincomefund.com.  Capitalized terms used in this press release that are not otherwise defined have the meanings ascribed to them in the Fund's MD&A for the Period and YTD.

"Boston Pizza's third quarter sales remained stable, with total franchise sales in-line with previous quarters in 2024," said Jordan Holm, President of BPI.  "Although the current economic conditions remain challenging, Boston Pizza was able to mitigate these issues with effective promotions.  We are closely monitoring the economic landscape and are well-prepared to respond positively to potential changes.  Our focus remains on our long-term growth potential, delivering exceptional guest experiences, and adapting to the evolving needs of our guests."

PERIOD RESULTS

SRS, a key driver of distribution growth for Unitholders, was negative 0.6% for the Period compared to positive 5.3% reported in the third quarter of 2023.  SRS for the Period was principally due to macroeconomic challenges faced by the full-service restaurant industry.  SRS was positive 0.1% YTD compared to positive 11.6% reported year-to-date in 2023.  YTD, SRS was primarily driven by flat Franchise Sales when compared to the same period in 2023.  The COVID-19 restrictions that existed during the first half of 2022 were a significant factor in the positive SRS reported year-to-date in 2023.

Franchise Sales of Boston Pizza restaurants in the Royalty Pool were $238.6 million for the Period compared to $240.1 million for the third quarter of 2023.  The $1.5 million decrease in Franchise Sales for the Period was primarily due to negative SRS.  Franchise Sales of Boston Pizza restaurants in the Royalty Pool were $697.4 million YTD compared to $698.0 million year-to-date in 2023.  The $0.6 million decrease in Franchise Sales YTD was primarily due to four restaurant closures, partially offset by positive SRS.

The Fund's net and comprehensive income was $9.4 million for the Period compared to $4.9 million for the third quarter of 2023.  The $4.5 million increase in the Fund's net and comprehensive income for the Period compared to the third quarter of 2023 was primarily due to a $6.8 million increase in fair value gain, partially offset by a $2.2 million increase in deferred income tax expense and a $0.1 million decrease in Royalty6 and Distribution Income7.  The Fund's net and comprehensive income was $25.3 million YTD compared to $24.3 million year-to-date in 2023.  The $1.0 million increase in the Fund's net and comprehensive income YTD compared to the same period in 2023 was primarily due to a $3.3 million increase in fair value gain, partially offset by a $1.8 million increase in deferred income tax expense, a $0.3 million increase in net interest expense and a $0.2 million increase in administrative expenses.

Cash generated from operating activities for the Period was $10.0 million compared to $9.7 million in the third quarter of 2023.  The increase of $0.3 million was primarily due to an increase in changes in working capital of $0.3 million and a decrease in income taxes paid of $0.1 million, partially offset by a decrease in Royalty and Distribution Income of $0.1 million.  Cash generated from operating activities YTD was $28.7 million compared to $28.6 million in the same period in 2023.  The increase of $0.1 million was primarily due to an increase in changes in working capital of $0.2 million and a nominal decrease in income taxes paid, partially offset by an increase in administrative expenses of $0.2 million.

The Fund generated Distributable Cash of $8.1 million for the Period compared to $8.3 million for the third quarter of 2023.  The decrease in Distributable Cash of $0.2 million or 1.8% was primarily due to higher Class B Unit entitlement8 of $0.5 million and decreased income taxes paid of $0.1 million, partially offset by an increase in cash flows generated from operating activities of $0.3 million and lower interest paid on debt of $0.1 million.  The Fund generated Distributable Cash of $22.9 million YTD compared to $23.3 million for the same period in 2023.  The decrease in Distributable Cash of $0.4 million or 1.6% was primarily due higher Class B Unit entitlement of $0.6 million, partially offset by lower interest paid on debt of $0.2 million.

The Fund generated Distributable Cash per Unit of $0.381 for the Period and $1.077 YTD compared to $0.387 per Unit and $1.086 per Unit, respectively, for the same periods in 2023.  The decrease in Distributable Cash per Unit of $0.006 or 1.6% for the Period and $0.009 or 0.8% YTD and was primarily attributable to the decrease in Distributable Cash outlined above, partially offset by fewer Units outstanding compared to the same periods in 2023 due to the Fund's normal course issuer bid that was in effect from June 20, 2023 to June 19, 2024 ("NCIB").

The Fund's Payout Ratio for the Period was 88.9% compared to 82.9% in the third quarter of 2023.  The increase in the Fund's Payout Ratio for the Period was due to distributions paid increasing by $0.4 million or 5.3% and Distributable Cash decreasing by $0.2 million or 1.8%.  YTD, the Fund's Payout Ratio was 93.8% compared to 87.3% year-to-date in 2023.  The increase in the Fund's Payout Ratio YTD was due to distributions paid increasing by $1.2 million or 5.8% and Distributable Cash decreasing by $0.4 million or 1.6%.  Payout Ratio is calculated by dividing the amount of distributions paid during the applicable period by the Distributable Cash for that period.  The Fund's Payout Ratio is typically higher in the first and fourth quarters compared to the second and third quarters since Boston Pizza restaurants generally experience higher Franchise Sales levels during the summer months when restaurants open their patios and benefit from increased tourist traffic.  On a trailing 12-month basis, the Fund's Payout Ratio was 93.6% as at September 30, 2024.

DISTRIBUTIONS

During the Period, the Fund declared distributions on the Units in the aggregate amount of $7.2 million or $0.339 per Unit.  During the third quarter of 2023, the Fund declared distributions on the Units in the aggregate amount of $6.8 million or $0.321 per Unit.  During the Period, the Fund paid distributions on the Units in the aggregate amount of $7.2 million or $0.339 per Unit.  During the third quarter of 2023, the Fund paid distributions on the Units in the aggregate amount of $6.8 million or $0.321 per Unit.  The amount of distributions declared and paid during the Period increased by $0.4 million or $0.018 per Unit due to the monthly distribution rate increasing from $0.107 per Unit to $0.113 per Unit commencing with the January 2024 distribution (the "2024 Distribution Increase"), partially offset by fewer Units being outstanding during the Period compared to the third quarter of 2023 due to the NCIB.  YTD, the Fund declared distributions on the Units in the aggregate amount of $19.2 million or $0.904 per Unit.  During the same period in 2023, the Fund declared distributions on the Units in the aggregate amount of $18.1 million or $0.846 per Unit. YTD, the Fund paid distributions on the Units in the aggregate amount of $21.5 million or $1.011 per Unit. During the same period in 2023, the Fund paid distributions on the Units in the aggregate amount of $20.3 million or $0.948 per Unit. The amount of distributions declared YTD increased by $1.1 million or $0.058 per Unit due to the monthly distribution rate increasing from $0.102 per Unit to $0.107 per Unit commencing with the March 2023 distribution (the "2023 Distribution Increase") and the 2024 Distribution Increase, partially offset by fewer Units being outstanding YTD compared to the same period in 2023 due to the NCIB.  The amount of distributions paid YTD increased by $1.2 million or $0.063 per Unit due to the 2023 Distribution Increase and the 2024 Distribution Increase, partially offset by fewer Units being outstanding YTD compared to the same period in 2023 due to the NCIB.

On November 6, 2024, the trustees of the Fund declared a distribution for the period of October 1, 2024 to October 31, 2024 of $0.113 per Unit, which will be payable on November 29, 2024 to Unitholders of record on November 21, 2024.  Including the October 2024 distribution, which will be paid on November 29, 2024, the Fund will have paid out total distributions of $446.8 million or $27.15 per Unit, which includes 262 monthly distributions and two special distributions.

FINANCIAL SUMMARY

The tables below set out selected information from the Fund's unaudited condensed consolidated interim financial statements together with other data and should be read in conjunction with the unaudited condensed consolidated interim financial statements and MD&A of the Fund for the three-month and nine-month periods ended September 30, 2024 and September 30, 2023, and the Fund's audited annual consolidated financial statements for the year-ended December 31, 2023.

 For the periods ended September 30

Q3 2024

Q3 2023

YTD 2024

YTD 2023

(in thousands of dollars, except restaurants, SRS, Payout Ratio and per Unit items)

Number of restaurants in Royalty Pool

372

377

372

377

Franchise Sales reported by restaurants in the Royalty Pool

238,613

240,139

697,437

697,990

Royalty income

9,544

9,606

27,897

27,920

Distribution Income

3,135

3,155

9,165

9,175

Total revenue

12,679

12,761

37,062

37,095

Administrative expenses

(379)

(350)

(1,312)

(1,142)

Interest expense on debt and financing fees

(887)

(838)

(2,647)

(2,531)

Interest expense on Class B Unit liability

(1,033)

(1,055)

(2,825)

(2,669)

Interest income

71

72

206

219

Profit before fair value gain (loss) and income taxes

10,451

10,590

30,484

30,972

Fair value gain (loss) on investment in BP Canada LP

8,511

(7,857)

12,112

436

Fair value (loss) gain on Class B Unit liability

(3,792)

3,501

(5,396)

(194)

Fair value (loss) gain on Swaps

(1,923)

333

(2,407)

814

Current and deferred income tax expense

(3,863)

(1,673)

(9,478)

(7,679)

Net and comprehensive income

9,384

4,894

25,315

24,349

Basic earnings per Unit

0.44

0.23

1.19

1.13

Diluted earnings per Unit