Fourth-quarter profit at Tim Hortons Inc. soared to $67.8-million, or 35 cents a share, in the three months ended Dec. 31, 2006, compared with $16.4-million, or 10 cents a share, in the corresponding period a year earlier.
Total revenue was $466.5-million in the fourth quarter, up from $403.9-million in the fourth quarter of 2005. Same-store sales increased by 9.3 per cent in Canada and by 8.3 per cent in the United States, the company reported Wednesday.
Shares were trading at $37.31 on the Toronto stock exchange by mid-day, up 24 cents from the opening.
Tim Hortons opened 111 new restaurants in the fourth quarter of 2006. It also introduced its breakfast sandwich in Canada and promoted its chili and garlic toast combo in Canada and the U.S.
The iconic doughnut chain appointed chief executive officer Paul House chairman of the board, appointed former Supreme Court of Canada justice Frank Iacobucci as lead director and added former Loblaw Cos. Ltd. executive John Lederer to the board, along with Craig S. Miller.
Mr. House said Wednesday that 2006 was a milestone year for Tim Hortons “as we became a separate public company and finished the year with very strong fourth quarter results.”
Profit for the year was $259.6-million, or $1.40 a share, compared with $191.1-million, or $1.19 a share in 2005.
“Based on last year's results, the company feels it is well positioned to deliver solid, steady long term growth,” Mr. House said Wednesday in a conference call with investors and analysts.
Mr. House said fourth-quarter results were strong because of a range of new product introductions, some price increases and a milder December in some parts of Canada and the United States.
Tim Hortons found new markets in 2006 for its fast and affordable food, the company said, noting that, in December, it opened its 3,000th restaurant in Orchard Park, New York.
“Western New York is the gateway for Tim Hortons into the U.S. market . . . The people of Western New York have truly embraced Tim Hortons and we thank them for making Tim Hortons a part of their everyday life,” the company said in its earnings release.
Tim Hortons also established a franchise in Afghanistan to serve Canadian troops.
Earlier this month, Wendy's International Inc. reported that its profit fell nearly 90 per cent in the fourth quarter following the spinoff of its Tim Hortons coffee and doughnut chain. The third-largest U.S. hamburger company said it earned $3-million (U.S.) or 3 cents a share for the quarter, compared with $30-million, or 25 cents a year earlier.
As a result of the spinoff, Wendy's CEO James Pickett and president Kerrii Anderson have resigned from the Tim Hortons board.
“With these departures and others that are anticipated, the objective of the Company's nominating and corporate governance committee has been to transition to a board comprised of entirely independent directors, except for Mr. House,” Tim Hortons said in announcing its financial results.
“To achieve this objective, Ms. Cynthia Devine, the company's chief financial officer and executive vice president, has resigned her board seat.”
Ms. Devine's seat will be filled by Mr. Lederer, former Loblaw president, and Mrs. Anderson's seat will be filled by Mr. Miller, president and CEO of Ruth's Chris Steakhouse.
Mr. Iacobucci, current director of Tim Hortons, has been appointed lead director and chairman of the company's nominating and corporate governance committee.
The company reported that net interest expense in the fourth quarter of 2006 was $3.3 million compared to net interest expense of $8.6 million in the same period last year. The lower net interest expense in 2006 was mainly the result of the repayment, in early 2006, of a $1.1 billion note owing to Wendy's. Proceeds from the Company's IPO in March, 2006, together with proceeds from its debt issuance in February, 2006, were used to repay this note.
The company, named for its founder — the late hockey legend Tim Horton — opened its first store in Hamilton, Ont. in 1964.
Its menu now includes cappuccinos, specialty teas, soups, sandwiches and baked goods. Featured items in the fourth quarter included a pumpkin spice glazed doughnut, Danish fruit bites and a chocolate raspberry doughnut.
The company has projected 10-per-cent growth in operating income in 2007. It plans to open between 120 and 140 new stores in Canada and 60 to 80 in the U.S.
© The Globe and Mail
