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BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES 2023 THIRD QUARTER RESULTS AND OCTOBER 2023 CASH DISTRIBUTION OF $0.107 PER UNIT

Toronto Stock Exchange: BPF.UN

HIGHLIGHTS

  • Franchise Sales1 of $240.1 million for the Period and $698.0 million YTD, representing an increase of 4.5% and 11.2%, respectively, versus the same periods one year ago.

  • Same Restaurant Sales2 of 5.3% for the Period and 11.6% YTD.

  • Cash flows generated from operating activities of $9.7 million for the Period, consistent with the third quarter of 2022. Cash flows generated from operating activities of $28.6 million YTD, representing an increase of 12.6% versus the same period one year ago.

  • Distributable Cash3 increased 10.5% for the Period and 27.0% YTD, and Distributable Cash per Unit4 increased 11.5% for the Period and 27.3% YTD.

  • Payout Ratio5 of 82.9% for the Period, 87.3% YTD and 93.9% on a trailing 12-month basis. Cash balance at the end of the Period was $3.9 million.

  • Acquired 188,700 units of the Fund ("Units") at an average price of $16.55 per Unit during the Period under the Fund's NCIB (defined below).

  • On November 8, 2023, the trustees of the Fund declared a distribution for the period of October 1, 2023 to October 31, 2023 of $0.107 per Unit, which will be payable on November 30, 2023 to unitholders of the Fund ("Unitholders") of record on November 21, 2023.

VANCOUVER, BC, Nov. 9, 2023 /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, 2023 to September 30, 2023 (the "Period") and January 1, 2023 to September 30, 2023 ("YTD"). A copy of this press release, the 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 9, 2023 at 8:30 am Pacific Time (11:30 am Eastern Time). The call can be accessed by dialling 1-800-319-4610 or 604-638-5340. A replay will be available until December 9, 2023 by dialling 1-800-319-6413 or 604-638-9010 and entering the access code: 0410 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.

COVID-19 impacted the business of the Fund, BPI and Boston Pizza Canada Limited Partnership ("BP Canada LP"), and the operation of Boston Pizza restaurants significantly during 2020, 2021 and the first half of 2022. Since then, COVID-19 case counts improved, government restrictions related to COVID-19 were largely eliminated, and sales levels of Boston Pizza restaurants have returned to levels more consistent with times prior to COVID-19.

"We are pleased that the encouraging sales trend has continued into the third quarter of 2023. This achievement is a testament to our franchisees' dedication to delivering exceptional guest experiences", stated Jordan Holm, BPI's President. "In the midst of ongoing economic uncertainty, inflationary pressures and high interest rates, we are dedicated to the continued success of the Boston Pizza brand and our restaurant network."

PERIOD AND YTD RESULTS

SRS, a key driver of distribution growth for Unitholders, was 5.3% for the Period compared to 8.4% reported in the third quarter of 2022. SRS was principally due to an increase in average guest cheque due to a combination of menu pricing and larger per guest ordering levels. SRS YTD was 11.6% compared to 32.6% reported year-to-date in 2022. SRS was principally due to increases in restaurant guest traffic compared to year-to-date in 2022 and average guest cheque due to a combination of menu pricing and larger per guest ordering levels. COVID-19 restrictions existed in most of the country during the first quarter of 2022 and part of the second quarter of 2022 that negatively impacted in-restaurant guest traffic. Those restrictions were largely eliminated during the second quarter of 2022.

Franchise Sales of Boston Pizza restaurants in the Royalty Pool were $240.1 million for the Period and $698.0 million YTD compared to $229.8 million and $627.8 million, respectively, for the same periods one year ago. The $10.3 million increase in Franchise Sales for the Period and $70.2 million increase in Franchise Sales YTD were primarily due to positive SRS.

The Fund's net and comprehensive income was $4.9 million for the Period compared to $9.5 million for the third quarter of 2022. The $4.6 million decrease in the Fund's net and comprehensive income for the Period compared to the third quarter of 2022 was primarily due to a $5.8 million increase in fair value loss and a $0.1 million increase in net interest expense, partially offset by a $0.8 million decrease in income tax expense and a $0.6 million increase in Royalty6 and Distribution Income7. The Fund's net and comprehensive income was $24.3 million YTD compared to $24.2 million year-to-date in 2022. The $0.1 million increase in the Fund's net and comprehensive income YTD compared to the same period in 2022 was primarily due to a $3.7 million increase in Royalty and Distribution Income, partially offset by a $2.2 million decrease in fair value gain, a $1.1 million increase in income tax expense and a $0.1 million increase in net interest expense.

The Fund's cash flows generated from operating activities was $9.7 million for the Period compared to $9.7 million in the third quarter of 2022. An increase in income taxes paid of $0.5 million and a decrease in changes in working capital of $0.1 million were offset by an increase in Royalty and Distribution Income of $0.6 million. Cash flows generated from operating activities YTD was $28.6 million compared to $25.4 million in the same period in 2022. The increase of $3.2 million was primarily due to an increase of Royalty and Distribution Income of $3.7 million and an increase in changes in working capital of $0.7 million, partially offset by an increase in income taxes paid of $1.2 million.

The Fund generated Distributable Cash of $8.3 million for the Period compared to $7.5 million for the third quarter of 2022. The increase in Distributable Cash of $0.8 million or 10.5% was primarily due to decreased BPI Class B Unit entitlement8 of $0.3 million, SIFT Tax on Units adjustment of $0.3 million and lower interest paid on long-term debt of $0.1 million. The Fund generated Distributable Cash of $23.3 million YTD compared to $18.4 million year-to-date in 2022. The increase in Distributable Cash of $4.9 million or 27.0% was primarily due to increased cash flows generated from operating activities of $3.2 million, lower repayments of long-term debt of $1.5 million, SIFT Tax on Units3 adjustment of $0.2 million and lower interest paid on long-term debt of $0.2 million, partially offset by increased BPI Class B Unit entitlement of $0.2 million.

The Fund generated Distributable Cash per Unit of $0.387 for the Period and $1.086 YTD compared to $0.347 and $0.853, respectively, for the same periods in 2022. The increase in Distributable Cash per Unit of $0.040 or 11.5% for the Period and $0.233 or 27.3% YTD were primarily attributable to the increase in Distributable Cash outlined above and fewer Units outstanding compared to the same period in 2022 due to the Fund's NCIB (defined below).

The Fund's Payout Ratio for the Period was 82.9% compared to 82.0% in the third quarter of 2022. The increase in the Fund's Payout Ratio for the Period was due to distributions paid increasing by $0.7 million or 11.7%, partially offset by Distributable Cash increasing by $0.8 million or 10.5%. YTD, the Fund's Payout Ratio was 87.3% compared to 93.2% year-to-date in 2022. The decrease in the Fund's Payout Ratio YTD was due to Distributable Cash increasing by $4.9 million or 27.0%, partially offset by distributions paid increasing by $3.2 million or 18.9%. 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 93.9% as at September 30, 2023.

NORMAL COURSE ISSUER BID

On June 15, 2023, the Fund announced that it had received TSX approval of a Notice of Intention to Make a Normal Course Issuer Bid through the facilities of the TSX, other designated exchanges and/or alternative Canadian trading systems from June 20, 2023 to no later than June 19, 2024 (the "NCIB"). The NCIB permits the Fund to repurchase for cancellation up to 400,000 Units, being approximately 1.86% of the Fund's issued and outstanding Units (as at June 6, 2023).

The Fund established an automatic securities purchase plan (the "ASPP") with its broker to allow for the repurchase of Units under the NCIB at any time, including when it ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. The ASPP automatically terminated by its terms on August 22, 2023 as a result of the purchase limits specified in the ASPP having been attained. All purchases under the ASPP were made on the open market through the facilities of the TSX, other designated exchanges and/or alternative Canadian trading systems.

As at June 30, 2023, the Fund acquired 54,200 Units under the NCIB at an average price of $16.28 per Unit. During the Period, the Fund acquired an additional 188,700 Units under the NCIB at an average price of $16.55 per Unit. Accordingly, as at September 30, 2023, the Fund acquired a total of 242,900 Units at an average price of $16.49 per Unit. The Fund did not acquire any additional Units under the NCIB after September 30, 2023. The Fund financed Units purchased under the NCIB from cash on hand. All Units that were or will be purchased under the NCIB were or will be cancelled.

DISTRIBUTIONS

During the Period, the Fund declared distributions on the Units in the aggregate amount of $6.8 million or $0.321 per Unit. During the third quarter of 2022, the Fund declared distributions on the Units in the aggregate amount of $6.1 million or $0.285 per Unit. During the Period, the Fund paid distributions on the Units in the aggregate amount of $6.8 million or $0.321 per Unit. During the third quarter of 2022, the Fund paid distributions on the Units in the aggregate amount of $6.1 million or $0.285 per Unit. The amount of distributions declared during the Period increased by $0.7 million or $0.036 per Unit due to the monthly distribution rate increasing from $0.085 per Unit to $0.100 per Unit commencing with the July 2022 distribution, increasing again from $0.100 per Unit to $0.102 per Unit commencing with the November 2022 distribution, and increasing again from $0.102 per Unit to $0.107 per Unit commencing with the March 2023 distribution (collectively, the "2022-2023 Distribution Increases"). Distributions paid during the Period increased by $0.7 million or $0.036 per Unit due to the 2022-2023 Distribution Increases. YTD, the Fund declared distributions on the Units in the aggregate amount of $18.1 million or $0.846 per Unit. During the same period in 2022, the Fund declared distributions on the Units in the aggregate amount of $15.3 million or $0.710 per Unit. YTD, the Fund paid distributions on the Units in the aggregate amount of $20.3 million or $0.948. During the same period in 2022, the Fund paid distributions on the Units in the aggregate amount of $17.1 million or $0.795 per Unit. The amount of distributions declared YTD increased by $2.8 million or $0.136 per Unit due to the 2022-2023 Distribution Increases. Distributions paid YTD increased by $3.2 million or $0.153 per Unit due to the 2022-2023 Distribution Increases.

On November 8, 2023, the trustees of the Fund declared a distribution for the period of October 1, 2023 to October 31, 2023 of $0.107 per Unit, which will be payable on November 30, 2023 to Unitholders of record on November 21, 2023. Including the October 2023 distribution, which will be paid on November 30, 2023, the Fund will have paid out total distributions of $418.2 million or $25.80 per Unit, which includes 250 monthly distributions and two special distributions.

FINANCIAL SUMMARY

The tables below set out selected information from the Fund's condensed consolidated interim financial statements together with other data and should be read in conjunction with the condensed consolidated interim financial statements and MD&A of the Fund for the three-month and nine-month periods ended September 30, 2023 and September 30, 2022.

For the periods ended September 30

Q3 2023

Q3 2022

YTD 2023

YTD 2022

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






Number of restaurants in Royalty Pool

377

383

377

383

Franchise Sales reported by restaurants in the Royalty Pool

240,139

229,848

697,990

627,834






Royalty income

9,606

9,194

27,920

25,113

Distribution Income

3,155

3,027

9,175

8,285

Total revenue

12,761

12,221

37,095

33,398

Administrative expenses

(350)

(334)

(1,142)

(1,021)

Interest expense on debt and financing fees

(838)

(886)

(2,531)

(2,802)

Interest expense on Class B Unit liability

(1,055)

(835)

(2,669)

(2,133)

Interest income

72

31

219

46

Profit before fair value (loss) gain and income taxes

10,590

10,197

30,972

27,488

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

(7,857)

2,183

436

(873)

Fair value gain (loss) on Class B Unit liability

3,501

(972)

(194)

389

Fair value gain on Swaps

333

572

814

3,785

Current and deferred income tax expense

(1,673)

(2,478)

(7,679)

(6,612)

Net and comprehensive income

4,894

9,502

24,349

24,177






Basic earnings per Unit

0.23

0.44

1.13

1.12

Diluted earnings per Unit

0.06

0.41

1.06

1.00






Distributable Cash / Distributions / Payout Ratio





Cash flows generated from operating activities

9,659

9,667

28,638

25,436

BPI Class B Unit entitlement

(740)

(1,083)

(2,784)

(2,635)

Interest paid on long-term debt

(825)

(939)

(2,587)

(2,777)

Principal repayments on long-term debt

-

-

-

(1,500)

Current income tax expense

(2,603)

(2,438)

(7,504)

(6,492)

Current income tax paid

2,770

2,270

7,537

6,319

Distributable Cash

8,261

7,477

23,300

18,351

Distributions paid

6,848

6,133

20,342

17,109

Payout Ratio

82.9 %

82.0 %

87.3 %

93.2 %

Distributable Cash per Unit

0.387

0.347

1.086

0.853

Distributions paid per Unit

0.321

0.285

0.948

0.795






Other





Same Restaurant Sales

5.3 %

8.4 %

11.6 %

32.6 %

Number of restaurants opened

0

0

0

0

Number of restaurants closed

0

1

2

3






Sep 30, 2023

Dec 31, 2022

Total assets



413,645

413,701

Total liabilities



130,869

133,123







SUMMARY OF QUARTERLY RESULTS


Q3 2023

Q2 2023

 Q1 2023

Q4 2022

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





Number of restaurants in Royalty Pool

377

377

377

383

Franchise Sales reported by restaurants in the Royalty Pool

240,139

233,650

224,201

227,163






Royalty income

9,606

9,346

8,968

9,087

Distribution Income

3,155

3,071

2,949

2,988

Total revenue

12,761

12,417

11,917

12,075

Administrative expenses

(350)

(401)

(391)

(369)

Interest expense on debt and financing fees

(838)

(843)

(850)

(812)

Interest expense on Class B Unit liability

(1,055)

(982)

(632)

(1,557)

Interest income

72

79

68

61

Profit before fair value (loss) gain and income taxes

10,590

10,270

10,112

9,398

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

(7,857)

8,511

(218)

(1,146)

Fair value gain (loss) on Class B Unit liability

3,501

(3,792)

97

510

Fair value gain (loss) on Swaps

333

1,373

(892)

106

Current and deferred income tax expense

(1,673)

(3,576)

(2,430)

(2,462)

Net and comprehensive income

4,894

12,786

6,669

6,406






Basic earnings per Unit

0.23

0.59

0.31

0.30

Diluted earnings per Unit

0.06

0.59

0.24

0.26






Distributable Cash / Distributions / Payout Ratio





Cash flows generated from operating activities

9,659

9,759

9,220

8,919

BPI Class B Unit entitlement

(740)

(1,006)

(1,038)

(1,044)

Interest paid on long-term debt

(825)

(848)

(914)

(799)

Current income tax expense

(2,603)

(2,511)

(2,390)

(2,422)

Current income tax paid

2,770

2,456

2,311

2,585

Distributable Cash

8,261

7,850

7,189

7,239

Distributions paid

6,848

6,909

6,585

8,329

Payout Ratio

82.9 %

88.0 %

91.6 %

115.1 %

Distributable Cash per Unit

0.387

0.365

0.334

0.336

Distributions paid per Unit

0.321

0.321

0.306

0.387






Other





Same Restaurant Sales

5.3 %

6.6 %

25.7 %

24.5 %

Number of restaurants opened

0

0

0

0

Number of restaurants closed

0

1

1

3

SUMMARY OF QUARTERLY RESULTS (continued)


Q3 2022

Q2 2022

Q1 2022

Q4 2021

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





Number of restaurants in Royalty Pool

383

383

383

387

Franchise Sales reported by restaurants in the Royalty Pool

229,848

219,384

178,602

183,177






Royalty income

9,194

8,775

7,144

7,327

Distribution Income

3,027

2,895

2,363

2,423

Total revenue

12,221

11,670

9,507

9,750

Administrative expenses

(334)

(349)

(338)

(327)

Interest expense on debt and financing fees

(886)

(977)

(939)

(939)

Interest expense on Class B Unit liability

(835)

(733)

(565)

(1,037)

Interest income

31

10

5

7

Profit before fair value gain (loss) and income taxes

10,197

9,621

7,670

7,454

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

2,183

(14,622)

11,566

11,294

Fair value (loss) gain on Class B Unit liability

(972)

6,515

(5,154)

(5,032)

Fair value gain on Swaps

572

1,337

1,876

730

Current and deferred income tax expense

(2,478)

(1,075)

(3,059)

(1,804)

Net and comprehensive income

9,502

1,776

12,899

12,642






Basic earnings per Unit

0.44

0.08

0.60

0.59

Diluted (loss) earnings per Unit

0.41

(0.20)

0.60

0.59






Distributable Cash / Distributions / Payout Ratio





Cash flows generated from operating activities

9,667

9,118

6,651

8,524

BPI Class B Unit entitlement

(1,083)

(888)

(664)

(858)

Interest paid on long-term debt

(939)

(954)

(884)

(892)

Principal repayments on long-term debt

-

(1,000)

(500)

(679)

Current income tax expense

(2,438)

(2,285)

(1,769)

(1,814)

Current income tax paid

2,270

2,185

1,864

1,790

Distributable Cash

7,477

6,176

4,698

6,071

Distributions paid

6,133

5,488

5,488

5,488

Payout Ratio

82.0 %

88.9 %

116.8 %

90.4 %

Distributable Cash per Unit

0.347

0.287

0.218

0.282

Distributions paid per Unit

0.285

0.255

0.255

0.255






Other





Same Restaurant Sales

8.4 %

64.9 %

39.1 %

25.5 %

Number of restaurants opened

0

0

0

0

Number of restaurants closed

1

0

2

2

SHORT-TERM OUTLOOK

The two principal factors that affect SRS are changes in guest traffic and changes in average guest cheque. BPI's and BP Canada LP's strategies to drive higher guest traffic include attracting a wide variety of guests into the restaurant, sports bar and take-out and delivery parts of each location, offering a compelling value proposition to guests and leveraging a larger marketing budget versus the previous year along with a revised calendar of national and local store promotions. Increased average cheque levels are expected to be achieved through a combination of culinary innovation and menu re-pricing.

The success of BPI, BP Canada LP and Boston Pizza restaurants, and the amount of Franchise Sales, Royalty, Distribution Income and Distributable Cash available for distribution to Unitholders, are dependent upon many economic factors, including impacts of inflation, increases in interest rates, unemployment rates, consumer confidence, recession, supply chain disruption, labour availability and other globally disruptive events. Despite the current state of economic uncertainty, Boston Pizza restaurants have been able to generate solid Franchise Sales and offer affordable dining options, both on and off-premise, for guests in economically uncertain times. As demonstrated during COVID-19, BPI, BP Canada LP and Boston Pizza restaurants have the ability to adapt to changes in operating environments and economic conditions. However, with supply chain challenges, rising interest rates, increasing input costs and labour shortages impacting most of the restaurant industry, together with widespread focus on sustainability and climate related issues, BPI's management remains cautious. The focus of BPI's management is to adapt the business to mitigate these challenges and maintain the positive sales momentum achieved in 2022 and the first three quarters of 2023.

The trustees of the Fund will continue to closely monitor the Fund's available cash balances given the uncertain economic outlook and industry challenges.

Forward Looking Information

Certain information in this press release constitutes "forward-looking information" that involves known and unknown risks, uncertainties, future expectations and other factors which may cause the actual results, performance or achievements of the Fund, Boston Pizza Holdings Trust, Boston Pizza Royalties Limited Partnership, Boston Pizza Holdings Limited Partnership, Boston Pizza Holdings GP Inc., Boston Pizza GP Inc., BPI, BP Canada LP, Boston Pizza Canada Holdings Inc., Boston Pizza Canada Holdings Partnership, Boston Pizza restaurants, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Fund or its trustees expect or anticipate will or may occur in the future, including such things as, continuing to work diligently to support franchisees and continuing positive sales momentum in the challenging market conditions, Boston Pizza restaurants generally experiencing higher Franchise Sales levels during the summer months when restaurants open their patios and benefit from increased tourist traffic, BPI and BP Canada LP's ability to implement strategies driving higher guest traffic and increased average cheque levels, continued improved performance and guest traffic due to the elimination of government-imposed COVID-19 restrictions in the Canadian restaurant industry, continued delivery of exceptional guest experiences and innovative menu selections, the persistence of economic uncertainty and inflationary pressures in 2023, prevailing macroeconomic conditions and industry challenges, the success of BPI, BP Canada LP and Boston Pizza restaurants, and the amount of Franchise Sales, Royalty, Distribution Income and Distributable Cash available for distribution to Unitholders, being dependent upon many economic factors, including impacts of inflation, increases in interest rates, unemployment rates, consumer confidence, recession, supply chain disruption, labour availability and other globally disruptive events, continued ability to offer affordable dining options, Boston Pizza restaurants having the ability to adapt to changes in operating environments and economic conditions, BPI's management remaining cautious, the focus of BPI's management being to adapt the business to mitigate challenges and maintain the positive sales momentum achieved in 2022 and the first three quarters of 2023, and the trustees of the Fund continuing to closely monitor the Fund's available cash balances given the uncertain economic outlook and industry challenges, and other such matters are forward-looking information. When used in this press release, forward-looking information may include words such as "anticipate", "estimate", "may", "will", "expect", "believe", "plan", "should", "continue" and other similar terminology. The material factors and assumptions used to develop the forward-looking information contained in this press release include the following: the Fund maintaining the same distribution policy, expectations related to future general economic conditions, expectations related to guest traffic and average guest cheques, expectations that the Fund's Payout Ratio is typically higher in the first and fourth quarter, Boston Pizza restaurants maintaining operational excellence, the Fund having sufficient cash on hand to fund repurchases under the NCIB, and that COVID-19 and its negative impacts will eventually dissipate. Risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by the forward-looking information contained herein, relate to (among others): competition, demographic trends, consumer preferences and discretionary spending patterns, business and economic conditions, interest rates and inflationary pressures, legislation and regulation, reliance on operating revenues, accounting policies and practices, the results of operations and financial condition of BPI, BP Canada LP and the Fund, pandemics and national health crises, in particular COVID-19, extreme weather events, as well as those factors discussed under the heading "Risks and Uncertainties" in the most recent Annual Information Form of the Fund. This information reflects current expectations regarding future events and operating performance and speaks only as of the date of this press release. Except as required by law, neither the Fund nor BPI assumes any obligation to update previously disclosed forward-looking information. For a complete list of the risks associated with forward-looking information and the Fund's business, please refer to the "Risks and Uncertainties" and "Note Regarding Forward-Looking Information" sections included in the most recent Annual Information Form of the Fund available at www.sedarplus.ca and www.bpincomefund.com.

The trustees of the Fund have approved the contents of this news release.

® Boston Pizza Royalties Limited Partnership. All Boston Pizza registered Canadian trademarks and unregistered Canadian trademarks containing the words "Boston", "BP", and/or "Pizza" are trademarks owned by the Boston Pizza Royalties Limited Partnership and licensed by the Boston Pizza Royalties Limited Partnership to Boston Pizza International Inc.


© Boston Pizza International Inc. 2023.

Notes – Non-GAAP, Specified Financial Measures and Other Information

  1. "Franchise Sales" is the basis upon which Royalty and Distribution Income are payable, and means the gross revenue: (i) of the corporate Boston Pizza restaurants in Canada owned by BPI that are in the Royalty Pool; and (ii) reported to BP Canada LP by franchised Boston Pizza restaurants in Canada that are in the Royalty Pool, without audit or other form of independent assurance, and in the case of both (i) and (ii), after deducting revenue from the sale of liquor, beer, wine and revenue from BP Canada LP approved national promotions and discounts and excluding applicable sales and similar taxes. Nevertheless, BP Canada LP periodically conducts audits of the Franchise Sales reported to it by its franchisees, and the Franchise Sales reported herein include results from sales audits of earlier periods. Franchise Sales is reported on a quarterly basis in the Fund's financial statements, however, the financial statements do not report it on a monthly basis. Therefore, when disclosed on a monthly basis herein, this is a supplementary financial measure under National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure ("NI 52‑112"). The Fund believes that Franchise Sales for this month provides useful information to investors regarding recent performance of Boston Pizza.

  2. "Same Restaurant Sales" or "SRS" is a supplementary financial measure under NI 52-112 and therefore may not be comparable to similar measures presented by other issuers. Prior to the fourth quarter of 2021, the Fund defined SRS as the change in gross revenues of Boston Pizza restaurants in the Royalty Pool as compared to the gross revenues for the same period in the previous year (where restaurants were open for a minimum of 24 months). Commencing with the fourth quarter of 2021, the Fund defines SRS as the change in Franchise Sales of Boston Pizza restaurants in the Royalty Pool as compared to the Franchise Sales for the same period in the previous year (where restaurants were open for a minimum of 24 months). The Fund believes that the current method of calculating SRS provides Unitholders more meaningful information regarding the performance of Boston Pizza restaurants since Royalty and Distribution Income are payable to the Fund by BPI and BP Canada LP on Franchise Sales and not gross revenues of Boston Pizza restaurants. All historical SRS figures contained in this press release have been restated to conform to the current method of calculating SRS. 

  3. "Distributable Cash" is a non-GAAP financial measure under NI 52-112. Distributable Cash is not a standardized financial measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. The Fund defines Distributable Cash to be, in respect of any particular period, the Fund's cash flows generated from operating activities for that period (being the most comparable financial measure in the Fund's primary financial statements) minus (a) BPI's entitlement in respect of its Class B Units in respect of the period (see note 8 below), minus (b) interest paid on long-term debt during the period, minus (c) principal repayments on long-term debt that are contractually required to be made during the period, minus (d) the current income tax expense in respect of the period, plus (e) current income tax paid during the period (the sum of (d) and (e) being "SIFT Tax on Units"). Management believes that Distributable Cash provides investors with useful information about the amount of cash the Fund has generated and has available for distribution on the Units in respect of any period. The tables in the "Financial Highlights" section of this press release provide a reconciliation from this non-GAAP financial measure to cash flows generated from operating activities, which is the most directly comparable IFRS measure. Current income tax expense in respect of any period is prepared using reasonable and supportable assumptions (including that the base rate of SIFT Tax will not increase throughout the calendar year and that certain expenses of the Fund will continue to be deductible for income tax purposes), all of which reflect the Fund's planned courses of action given management's judgment about the most probable set of economic conditions. There is a risk that the federal government of Canada could increase the base rate of SIFT Tax or that applicable taxation authorities could assess the Fund on the basis that certain expenses of the Fund are not deductible. Investors are cautioned that if either of these possibilities occurs, then the actual results for this component of Distributable Cash may vary, perhaps materially, from the amounts used in the reconciliation.

  4. "Distributable Cash per Unit" is a non-GAAP ratio under NI 52-112. Distributable Cash per Unit is not a standardized financial measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. The Fund defines Distributable Cash per Unit for any period as the Distributable Cash generated in that period divided by the weighted average number of Units outstanding during that period. Management believes that Distributable Cash per Unit provides investors with useful information regarding the amount of cash per Unit that the Fund has generated and has available for distribution in respect of any period.

  5. "Payout Ratio" is a non-GAAP ratio under NI 52-112. Payout Ratio is not a standardized financial measure under IFRS and may not be comparable to similar financial measures disclosed by other issuers. The Fund defines Payout Ratio for any period as the aggregate distributions paid by the Fund during that period divided by the Distributable Cash generated in that period. Management believes that Payout Ratio provides investors with useful information regarding the extent to which the Fund distributes cash generated on Units.

  6. Boston Pizza Royalties Limited Partnership ("Royalties LP") licenses BPI the right to use various Boston Pizza trademarks in return for BPI paying Boston Pizza Royalties Limited Partnership a royalty equal to 4% of Franchise Sales of Boston Pizza restaurants (the "Royalty") in the Fund's royalty pool (the "Royalty Pool").

  7. "Distribution Income" is income received indirectly by the Fund on Class 1 LP Units and Class 2 LP Units of BP Canada LP. See the "Overview – Purpose of the Fund / Sources of Revenue" section of the Fund's MD&A for the Period and YTD for more details.

  8. "BPI Class B Unit entitlement" is a supplementary financial measure under NI 52-112 and therefore may not be comparable to similar measures presented by other issuers. The BPI Class B Unit entitlement is the interest expense on Class B Units in respect of a period plus management's estimate of how much cash BPI would be entitled to receive pursuant to the limited partnership agreement governing Royalties LP (a copy of which is available on www.sedarplus.ca) on its Class B Units if Royalties LP fully distributed any residual cash generated in respect of that period after the Fund pays interest on long-term debt, principal repayments on long-term debt and SIFT Tax on Units in respect of that period. Management believes that the BPI Class B Unit entitlement is an important component in calculating Distributable Cash since it represents the amount of residual cash generated that BPI would be entitled to receive and therefore would not be available for distribution to Unitholders. Management prepares such estimate using reasonable and supportable assumptions that reflect the Fund's planned courses of action given management's judgment about the most probable set of economic conditions.

SOURCE Boston Pizza Royalties Income Fund

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