Sales for Canada's Oldest Full-service Restaurant Company Sizzles after Acquisitions
VAUGHAN, ON -- Cara Operations Limited, announced results for the fourth quarter and year ended December 31, 2017.
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"In 2017, we continued to grow sales, Operating EBITDA and earnings before income tax, all contributing to another successful year. In the fourth quarter, Operating EBITDA and earnings before tax were the highest result achieved since our IPO back in 2015, even after removing the benefit of the 53rd week in 2017," said Bill Gregson, Chief Executive Officer.
In the fourth quarter Same Restaurant Sales grew 2.5%, driven by the success of our renovation program, menu enhancements, investments in digital marketing, and by strong performance in Quebec and improvements in Alberta. Total System Sales grew to $774.9 million in the quarter, an increase of $133.8 million or 20.9% and $85.6 million or 13.4% after removing the benefit of the 53rd week. Operating EBITDA was $58.5 million in the quarter, compared to $46.7 million for the 13 weeks ended December 25, 2016, an improvement of $11.8 million or 25.3% and $8.3 million or 17.8% with the 53rd week excluded. Earnings before tax was $37.0 million compared to $30.3 million last year, an increase of $6.7 million or 22.1%. Fourth quarter Operating EBITDA margin on System Sales increased to 7.6% from 7.3% in 2016, within our long-range target of 7%-8% and the best result of any quarter in 2017.
Looking ahead to 2018, the Keg will contribute over $600 million of annual System Sales and approximately $23.5 million of annual Operating EBITDA to our results. This takes us to $3.4 billion of total annual System Sales and approximately $211 million of proforma Operating EBITDA, well within our 2020 to 2022 target ranges of $2.9 to $3.7 billion for System Sales and $203 to $296 million for Operating EBITDA. In addition, this marks the start of a new chapter for Cara's premium brands as we introduce key success factors experienced by the Keg, under the leadership of David Aisenstat.
Proforma the Keg transaction, Cara's Debt to EBITDA ratio will be approximately 2.2x. With the Company's strong balance sheet and growing cash flows, Cara is well positioned to pursue more strategic acquisitions and to explore alternatives to return more capital to its shareholders including continuation of its NCIB and increases to the Company's dividend rate. As such, Cara will be increasing its upcoming 2017 fourth quarter dividend by 5% to 10.68 cents per share.
System Sales grew $133.8 million to $774.9 million for the 14 weeks ended December 31, 2017 as compared to 13 weeks ended December 25, 2016, representing an increase of 20.9% or 13.4% with the 53rd week excluded. For the 53 weeks ended December 31, 2017, System Sales grew $737.8 million to $2,779.5 million compared to 52 weeks ended December 25, 2016, representing an increase of 36.1% or 33.8% with the 53rd week excluded. The increase in System Sales is primarily related to the addition of St-Hubert in September 2016, Original Joe's in November 2016, Pickle Barrel in December 2017, Same Restaurant Sales ("SRS") increases, and the addition of 56 new restaurants that opened in 2017, partially offset by restaurant closures. The System Sales impact from the additional week in 2017 was $48.2 million.
SRS Growth for the 14 and 53 weeks ended December 31, 2017 was 2.5% and 0.7%, respectively, compared to the same 14 and 53 weeks in 2016. The improvement in trend to positive SRS is primarily driven by sales increases from renovated restaurants, menu enhancements, digital marketing, strong performance in Quebec and improvements in Alberta. SRS excludes the impact from the Original Joe's transaction that was completed on November 28, 2016, the Burger's Priest investment that was completed on June 1, 2017, and the Pickle Barrel transaction that was completed on December 1, 2017. These banners will be included in SRS for 2018.
SOURCE Cara Operations Limited
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