Tim Hortons’ (THI) CEO Marc Caira on Q2 2014 Results – Earnings Call Transcript

August 26, 2014 4:27 am | By More

Source: Seeking Alpha

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Tim Hortons (NYSE:THI)

Q2 2014 Earnings Call

August 06, 2014 2:30 pm ET

Executives

Scott Bonikowsky – Senior Vice President of Corporate, Public & Government Affairs

Marc Caira – Executive Chairman, Chief Executive Officer, President and Director

Cynthia Jane Devine – Chief Financial Officer and Principal Accounting Officer

Analysts

Andrew Michael Charles – BofA Merrill Lynch, Research Division

Irene Nattel – RBC Capital Markets, LLC, Research Division

Perry Eugene Caicco – CIBC World Markets Inc., Research Division

David Hartley – Crédit Suisse AG, Research Division

James Durran – Barclays Capital, Research Division

Michael Van Aelst – TD Securities Equity Research

John S. Glass – Morgan Stanley, Research Division

Peter Sklar – BMO Capital Markets Canada

David Carlson – KeyBanc Capital Markets Inc., Research Division

Derek Dley – Canaccord Genuity, Research Division

Keith Howlett – Desjardins Securities Inc., Research Division

Stephen Anderson – Miller Tabak + Co., LLC, Research Division

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Tim Hortons’ Second Quarter 2014 Analyst Conference Call. [Operator Instructions] As a reminder, this conference is being recorded and will be available on the Investor Relations section of the Tim Hortons’ website following the call.

It is now my pleasure to turn the conference over to Scott Bonikowsky, Senior Vice President of Corporate Affairs and Investor Relations at Tim Hortons. Please go ahead.

Scott Bonikowsky – Senior Vice President of Corporate, Public & Government Affairs

Thanks, operator, and welcome everyone to the Tim Hortons’ second quarter 2014 analyst call. We released our results earlier this morning before the market opened. To access our earnings material and the presentation supporting today’s discussion, please visit the Investor Relations section of our website and click on the Events and Presentations tab. This material will be available for a period of about 1 year.

Marc Caira, our President and Chief Executive Officer; along with Cynthia Devine, our Chief Financial Officer, will be joining the call this afternoon. We will be pleased to take questions after our prepared remarks [Operator Instructions].

Please note that we may provide forward-looking information this afternoon including: discussions about planned initiatives; our strategic plan; future performance; results and outlook based on our current expectations; assumptions and information, including information about our restaurant development plans, same-store sales expectations, earnings performance, 2014 outlook and targets and operational initiatives.

Forward-looking statements are based on a number of assumptions that contain risks and uncertainties, and our actual results and activities could differ materially from these statements. Please refer to the Safe Harbor statement on our website and on Slide 3 of today’s supporting presentation and refer to the risks and assumptions on our public disclosures.

All Tim Hortons’ results are presented in accordance with U.S. GAAP, and I’ll remind you we report in Canadian dollars unless otherwise noted.

I will now turn it over to Marc Caira. Marc?

Marc Caira – Executive Chairman, Chief Executive Officer, President and Director

Thank you, Scott, and good afternoon, everyone. I am pleased to report very positive progress in several key areas of our business in the second quarter. We are seeing momentum in both major markets supported by the early stage execution of our strategic roadmap. I have been particularly pleased with our success in growing average check, delivering menu innovation and implementing new technology.

Our same-store sales growth in the second quarter was 2.6% in Canada and 5.9% in the U.S. These growth rates are significantly better than we have seen in recent quarters. In fact, in both markets, this was the best growth we have reported since 2012.

Strong sales performance contributed to a solid growth and profitability. Operating income was up 8.9% and earnings per share increased 13.6%. Our share repurchase program also contributed to our strong EPS growth.

It is encouraging to see momentum in our business in an environment that remains very competitive. We outlined a new strategic plan in February of this year. We knew we needed to work hard to establish additional traction in the business, especially in this new era of low growth, competitive intensity, evolving consumer demands and changing technology. Achieving the goals we set out in the strategic plan will be a long-term process. We are less than 6 months into our 5-year plan, so naturally there’s still much work to be done. However, as we clearly focus on the long term; it is imperative that we also deliver short-term results to help us to lay the foundation for long-term sustainable profitable growth. I believe we are seeing some positive early progress on the initiatives we are focused on to this point.

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