Tim Hortons stock jumps on earnings, bakery sale

by Eric Schroeder
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OAKVILLE, ONT. — Tim Hortons Inc.’s stock price jumped nearly 8% on Aug. 12 to $36.64, its highest level since it reached $36.89 on Jan. 7, 2008, following the release of second-quarter financials as well as news that the company is selling its 50% interest in Maidstone Bakeries to its European joint venture partner Aryzta AG,
Tim Hortons posted net income of C$94,121,000 (C$90,820,000), equal to C$0.54 per share on the common stock, in the second quarter ended July 4, up 21% from C$77,760,000, or C$0.43 per share, in the previous year’s second quarter. Net sales rose 6% to C$639,862,000 ($617,446,000). Same-store sales grew 6.4% in Canada and 3.1% in the United States.

“Our quarterly same-store sales performance in Canada was the best in several quarters, and the strength of our same-store sales in the U.S. was gratifying given continued economic challenges in that market,” said Don Schroeder, president and chief executive officer. “We continue to make excellent progress on our growth initiatives and we believe our business is well positioned to continue to drive shareholder value.”

The U.S. segment had operating income of C$3,580,000 ($3,458,000) in the second quarter, up 14% from C$3,141,000 in the same period a year ago. Net revenues in the United States, meanwhile, fell 22% to C$30,135,000 ($29,097,000).

Tim Hortons said transaction growth in the United States was driven by continued menu innovation, value promotions and to a lesser extent Cold Stone Creamery co-branded locations.

Twenty-one restaurants were opened in the United States during the quarter, including 15 self-serve kiosks.
For the six months ended July 4, overall net income at Tim Hortons was C$173,010,000 ($166,930,000), or C$0.99 per share, up 20% from C$144,199,000, or C$0.80 per share, in the same period of fiscal 2009. Net sales totaled C$1,222,474,000 ($1,179,750,000), up 5% from C$1,161,166,000.

Earlier in the day, Tim Hortons said it sold its 50% stake in Maidstone Bakeries to Zurich, Switzerland-based Aryzta AG for C$475 million ($457.9 million). Maidstone, which operates a 400,000-square-foot bakery in Brantford, Ont., was designed, constructed and commissioned in partnership with Tim Hortons in 2002-03, and it allowed Tim Hortons to provide fresh baked foods across all parts of the day under the company’s “always fresh” bakery concept. The facility has the capability to produce a broad range of products, including sandwich carriers, handheld snacks, and breakfast products.

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