BOSTON PIZZA ROYALTIES INCOME FUND ANNOUNCES 2023 FOURTH QUARTER AND ANNUAL RESULTS AND 5.6% INCREASE TO MONTHLY CASH DISTRIBUTIONS TO UNITHOLDERS

Toronto Stock Exchange: BPF.UN

HIGHLIGHTS

• Franchise Sales1 of $227.7 million for the Period and $925.7 million for the Year, representing an increase of 0.2% and 8.3%, respectively, versus the same periods one year ago.
• Same Restaurant Sales2 of 0.6% for the Period and 8.7% for the Year.
• Cash flows generated from operating activities of $9.3 million for the Period and $37.9 million for the Year, representing an increase of 4.1% and 10.4%, respectively, versus the same periods one year ago.
• Distributable Cash3 increased 1.8% for the Period and 19.8% for the Year, and Distributable Cash per Unit4 increased 3.0% for the Period and 20.4% for the Year.
• Payout Ratio5 of 92.7% for the Period and 88.6% for the Year. Cash balance at the end of the Period was $4.6 million.
• On April 5, 2023, the Fund increased its monthly distribution rate to $0.107 per unit of the Fund ("Unit") for the March 2023 distribution from the previous monthly rate of $0.102 per Unit, being an increase of $0.005 per Unit or 4.9%.
• In December 2023, the first new Boston Pizza restaurant opened since 2020.
• On February 13, 2024, the trustees of the Fund declared a distribution for the period of January 1, 2024 to January 31, 2024 of $0.113 per Unit, which is payable on February 29, 2024 to unitholders of the Fund ("Unitholders") of record on February 21, 2024. This is an increase of $0.006 per Unit, or 5.6%, from the previous monthly distribution rate of $0.107 per Unit. On an annualized basis, the new monthly distribution rate equates to $1.356 per Unit compared to $1.284 per Unit for the previously monthly distribution rate.

VANCOUVER, BC, Feb. 14, 2024 /CNW/ - Boston Pizza Royalties Income Fund (the "Fund") and Boston Pizza International Inc. ("BPI") reported financial results today for the fourth quarter period from October 1, 2023 to December 31, 2023 (the "Period") and January 1, 2023 to December 31, 2023 (the "Year"). A copy of this press release, the audited annual consolidated financial statements, related Management's Discussion and Analysis ("MD&A") of the Fund and BPI and the Annual Information Form of the Fund are available at www.sedarplus.ca and www.bpincomefund.com. The Fund will host a conference call to discuss the results on February 14, 2024 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 March 14, 2024 by dialling 1-800-319-6413 or 604-638-9010 and entering the access code: 0605 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 the Year.

"We are pleased to announce a 5.6% increase to the monthly cash distribution rate to Unitholders to a new rate of $0.113 per Unit the highest level since COVID-19." said Marc Guay, Chair of the Board of Trustees. "The strong financial performance of Boston Pizza International Inc. and the Fund in 2023, along with the Fund's growing cash balance, have enabled the trustees of the Fund to increase the monthly distribution rate payable to Unitholders. While this demonstrates the resiliency of the Boston Pizza system, the trustees of the Fund remain cautious and will continue to closely monitor the Fund's available cash balances and distribution levels, based on our goal of stable and sustainable distribution flow to Unitholders."

In deciding to increase monthly cash distributions from $0.107 per Unit to $0.113 per Unit, the trustees of the Fund considered, among other factors, the recent financial performance of the Fund, Boston Pizza International Inc. and Boston Pizza restaurants in the Fund's Royalty Pool, the Fund's cash position and debt repayment obligations, internal financial projections for the Fund and Boston Pizza restaurants in the Fund's Royalty Pool for the remainder of 2024 and beyond.

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 strong Franchise Sales in the first quarter of 2023 carried on throughout 2023 despite ongoing economic uncertainty, inflationary pressures and high interest rates," said Jordan Holm, President of BPI. "We ended 2023 with the first opening of a new Boston Pizza restaurant since 2020. This significant landmark is a testament to the strength and future growth of the Boston Pizza brand. We are dedicated to the continued success of the Boston Pizza brand and our restaurant network."

PERIOD AND YEAR RESULTS

SRS, a key driver of distribution growth for Unitholders, was 0.6% for the Period compared to 24.5% reported in the fourth quarter of 2022. SRS for the Period was principally due to an increase in average guest cheque due to menu pricing. SRS was 8.7% for the Year compared to 30.4% reported in 2022. SRS for the Year was principally due to increases in restaurant guest traffic compared to 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 2021, 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. The COVID-19 restrictions that existed during 2021 were a significant factor in why SRS in 2022 is greater than SRS in 2023.

Franchise Sales of Boston Pizza restaurants in the Royalty Pool were $227.7 million for the Period and $925.7 million for the Year compared to $227.2 million and $855.0 million, respectively, for the same periods in 2022. The $0.5 million increase in Franchise Sales for the Period and $70.7 million increase in Franchise Sales for the Year were primarily due to positive SRS.

The Fund's net and comprehensive income was $5.2 million for the Period compared to $6.4 million for the fourth quarter of 2022. The $1.2 million decrease in the Fund's net and comprehensive income for the Period compared to the fourth quarter of 2022 was primarily due to a $1.2 million increase in fair value loss and $0.2 million increase in income tax expense for the Period, partially offset by a $0.2 million decrease in interest expense on Class B Unit liability. The Fund's net and comprehensive income was $29.6 million for the Year compared to $30.6 million in 2022. The $1.0 million decrease in the Fund's net and comprehensive income for the Year compared to the same period in 2022 was primarily due to a $3.5 million increase in fair value loss and $1.3 million increase in income tax expense for the period, partially offset by a $3.7 million increase in Royalty6 and Distribution Income7.

The Fund's cash flows generated from operating activities for the Period was $9.3 million compared to $8.9 million in the fourth quarter of 2022. The increase of $0.4 million was primarily due to an increase in changes in working capital of $0.2 million and a decrease in income taxes paid of $0.2 million. The Fund's cash flows generated from operating activities for the Year was $37.9 million compared to $34.4 million in the same period in 2022. The increase of $3.5 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 $0.8 million, partially offset by an increase in income taxes paid of $1.1 million.

The Fund generated Distributable Cash of $7.4 million for the Period compared to $7.2 million for the fourth quarter of 2022. The increase in Distributable Cash of $0.2 million or 1.8% was primarily due to increased cash flows generated from operating activities of $0.4 million, partially offset by a SIFT Tax on Units3 adjustment of $0.2 million. The Fund generated Distributable Cash of $30.7 million for the Year compared to $25.6 million in 2022. The increase in Distributable Cash of $5.1 million or 19.8% was primarily due to increased cash flows generated from operating activities of $3.5 million, lower repayments of debt of $1.5 million and lower interest paid on debt of $0.2 million, partially offset by increased BPI Class B Unit entitlement8 of $0.2 million.

The Fund generated Distributable Cash per Unit of $0.346 for the Period compared to $0.336 per Unit for the fourth quarter of 2022. The increase in Distributable Cash per Unit of $0.010 or 3.0% was primarily attributable to the increase in Distributable Cash outlined above and fewer Units outstanding compared to the same period in 2022 due to the normal course issuer bid through the Toronto Stock Exchange that commenced on June 20, 2023 under which the Fund acquired and cancelled a total of 242,900 Units (the "NCIB"). The Fund generated Distributable Cash per Unit of $1.432 for the Year compared to $1.189 per Unit in 2022. The increase in Distributable Cash per Unit of $0.243 or 20.4% was primarily attributable to the increase in Distributable Cash outlined above and fewer Units outstanding compared to the same period in 2022 due to the NCIB.

The Fund's Payout Ratio for the Period was 92.7% compared to 115.1% in the fourth quarter of 2022. The decrease in the Fund's Payout Ratio for the Period was due to distributions paid decreasing by $1.5 million or 18.0% as a result of the 2022 Special Distribution (defined below) and Distributable Cash increasing by $0.2 million or 1.8%. During the Year, the Fund's Payout Ratio was 88.6% compared to 99.4% in 2022. The decrease in the Fund's Payout Ratio for the Year was due to Distributable Cash increasing by $5.1 million or 19.8%, partially offset by distributions paid increasing by $1.8 million or 6.8%. 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.

DISTRIBUTIONS

During the Period, the Fund declared distributions on the Units in the aggregate amount of $9.1 million or $0.428 per Unit. During the fourth quarter of 2022, the Fund declared distributions on the Units in the aggregate amount of $10.5 million or $0.489 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 fourth quarter of 2022, the Fund paid distributions on the Units in the aggregate amount of $8.3 million or $0.387 per Unit. The amount of distributions declared during the Period decreased by $1.4 million or $0.061 per Unit due to the special one-time cash distribution to Unitholders of $0.085 per Unit, which was declared on December 8, 2022 and was paid on December 30, 2022 (the "2022 Special Distribution"), partially offset by the monthly distribution rate increasing from $0.100 per Unit to $0.102 per Unit commencing with the November 2022 distribution (the "November 2022 Distribution Increase"), and increasing again from $0.102 per Unit to $0.107 per Unit commencing with the March 2023 distribution (the "March 2023Distribution Increase"). Distributions paid during the Period decreased by $1.5 million or $0.066 per Unit due to the 2022 Special Distribution, partially offset by the November 2022 Distribution Increase and the March 2023 Distribution Increase.

During the Year, the Fund declared distributions on the Units in the aggregate amount of $27.3 million or $1.274 per Unit. During the same period in 2022, the Fund declared distributions on the Units in the aggregate amount of $25.8 million or $1.199 per Unit. During the Year, the Fund paid distributions on the Units in the aggregate amount of $27.2 million or $1.269. During the same period in 2022, the Fund paid distributions on the Units in the aggregate amount of $25.4 million or $1.182 per Unit. The amount of distributions declared for the Year increased by $1.5 million or $0.075 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, the November 2022 Distribution Increase and the March 2023 Distribution Increase (collectively, the "2022-2023 Distribution Increases"), partially offset by the 2022 Special Distribution. Distributions paid for the Year increased by $1.8 million or $0.087 per Unit due to the 2022-2023 Distribution Increases, partially offset by the 2022 Special Distribution.

The Fund pays distributions on the Units in respect of any calendar month not later than the last business day of the immediately subsequent month. Consequently, monthly distributions payable by the Fund on the Units in respect of the Period were the October 2023 distribution (which was paid on November 30, 2023), the November 2023 distribution (which was paid on December 29, 2023) and the December 2023 distribution (which was paid on January 31, 2024). Similarly, the distributions payable by the Fund on the Units in respect of any other period are paid in the immediately subsequent month of such period.

On February 13, 2024, the trustees of the Fund declared a distribution for the period of January 1, 2024 to January 31, 2024 of $0.113 per Unit, which will be payable on February 29, 2024 to Unitholders of record on February 21, 2024. This is an increase of $0.006 per unit, or 5.6%, from the previous monthly distribution rate of $0.107 per unit. On an annualized basis, the new monthly distribution rate equates to $1.356 per Unit compared to $1.284 per Unit for the previously monthly distribution rate. Including the January 2024 distribution, which will be paid on February 29, 2024, the Fund will have paid out total distributions of $425.2 million or $26.13 per Unit, which includes 253 monthly distributions and two special distributions.

FINANCIAL SUMMARY

The tables below set out selected information from the Fund's audited annual consolidated financial statements together with other data and should be read in conjunction with the audited annual consolidated financial statements and MD&A of the Fund for the years ended December 31, 2023 and 2022.

SUMMARY OF QUARTERLY RESULTS

SUMMARY OF QUARTERLY RESULTS (continued)

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 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, the opening of a new Boston Pizza restaurant being a testament of the strength and future growth of the Boston Pizza brand, continued improved performance and guest traffic due to the elimination of government-imposed COVID-19 restrictions in the Canadian restaurant industry, sales levels returning to levels consistent with times prior to COVID-19, continued delivery of exceptional guest experiences and innovative menu selections, the persistence of economic uncertainty and inflationary pressures in 2024, 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 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, and the Fund having sufficient cash on hand to fund repurchases under the NCIB. 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.

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 Year 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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