Cara Reports Q4 2016 and 2016 Year-end Results

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VAUGHAN, Ont. — Cara Operations Limited announced results for the fourth quarter and year ended December 25, 2016. According to CEO Bill Gregson, 2016 marks the third-consecutive year of transformational growth for the company. “I am proud to report that Cara management has delivered on our strategy to aggressively grow topline sales, consolidate restaurant brands in the industry, drive synergies, control overhead costs and maximize earnings,”he says.

Total System Sales grew to $2,041.7 million, an increase of $669.8 million, or 48.8 per cent since 2013; EBITDA margin on System Sales increased to 7.1 per cent in 2016 compared to 3.5 per cent in 2013; and net earnings before tax increased to $96.0 million in 2016 compared to a net loss of ($42.2) million in 2013. “This represents an improvement of $138.2 million since 2013,” says Gregson.“In 2016, we completed the acquisition of St-Hubert and Original Joe’s, adding almost $900 million of annual System Sales and $60 million of annualized EBITDA to our network.  At the same time, we continue to be heavily focused on growing sales, profits and EBITDA as a percentage of total system sales in each of our corporate, franchise and central segments and across all of our restaurant brands.”

Gregson says Cara management continues to focus on both short-term and long-term strategies to improve SRS through restaurant renovations, greater emphasis on menu innovation, enhanced guest experiences and expanded e-commerce sales through new or improved off-premise applications for most brands over the next two years. “In addition, we will add several digital-marketing initiatives that are expected to launch in 2017 to reach new customer segments and to increase the frequency of existing ones. In order to accelerate these e-commerce and digital marketing initiatives we will be increasing our investment in technology resources in 2017,” he says.

The company’s assets have more than doubled from $620.2 million in 2013 to $1,316 million in 2016. Through successful acquisitions and integration, improved profitability, overhead cost control and reduced leverage, System Sales have increased to $2,041.7 million in 2016 compared to $1,371.9 million in 2013 — an increase of $669.8 million or 48.8 per cent. The total number of restaurants have increased to 1,237 in 2016 compared to 833 restaurants in 2013, an increase of 404 restaurants or 48.5 per cent; total gross revenue has increased to $463.3 million in 2016 compared to $270.6 million in 2013, an increase of $192.7 million or 71.2 per cent; and selling, general and administrative expenses as a percentage of gross revenue has decreased from 63.8 per cent in 2013 to 46.9 per cent in 2016.

Other highlights released in the report include:
•    Operating EBITDA has increased to $144 million in 2016 compared to $47.9 million in 2013, an increase of $96.1 million or 201per cent;
•    Operating EBITDA Margin on System Sales has increased to 7.1 per cent in 2016 compared to 3.5 per cent in 2013, an increase of 360 basis points or 103-per-cent improvement;
•    Operating income has increased to $102.0 million in 2016 compared to $1.8 million in 2013, an increase of $100.2 million;
•    Earnings before income taxes has increased to $96 million in 2016 compared to a loss of ($42.2) million in 2013, an improvement of $138.2 million;
•    Adjusted Net Earnings has increased to $97 million in 2016 compared to a loss of ($39.5) million in 2013, an improvement of $136.5 million; and
•    The company has reshaped its balance sheet to significantly reduce its leverage ratios from a debt to EBITDA multiple of 6.2x in 2013 to 2.1x at the end of 2016.  The deleveraged balance sheet will allow the company to continue seeking opportunities to invest in its brands as well as pursue strategic acquisitions which will fuel sales and profitable growth while maintaining conservative EBITDA leverage multiples.

The company’s audited consolidated financial statements for the year ended December 25, 2016 and Management’s Discussion and Analysis are available under the company’s profile on SEDAR at www.sedar.com.

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