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Tim Hortons Q4 Results Miss Estimates, Guides 2013 Below View; Boosts Dividend

Canadian quick-service restaurant chain Tim Hortons, Inc. (THI,THI.TO) reported Thursday a profit for the fourth quarter that edged down from last year, hurt by corporate reorganization expenses. Meanwhile, same-store sales in both Canada and the U.S. increased. Both earnings per share and quarterly revenues missed analysts' expectations. The company also provided earnings guidance for the full-year 2013, below Street view.

Further, the company boosted its quarterly dividend by 23.8 percent, and announced a new share repurchase program of up to $250 million.

"Menu innovation and other strategic initiatives helped contribute to our growth in the fourth quarter, as shown by improvements in same-store sales growth rates compared to the previous quarter. Economic and operating conditions remain challenging," Chairman, President and CEO Paul House said in a statement.

Oakville, Canada-based Tim Hortons reported net income of C$100.34 million for the fourth quarter, down 2.5 percent from C$102.95 million, while earnings per share remained flat with the prior-year quarter at C$0.65.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of C$0.71 per share for the quarter. Analysts' estimates typically exclude one-time items.

Revenues for the quarter grew 4.1 percent to C$811.6 million from C$779.8 million in the same quarter last year, but missed eleven Wall Street analysts' consensus estimate of C$829.52 million.

Tim Hortons' system-wide sales for the fourth quarter rose 6.4 percent on a constant currency basis, resulting from new restaurant development as well as same-store sales growth in Canada and the U.S.

Rents and royalties grew by 4.8 percent, driven by systemwide sales growth. Franchise fees grew 1.7 percent, due to a higher number of renovations during the quarter, offset by fewer resales and standard restaurant sales.

Same-store sales in Canada grew 2.6 percent compared to last year's increase of 5.5 percent, and same-store sales in the U.S. increased 3.2 percent, on top of a 7.2 percent increase in the same period last year.

Tim Hortons' board of directors also declared a 23.8 percent increase in quarterly dividend to C$0.26 per share, payable on March 19 to shareholders of record as of the close of business on March 4 2013.

For fiscal 2012, the company reported net income of C$402.9 million or C$2.59 per share, higher than C$382.8 million or C$2.35 per share in the prior year. Revenues for the full year grew 9.4 percent to C$3.12 billion from C$2.85 billion in the previous year. Systemwide sales increased 6.9 percent on a constant currency basis.

Street was looking for full-year 2012 earnings of C$2.69 per share on annual revenues of C$3.14 billion.

Looking ahead to fiscal 2013, Tim Hortons expects earnings in a range of C$2.87 to C$2.97 per share, on anticipated same-store sales growth of 2 to 4 percent in Canada and 3 to 5 percent in the U.S. Analysts expect the company to report full-year 2013 earnings of C$3.00 per share.

The company also noted that its board has made significant progress in its external CEO search and currently anticipates appointing a new CEO by early summer, although the process is not yet complete.

"We are focused on leveraging our unique brand position, menu innovation, marketing and operational initiatives to help respond to the operating environment and continue to grow our business," House added.

THI closed Thursday's regular trading session at $49.90, up $0.14 on a volume of 0.19 million shares.

by RTTNews Staff Writer

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