Pizza Pizza Royalty Corp. ANNUAL GENERAL MEETING May 29, 2013 1
Elizabeth Wright, Board Chair 2
Forward-Looking Statement This presentation will contain forward-looking statements. Investors should be aware that any forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those disclosed here today. Investors are directed to the Company s Annual Information Form for a full discussion of risks. Management does not intend to discuss any undisclosed material information today. 3
Paul Goddard, Chief Executive Officer, Pizza Pizza Limited 4
ROYALTY REVENUES 6% of System Sales $24M in Royalty Revenue 9% of System Sales $7M in Royalty Revenue Licence and royalty agreements with Pizza Pizza Limited provide cash flow stability to investors with limited operational risks. 5
15 Pizza Pizza Same Store Sales Growth and Cash Reserve ($,000 s) $5,000 10 $4,000 5 $3,000 0 5.4 4.5 4.6 1.7 0 2.6 2.7 $2,000-5.9-5 $1,000-10 2005 2006 2007 2008 2009 2010 2011 2012 $0 6
$0.100 MONTHLY SHAREHOLDER DIVIDEND Since Initial Public Offering $0.090 $0.080 $0.070 $0.060 $0.0667 $0.0681 $0.0695 $0.0710 $0.0730 $0.0760 $0.0775 Tax $0.0584 +2.7% $0.0600 +4.2% $0.0625 +4% $0.0650 $0.050 $0.040 $0.030 $0.020 $0.010 $0 July-05 Nov-05 Feb-06 July-06 Jan-07 Sept-07 Jun-08 Jan-11 May-12 Jan -13 Jun-13 7
PZA compared to S&P/TSX Composite Total Return Index ($100 invested for last five years) $200.00 $150.00 $100.00 $50.00 $0 Jan-08 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Pizza Pizza Royaltiy Corp. S&P/TSX Composite Total Return Index 8
Pizza Pizza Limited - Business Fundamentals Canada s #1 pizzeria Seasoned management team Strong and proven business model Powerful brands Geographic diversification Modernized restaurant chain Innovation leader since 1967...the private operating company pays a monthly royalty for use of trademarks... 9
Restaurant Success Pizza Pizza provides restaurant operators a high level of service: Centralized food distribution - Volume purchasing Pizza Pizza Training Centre - Operator training Turn-key Operation, plus Centralized Financing Real estate site selection and lease renewal Centralized payment of all operating expenses including rents, mortgages, and sales taxes 10
Number of Restaurants 700 560 420 Pizza 73 Non-Traditional - Pizza Pizza Traditional - Pizza Pizza 483 146 494 156 505 165 531 176 616 57 192 640 72 199 671 81 216 695 690 697 88 89 91 228 225 220 280 317 140 337 338 340 355 367 369 374 379 376 386 0 03 04 05 06 07 08 09 10 11 Mar 13 11
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Canada s #1 Pizza Franchise Building a national presence outside our core Alberta and Ontario markets 13
Non-traditional Partnerships build Brand awareness Sponsorships Non-traditional locations Special Events Partnerships with major sports arenas, entertainment venues and special community events provide increased marketing and business opportunities 14
U LT R A THINS 15
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Value-oriented Menu Offerings 17
Partnering innovation with consumer convenience leads to sales growth 18
Social Responsibility Our fundraising events have raised over $1,000,000 for various charities including the Children s Miracle Network. 19
Curt Feltner Chief Financial Officer, Pizza Pizza Limited 20
Shareholder Information $370M Market Cap. TSX exchange listing PZA Publicly traded shares outstanding 21,818,392 Fully Diluted shares 29,934,276 Pizza Pizza Limited s ownership 27.1% Current monthly dividend $0.0625 Recent trading price $12.40 Recent yield 6.1% Credit facility matures Dec 2016 $47M Debt to EBITDA ratio at 3/31/13 1.54 21
PZA SHARE PERFORMANCE FOR LAST 12 MONTHS June 2013 distribution increase Jan 2013 distribution increase May 2012 distribution increase 22
2012 Performance Highlights Royalty Pool System sales $482 M SSSG 2.7% Number of restaurants in Royalty Pool: 690 $4.6 million working capital reserve Adjusted earnings per share $0.795 Dividends per Fund share $0.7136 Pay-out ratio = 90% 23
Q1 2013 -- Performance Highlights System sales of Royalty Pool $121 M Number of restaurants in Royalty Pool: 694 Adjusted earnings per share $0.208 Dividend per share $0.1875 SSSG 3.5% Pay-out ratio = 96% $4.7 million working capital reserve 24
PIZZA PIZZA LIMITED - both brands SAME STORE SALES GROWTH - QUARTERLY 6% 4% 4% 5% 5.5% 4.3% 5.1% 4.9% 3.7% 4.5% 3% 2.9% 3.4% 3.5% 3.2% 2% 1.3% 2.2% 0.8% 1.3% 2.2% 1.4% 1.3% 0% 0% -0.6% -2% -2.3% -4% -6% -8% Sept-06 Dec-06 Mar-07 Jun-07 Sept-07 Dec-07 Mar-08 Jun-08 Sept-08 Dec-08-4.3% -7.6% -7.8% Mar-09 Jun-09-4% Sept-09 Dec-09 Mar-10 Jun-10 Sept-10 Dec-10 Mar-11 Jun-11 Sept-11 Dec-11 Mar-12 Jun-12 Sept-12 Dec-12 Mar-13 25
500 375 250 PIZZA PIZZA LIMITED ANNUAL SYSTEM SALES (dollars in millions) 295 Pizza 73 Restaurants Pizza Pizza Restaurants 294 316 335 361 36 380 416 86 390 476 460 465 480 454 79 79 73 76 381 381 389 401 125 0 0 02 0 03 0 04 0 05 0 06 07 08 09 10 11 12 26
Conversion to a Corporation Benefits of Corporate structure Simply the organization structure for investors the story is simplified Simplify financial reporting more transparent earnings per share now fully diluted measurable to industry competitors Enhanced access to capital markets if needed in the future 27
Org. Chart - Post Conversion Shareholders Pizza Pizza Royalty Corp. 28
Org. Chart - Post Conversion Shareholders Pizza Pizza Limited Pizza Pizza Royalty Corp. 29
Org. Chart - Post Conversion Shareholders Pizza Pizza Limited Pizza Pizza Royalty Corp. 27.1% 72.9% Pizza Pizza GP Inc. Licence and Royalty Agreement Pizza Pizza Royalty Limited Partnership Bank Indebtedness Pizza Pizza Rights and Pizza 73 Rights 30
Pizza Pizza Royalty Corp. 31