Tim Hortons ( THI) posted a 25% increase in second-quarter earnings Thursday as the Canadian doughnut chain prepares to free itself completely from its corporate parent, Wendy's ( WEN). Price increases, strong sales, new-store growth and a bevy of new coffee and snack products drove strong results for the company, which also announced plans for its first dividend payment. Tim Hortons said it earned C$76.3 million, or 39 Canadian cents a share, for the second quarter, up from C$60.9 million, or 38 Canadian cents a share, a year earlier. The company's shares recently were up 15 cents, or 0.6%, to $25.25, but they're still down roughly 10% from where the stock opened for its much-hyped IPO back in March. The company, which remains 82.75% owned by Wendy's, said revenue for the quarter rose 10% to C$406.8 million. The revenue growth was partly driven by the 30 new restaurants that Tim Hortons opened in the quarter, with 24 in Canada and six in the U.S. On a same-store basis, measuring sales at restaurants that have been open for at least a year, Tim Hortons reported an increase of 6.1% in Canada and 8.4% in the U.S. Price increases powered two to three percentage points of those increases in both countries. "Our emphasis on product innovation, along with our ongoing focus on speed of service, continues to drive very strong results," said Tim Hortons. "We also demonstrated good control of costs across the company, despite absorbing incremental expenses, including the implementation of our new distribution centre and additional resources related to becoming a standalone public company." The company promoted new offerings at its restaurants in the quarter, including caramel-themed baked goods, iced cappuccino with "flavour shots" of butter caramel, French vanilla, hazelnut or raspberry, a chunky chicken salad wrap and strawberry-themed desserts.
Tim Hortons plans to pay a quarterly dividend payment of 7 Canadian cents a share starting on Aug. 24 for shareholders of record Aug. 10. Wendy's plans to spin off the rest of Tim Hortons on Oct. 1, offering 160 million shares of its subsidiary in the public market.