Tim Hortons outlines plans for Winning in the New Era

 Company unveils five-year strategic roadmap designed to create long-term  profitable growth and above-market returns            --  Significant room for growth in core Canadian business, plan             focuses on accelerating growth over the life of the plan with             new consumer and sales levers         --  U.S. focus on driving profitable growth in core and priority             markets designed to allow the business to be scaled             aggressively by the end of 2018         --  Future international growth will continue with pragmatic,             disciplined approach         --  Targeting a minimum of 800 net new locations across North             America and internationally through to the end of 2018  OAKVILLE, ON, Feb. 25, 2014 /CNW/ - Tim Hortons Inc. (TSX: THI, NYSE: THI)  will today outline at an investor conference our 2014-2018 strategic roadmap  "Winning in the New Era" which will also include our longer-term financial  aspirations.  "Consumers are highly inter-connected and have increasingly evolving needs.   Our strategic roadmap is ambitious but achievable, and is designed to  capitalize on our strengths while allowing us to rapidly adapt to deliver on  those changing consumer needs.  We are energizing the Tim Hortons brand in all  of our geographic markets and we are focusing on driving long-term,  sustainable, profitable growth which we believe will return us to above-market  total return to shareholders," said Marc Caira, president and CEO.  Key themes and trends shape the "new era" facing consumer companies and the  direction of our new strategic plan:         --  the evolution of consumer tastes and preferences, including new             flavours and an increasing desire for balanced menu options to             address interest in health, wellness and nutrition;         --  a continued shift in demographics, including an aging             population, increasing ethnic diversity and the growing             importance of 'Millennials' as a consumer segment; and         --  the emergence of technology and data to drive both consumer             marketing and menu insights and to respond to increasingly             inter-connected consumers.  Each of our geographic markets plays a different and important role in our  strategic plan. We have defined a set of strategic pillars and initiatives  within each business unit that are designed to deliver on our shareholder  value creation commitments.  Canada: Lead, Defend and Grow  We believe that our enviable guest loyalty, strong restaurant base and  differentiated brand position, coupled with initiatives planned in our  strategic plan, will present significant opportunities to grow our Canadian  business over the next five years.         --  Delivering the ultimate guest experience:  defending our core             business by delivering on the ultimate guest experience more             consistently with a focus on flawless restaurant-level             execution.         --  Leveraging technology:  embracing technology as a key business             driver, and becoming one of the industry's most             consumer-centric companies, enabling us to aggregate guest             insights and connect and transact with them in new and             innovative ways.         --  Differentiated innovation / pursuing new occasions:  delivering             differentiated innovation in products and services using guest             insights to anticipate and act upon evolving needs and             expectations.  Our focus includes new proprietary food             platforms that transcend dayparts, coffee and food category             leadership that responds to consumer demand spaces and             occasions, and a focus on consumer interest in health,             nutrition and wellness.         --  Narrowing average cheque gap:  narrowing the gap between our             average cheque and the sector average, while protecting our             core value brand positioning. We believe we have significant             opportunities to increase items per order primarily by focusing             on combination product offers and evaluating size and premium             options.         --  Continued restaurant development / channel extensions:              developing approximately 500 net new locations by 2018, and             additionally extending our brand reach through new restaurant             formats and sizes that target under-represented captive             audience settings such as office, sporting venue and health             care settings.  We also see opportunity, working together with             our restaurant owners, to go beyond our restaurant footprint in             alternative channels.  U.S.: Must-Win Battle  As the largest quick service restaurant market in the world, and one that is  still growing, we are committed to the U.S.  Our proprietary research  demonstrates that we have made significant inroads and progress in building  consumer brand awareness and convenience in our core and priority markets. Our  planned initiatives for the U.S. market include the following:         --  Driving average unit volumes in existing restaurants:             leveraging the strong awareness and convenience we have created             in our core and priority markets to drive average unit volumes             and enhance returns.       o New and differentiated beverages, snacks and meal items, and         compelling combos, to grow order size and make us more relevant to         a broader number of U.S. consumers.       o Leveraging technology, marketing and promotional initiatives to         appeal to consumer needs, different dayparts and occasions, all         designed to drive sales and traffic. Our view on the U.S., similar         to the Canadian market, is that we have significant opportunities         to grow average cheque while delivering value to consumers.         --  Developing restaurants: optimizing our business model and             restaurant-level economics with the goal of generating             increased profit and growth.  Focused on our core and priority             markets, through a less capital intense model, we expect an             increase of approximately 300 restaurants in the U.S. by the             end of 2018.  Our development plans will be complemented by             brand and channel extensions to drive brand awareness and             penetration.         --  Traditional franchising development:  to complement our own             development, pursuing traditional franchising development such             as Area Development Agreements and Master Licensing Agreements,             where partners deploy their capital and local market             knowledge.  We have signed our first development agreements             consistent with this strategy, with close to 100 (mix of             standard and non-standard) units over the next five years in:             St. Louis, Missouri (40); Youngstown, Ohio, 25 (all             non-standard to complement our existing development); Fort             Wayne, Indiana (15) and Fargo and Minot, North Dakota (15).  We expect this multi-layered, disciplined approach to developing our U.S.  business will result in substantial progress in the U.S. segment and U.S.  operating income of up to $50 million by 2018.  International: Grow, Learn, Expand  We are adopting a pragmatic and disciplined approach to continued  international growth.  We intend to do this through:         --  Further expansion in Gulf Cooperation Council (GCC):              continuing to learn and grow in the GCC where we have             demonstrated initial success and have a roadmap to             approximately 220 locations.         --  Validation of international market opportunities and             approach: refining our existing market research, business             assessments and views on market opportunities.         --  Position for potential market entries:  prioritize markets and             develop due diligence to position us to enter new international             markets in 2015.  * * *  Plan Summary  "We are setting out to be bold, different and daring.  We envision a Tim  Hortons that is one of the industry's most consumer-centric brands, leveraging  technology to build our understanding of emerging consumer insights and to  connect with them in new and innovative ways.  We are focusing on flawless  execution and creating the ultimate guest experience.  We are asserting our  coffee and food leadership, simplifying our operations and pursuing  differentiated innovation.  Our team is aligned, focused and committed to  strong execution and market leadership," added Caira.  2014 Financial Outlook and Longer-term Financial Aspirations  The Company has disclosed its 2014 financial outlook with our fourth quarter  results, as follows:         --  Diluted earnings per share (EPS) of $3.17 to $3.27         --  Same-store sales growth of 1% to 3% in Canada and 2% to 4% in             the U.S.         --  A total of 215 to 255 restaurant openings in Canada, the U.S.             and the Gulf Cooperation Council, including:       o 140 to 160 restaurant openings in Canada, approximately evenly         split between standard and non-standard format restaurants       o 40 to 60 full-serve restaurant openings in the U.S., approximately         evenly split between standard and non-standard format restaurants         --  Capital expenditures between $180 million to $220 million,             including approximately US$30 million in the U.S.         --  Effective tax rate of approximately 29%.  In support of the strategic initiatives outlined above, the Company has  established the following aspirations beyond 2014, from 2015 to 2018:         --  EPS: 11%-13% compounded annual growth rate;         --  Collectively, we plan to open more than 800 locations in North             America and the GCC (between 2014 and 2018);         --  Cumulative free cash flow1 of approximately $2 billion;  We expect to reduce total capital intensity of the business as the plan  progresses, and we are targeting to improve return on assets and total return  to shareholders.  Executive compensation measures have been changed to better align with the  strategy, shareholder value creation and same-store sales growth, which is  directly linked to the success of our partnership with our franchise community.  The operational objectives, financial outlook and aspirational goals  (collectively, "targets") established for 2014 and for our long-term  aspirations are based on the accounting, tax and other legislative rules in  place at the time the targets were issued and on the continuation of share  repurchase programs as expected.  The impact of future changes in accounting,  tax and/or other legislative rules that may or may not become effective in  fiscal 2014 and future years, changes to our share repurchase activities, and  other matters not contemplated at the time the targets were established that  could affect our business, are not included in the determination of these  targets.  In addition, the targets are forward-looking and are based on our  expectations and outlook on, and shall only be effective as of, the date the  targets were originally issued.  Except as required by applicable securities laws, we do not intend to update  our annual targets.  These targets and our performance generally are subject  to various risks and uncertainties ("risk factors") which may impact future  performance and our achievement of these targets.  Refer to our safe harbor  statement, which incorporates by reference our "risk factors" set forth at the  end of this release, and our Annual Report on Form 10-K for 2012 filed on  February 21st, 2013, our Quarterly Report on Form 10-Q filed on November 7th,  2013, and our Annual Report on Form 10-K for 2013 (expected to be filed on or  about February 25th, 2014).  (1)Free cash flow is a non-GAAP measure. Free cash flow is generally defined  as net income adjusted for amortization and depreciation, net of capital  requirements to sustain business growth. Management believes that free cash  flow is an important tool to compare underlying cash flow generated from core  operating activities once capital investment requirements have been met. Free  cash flow does not represent residual cash flow available for discretionary  expenditures. This non-GAAP measure is not intended to replace the  presentation of our financial results in accordance with GAAP. The Company's  use of the term free cash flow may differ from similar measures reported by  other companies. Free cash flow as contemplated above, was calculated as  follows: Net income attributable to THI, plus depreciation and amortization  (excluding VIEs), less capital expenditures (excluding VIEs).  Safe Harbor Statement  Certain information in this news release, particularly information regarding  future performance, finances, and plans, expectations and objectives of  management, and other information, constitutes forward-looking information  within the meaning of Canadian securities laws and forward-looking statements  within the meaning of the Private Securities Litigation Reform Act of 1995. We  refer to all of these as forward-looking statements. Various factors including  competition in the quick service segment of the food service industry, general  economic conditions and others described as "risk factors" in the Company's  2012 Annual Report on Form 10-K filed February 21st, 2013, our Quarterly  Report on Form 10-Q filed on November 7th, 2013, and our 2013 Annual Report on  Form 10-K expected to be filed on or about February 25th, 2014 with the U.S.  Securities and Exchange Commission and Canadian Securities Administrators,  could affect the Company's actual results and cause such results to differ  materially from those expressed in, or implied by, forward-looking statements.  As such, readers are cautioned not to place undue reliance on forward-looking  statements contained in this news release, which speak only as to management's  expectations as of the date hereof. Forward-looking statements are based on a number of assumptions which may  prove to be incorrect, including, but not limited to, assumptions about: the  absence of an adverse event or condition that damages our strong brand  position and reputation; the absence of a material increase in competition or  in volume or type of competitive activity within the quick service restaurant  segment of the food service industry; our ability to obtain financing on  favourable terms; our ability to maintain investment grade credit ratings;  prospects and execution risks concerning our U.S. market strategy; general  worldwide economic conditions; cost and availability of commodities; the  ability to retain our senior management team or the inability to attract and  retain qualified personnel; continuing positive working relationships with the  majority of the Company's restaurant owners; the absence of any material  adverse effects arising as a result of litigation; and there being no  significant change in the Company's ability to comply with current or future  regulatory requirements.  We are presenting this information for the purpose of informing you of  management's current expectations regarding these matters, and this  information may not be appropriate for any other purpose. We assume no  obligation to update or alter any forward-looking statements after they are  made, whether as a result of new information, future events, or otherwise,  except as required by applicable law. Please review the Company's Safe Harbor  Statement at www.timhortons.com/ca/en/about/safeharbor.html.  Tim Hortons Inc. Overview Tim Hortons is one of the largest publicly-traded restaurant chains in North  America based on market capitalization, and the largest in Canada. Operating  in the quick service segment of the restaurant industry, Tim Hortons appeals  to a broad range of consumer tastes, with a menu that includes premium coffee,  hot and cold specialty drinks (including lattes, cappuccinos and espresso  shots), specialty teas and fruit smoothies, fresh baked goods, grilled Panini  and classic sandwiches, wraps, soups, prepared foods and other food products.  As of December 29, 2013, Tim Hortons had 4,485 systemwide restaurants,  including 3,588 in Canada, 859 in the United States and 38 in the Gulf  Cooperation Council. More information about the Company is available at  www.timhortons.com.    SOURCE  Tim Hortons  Investors: Scott Bonikowsky, (905) 339-6186  orbonikowsky_scott@timhortons.com Media: Olga Petrycki, (905) 339-5960  orpetrycki_olga@timhortons.com  To view this news release in HTML formatting, please use the following URL:  http://www.newswire.ca/en/releases/archive/February2014/25/c6790.html  CO: Tim Hortons ST: Ontario NI: RES RET  
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