Humpty's Restaurants International Inc.

Humpty's Restaurants International Inc.

April 29, 2008 16:38 ET

Humpty's Releases Fiscal Year-End 2007 Results

CALGARY, ALBERTA--(Marketwire - April 29, 2008) - Humpty's Restaurants International Inc. (TSX VENTURE:HMP) today released financial results for the 12-month period ending December 31, 2007.

For the 12- Months ended December 31
2007 2006
Consolidated Revenue: $12,698,125 $11,325,321
Net Income: 510,817 126,533
Net Income/Share: 0.035 0.009
Shares Outstanding: 14,651,785 14,746,785

We are pleased to present to you our Company's operating results for 2007. The positive results reflect our continued efforts to solidify our position in the market place and strengthen our financial status. Our net income of $510,817 that we recorded in fiscal 2007 was our best result since 1998.

Our Operating Results

Total revenue for fiscal 2007 was $12,698,125 which represents a 12.1% increase from fiscal 2006 ($11,325,321). The bulk of this increase was derived from the restaurant, gasoline and convenience store division. Franchise sales and renewals increased by $55,000 while Royalties, Advertising fees and Rebates increased marginally. Operating expenses increased proportionally with the revenue increase (12.0% vs. 12.1%). The ever increasing cost of labour was the main contributor to the huge increase in operating expenses for the restaurant, gasoline and convenience store division. In fiscal 2007 our labour costs increased 12.9% over 2006. Lease settlements and franchise assistance recorded a slight increase of 1.8% from fiscal 2006 and as a result we didn't meet our target of $296,000. Each year in this Message we identify this category because it is the only expense dedicated to troubled locations or rectifying one-time unusual write downs or expenses.

The following items were the write downs and expenses that were the major contributors to this expense.

a) The lease for a Thunder Bay ON location that was closed in January/06 was set up as a lease settlement to the end of its term (April/09). In addition to this expense an environmental clean-up of mold that had developed in the unoccupied premises cost $50,000. Total expense was $144,301.

b) Five locations were upgraded with new Franchise operators in 2007. In all situations these locations had lease obligations that hadn't been paid. Total expense was $76,926.

c) A Prince George BC lease that we had been paying for over three years finally came to end in October /07. Expense $32,802.

d) Corporate location in Edmonton AB was sold which resulted in a write down of assets of $42,603.

The net effect of the aforementioned unusual items was a loss of $296,632. Lease settlements and franchise assistance will always be a cost of doing business in our Company. It is certainly a high priority to continue to reduce this expense. We will see a reduction in fiscal/08 with expectation that this reduction will be in the 25%-30% range.

Despite the aforementioned expenses, the Company recorded a 16.2% increase of Income from Operations ($291,062 vs. $250,477/06) Net income improved a very respectable 303.7%.

Normal Course Issuers Bid

In September 2002 the Company was granted permission to commence a Normal Course Issuers Bid which meant it could repurchase for cancellation up to 759,740 shares of its own capital stock. Annually since 2002 including 2007 the Company continues to renew its Bid to repurchase its capital stock. In 2007 the Company repurchased 95,000 shares bringing the total to date repurchased 543,000 or 3.57% of the original outstanding total. By repurchasing these shares for cancellation the Company continues to enhance shareholders value.

Our Market Position

2008 marks the 31st year of the Humpty's System in Canada. Our market share on December 31, 2007 was forty-nine (49) locations operating and one location closed for renovations (re-opening July/08). The Company owns or manages eight (8) locations with three of these locations being re-franchised in May/08, September/08 and December/08 respectively. Two of these locations are in Edmonton AB and have been a burden to the Company due to a lack of consistent and efficient on site management. With dedicated on-hands Franchisee ownership we anticipate increased sales at these two locations. The third location in Cold Lake AB (December/08) continues to be one of our best operations. In December/07 we sold our Humpty's Classic Cafe and Humpty's Express and Car Wash in Red Deer AB. Although this was a very high volume location it desperately required on-hands management. In order to maximize the potential for profitability the location had to be Franchised. The sales at this location continue to improve and should exceed $7 M revenue for fiscal 2008.

Looking Forward

We will maintain our objective to continue to improve on what we have. That is the reason we continue to upgrade our locations thus improving sales. We will continue to replace under performing Franchise owners (five changes 2007) with more motivated and progressive entrepreneurs.

Although we continue to focus on improvement we will look at every opportunity to develop new locations, particularly in Ontario and the Atlantic Provinces. We know there will be opportunities however the situation has to be right. As we like to say "its better to be cautious than careless."

Western Canada still continues to experience an extreme labour shortage. This is not a short term situation. We are making provisions as are our Franchisees to bring in foreign workers. Currently we have twenty-seven (27) foreign employees employed in our Corporate locations and have applications in place for another fourteen (14).


If we stay focused on profitability growth we will be prepared for expansion opportunities when they present themselves.

We are proud to be associated with a team of dedicated staff and Franchisees who continually contribute an admirable effort to deliver services that exceed our customers expectations. We acknowledge those staff and Franchisees for their continued commitment and dedication to the Humpty's System. We also appreciate your continued support as shareholders of our Company.

For detailed financial information, audited statements can be found at

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Humpty's Restaurants International Inc.
    Mr. Koenig
    (403) 269-4675
    (403) 266-1973 (FAX)
    Humpty's Restaurants International Inc.
    Tom Scappatura
    (403) 269-4675
    (403) 266-1973 (FAX)