Expect regular dividends from Express Catering, says CEO
Published:Friday | February 1, 2019 | 12:00 AM
Food service company Express Catering Limited, ECL, is indicating that the generous dividends paid to shareholders last year will not be a one-time event.
CEO Ian Dear says the company will continue to make ample distributions to its owners from the cash it generates, unless it needs the capital to fund expansion.
Plans to expand to other markets are under consideration and said to be pending negotiation with the brands Express represents, but Dear was vague on the timeline. Express Catering currently operates a series of food franchises at the Sangster International Airport in Montego Bay, but wants to grow into a regional operation.
“I am not at liberty to get into specifics; however, there are a number of opportunities under discussion. ECL will continue to focus on being an airport food, beverage and retail provider,” he said.
Express Catering, which is 80 per cent controlled by Ian Dear, shed three-quarters of its capital base after paying out a US$6-million dividend last September. It reduced the company’s capital from US$7.4 million in August to US$1.9 million at November. Consequently, ECL’s book value fell from $0.60 per share (US$0.0045) to $0.15 per share (US$0.0011). That was based on the total shareholding of 1.64 billion units.
The company paid another US$1-million dividend in January, the impact of which will be reflected in the company’s third-quarter financial report for the period ending February.
Dear said in response to Financial Gleaner queries about the distributions, that the company generates sufficient cash to cover dividends and the cost of operations, and that the two dividends were paid from accumulated earnings, US$3.4 million of which was generated during the fiscal year ending May 2018, and US$1 million in the following six months.
Express Catering operates international franchises, including Jimmy Buffet’s Margaritaville, Moe’s Southwest Grill, International Dairy Queen, Quiznos, Auntie Anne’s, Nathan’s Hot Dogs, Cinnabon, Wendy’s, Starbucks and Domino’s. These establishments are complimented by a number of proprietary and Jamaican food and beverage brands, including Bobsled Cafe, Tastee Patties, Viva Gourmet, Grab N Go, and Groovy Grouper.
“The company produces significant free cash flows annually and this is expected to continue into the future. We are currently seeking additional airport expansion opportunities outside of Sangster International Airport in order to increase and diversify our revenue streams,” Dear said.
“If these new opportunities do not materialise in similar timeframes as with the earnings of the free cash flows, a large percentage of this free cash flow will continue to be paid out to the shareholders in the form of dividends.”
Express Catering’s most recent capital expenditures was for three Starbucks coffee stores within the Sangster Airport. The build-out accounted for the bulk of its US$971,000 capex in the previous financial year and US$135,000 for the first half of the current year.