Delaware | 001-33174 | 16-1287774 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
968 James Street Syracuse, New York | 13203 | |
(Address of principal executive office) | (Zip Code) | |
Registrant’s telephone number, including area code (315) 424-0513 | ||
N/A | ||
(Former name or former address, if changed since last report.) |
By: | /s/ Paul R. Flanders |
Name: | Paul R. Flanders |
Title: | Vice President, Chief Financial Officer and Treasurer |
• | Restaurant sales increased 13.2% to $271.6 million from $239.9 million in the first quarter of 2017 including contributions from 64 restaurants acquired in 2017; |
• | Comparable restaurant sales increased a solid 6.2% compared to a 0.6% decrease in the prior year quarter; |
• | Adjusted EBITDA(1) increased 36.3% to $18.9 million from $13.9 million in the prior year quarter; |
• | Net loss was $3.1 million, or $0.09 per diluted share, compared to net loss of $5.6 million, or $0.16 per diluted share, in the prior year quarter; and |
• | Adjusted net loss(1) was $2.8 million, or $0.08 per diluted share, compared to adjusted net loss of $4.8 million, or $0.14 per diluted share, in the prior year quarter. |
(1) | Adjusted EBITDA, Restaurant-level EBITDA and Adjusted net income (loss) are non-GAAP financial measures. Refer to the definitions and reconciliation of these measures to net income (loss) or to income (loss) from operations in the tables at the end of this release. |
• | Total restaurant sales are expected to be $1.15 billion to $1.17 billion (previously $1.14 billion to $1.17 billion), including a comparable restaurant sales increase of 3% to 5%; |
• | Commodity costs are now expected to increase 1% to 2% (previously 2% to 3%) including a 2% to 3% increase in beef costs (previously 3% to 5%); |
• | General and administrative expenses are expected to be $58 million to $60 million, excluding stock compensation expense and acquisition-related costs; |
• | Adjusted EBITDA is now expected to be $95 million to $102 million (previously $93 million to $100 million); |
• | An effective income tax rate of 0% to 5%. |
• | Capital expenditures before discretionary growth-related expenditures (i.e., new restaurant development and acquisitions) are expected to be $50 million to $60 million (previously $45 million to $50 million). In addition, capital expenditures for the construction of 10 to 15 new units and remaining costs from 2017 construction late in the year are expected to be $15 million to $25 million; |
• | Proceeds from sale/leasebacks are expected to be $10 million to $15 million; and |
• | The Company expects to close 20 to 25 existing restaurants, three of which were closed during the first quarter. |
(unaudited) | |||||||
Three Months Ended (a) | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Restaurant sales | $ | 271,586 | $ | 239,852 | |||
Costs and expenses: | |||||||
Cost of sales | 73,005 | 64,236 | |||||
Restaurant wages and related expenses | 91,144 | 81,071 | |||||
Restaurant rent expense | 19,974 | 17,597 | |||||
Other restaurant operating expenses | 42,839 | 39,195 | |||||
Advertising expense | 11,265 | 9,901 | |||||
General and administrative expenses (b) (c) | 16,136 | 15,576 | |||||
Depreciation and amortization | 14,250 | 13,151 | |||||
Impairment and other lease charges | 309 | 531 | |||||
Total costs and expenses | 268,922 | 241,258 | |||||
Income (loss) from operations | 2,664 | (1,406 | ) | ||||
Gain on bargain purchase | (22 | ) | — | ||||
Interest expense | 5,926 | 4,801 | |||||
Loss before income taxes | (3,240 | ) | (6,207 | ) | |||
Benefit for income taxes | (138 | ) | (611 | ) | |||
Net loss | $ | (3,102 | ) | $ | (5,596 | ) | |
Basic and diluted net loss per share (d)(e) | $ | (0.09 | ) | $ | (0.16 | ) | |
Basic and diluted weighted average common shares outstanding | 35,666 | 35,384 |
(a) | The Company uses a 52 or 53 week fiscal year that ends on the Sunday closest to December 31. The three months ended April 1, 2018 and April 2, 2017 each included thirteen weeks. |
(b) | General and administrative expenses include acquisition costs of $105 and $718 for the three months ended April 1, 2018 and April 2, 2017, respectively. |
(c) | General and administrative expenses include stock-based compensation expense of $1,585 and $883 for the three months ended April 1, 2018 and April 2, 2017, respectively. |
(d) | Basic net loss per share was computed excluding loss attributable to preferred stock and non-vested restricted shares unless the effect would have been anti-dilutive for the periods presented. |
(e) | Diluted net loss per share was computed including shares issuable for convertible preferred stock and non-vested restricted shares unless their effect would have been anti-dilutive for the periods presented. |
(unaudited) | ||||||||
Three Months Ended (a) | ||||||||
April 1, 2018 | April 2, 2017 | |||||||
Total Restaurant Sales | $ | 271,586 | $ | 239,852 | ||||
Change in Comparable Restaurant Sales (a) | 6.2 | % | (0.6 | )% | ||||
Average Weekly Sales per Restaurant (b) | 25,978 | 24,140 | ||||||
Restaurant-Level EBITDA (c) | $ | 33,359 | $ | 27,852 | ||||
Restaurant-Level EBITDA margin (c) | 12.3 | % | 11.6 | % | ||||
Adjusted EBITDA (c) | $ | 18,913 | $ | 13,877 | ||||
Adjusted EBITDA margin (c) | 7.0 | % | 5.8 | % | ||||
Adjusted net loss (c) | $ | (2,792 | ) | $ | (4,822 | ) | ||
Adjusted diluted net loss per share (c) | $ | (0.08 | ) | $ | (0.14 | ) | ||
Number of Restaurants: | ||||||||
Restaurants at beginning of period | 807 | 753 | ||||||
New restaurants | 2 | 1 | ||||||
Restaurants acquired | 1 | 43 | ||||||
Restaurants closed | (3) | (9) | ||||||
Restaurants at end of period | 807 | 788 | ||||||
Average Number of Restaurants: | 804.2 | 764.3 |
At 4/1/18 | At 12/31/2017 | ||||||
Long-term debt (d) | $ | 285,945 | $ | 281,884 | |||
Cash | 34,501 | 29,412 |
(a) | Restaurants are generally included in comparable restaurant sales after they have been operated by us for 12 months. The calculation of changes in comparable restaurant sales is based on the comparable 13-week period. |
(b) | Average weekly sales per restaurant are derived by dividing restaurant sales for the comparable 13-week period by the average number of restaurants operating during such period. |
(c) | EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Restaurant-Level EBITDA, Restaurant-Level EBITDA margin and Adjusted net loss are non-GAAP financial measures and may not necessarily be comparable to other similarly titled captions of other companies due to differences in methods of calculation. Refer to the Company's reconciliation of net loss to EBITDA, Adjusted EBITDA and Adjusted net loss, and to the Company's reconciliation of income (loss) from operations to Restaurant-Level EBITDA for further detail. Both Adjusted EBITDA margin and Restaurant-Level EBITDA margin are calculated as a percentage of restaurant sales. Adjusted diluted net loss per share is calculated based on Adjusted net income and reflects the dilutive impact of shares, where applicable, based on Adjusted net loss. |
(d) | Long-term debt (including current portion and excluding deferred financing costs) at April 1, 2018 included $275,000 of the Company's 8% Senior Secured Second Lien Notes, $4,500 of outstanding revolving borrowings under the Company's senior credit facility, $1,203 of lease financing obligations and $5,242 of capital lease obligations. Long-term debt (including current portion and excluding deferred financing costs) at December 31, 2017 included $275,000 of the Company's 8% Senior Secured Second Lien Notes, $1,203 of lease financing obligations and $5,681 of capital lease obligations. |
(unaudited) | |||||||
Three Months Ended (a) | |||||||
April 1, 2018 | April 2, 2017 | ||||||
Reconciliation of EBITDA and Adjusted EBITDA: (a) | |||||||
Net loss | $ | (3,102 | ) | $ | (5,596 | ) | |
Benefit for income taxes | (138 | ) | (611 | ) | |||
Interest expense | 5,926 | 4,801 | |||||
Gain on bargain purchase | (22 | ) | — | ||||
Depreciation and amortization | 14,250 | 13,151 | |||||
EBITDA | 16,914 | 11,745 | |||||
Impairment and other lease charges | 309 | 531 | |||||
Acquisition costs (b) | 105 | 718 | |||||
Stock-based compensation expense | 1,585 | 883 | |||||
Adjusted EBITDA | $ | 18,913 | $ | 13,877 | |||
Reconciliation of Restaurant-Level EBITDA: (a) | |||||||
Income (loss) from operations | $ | 2,664 | $ | (1,406 | ) | ||
Add: | |||||||
General and administrative expenses | 16,136 | 15,576 | |||||
Depreciation and amortization | 14,250 | 13,151 | |||||
Impairment and other lease charges | 309 | 531 | |||||
Restaurant-Level EBITDA | $ | 33,359 | $ | 27,852 | |||
Reconciliation of Adjusted net loss: (a) | |||||||
Net loss | $ | (3,102 | ) | $ | (5,596 | ) | |
Add: | |||||||
Impairment and other lease charges | 309 | 531 | |||||
Gain on bargain purchase | (22 | ) | — | ||||
Acquisition costs (b) | 105 | 718 | |||||
Income tax effect on above adjustments (c) | (82 | ) | (475 | ) | |||
Adjusted net loss | $ | (2,792 | ) | $ | (4,822 | ) | |
Adjusted diluted net loss per share | $ | (0.08 | ) | $ | (0.14 | ) |
(a) | Within our press release, we make reference to EBITDA, Adjusted EBITDA, Restaurant-Level EBITDA and Adjusted net loss which are non-GAAP financial measures. EBITDA represents net loss before benefit for income taxes, interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted to exclude impairment and other lease charges, acquisition costs, stock-based compensation expense and other non-recurring income or expense. Restaurant-Level EBITDA represents income (loss) from operations as adjusted to exclude general and administrative expenses, depreciation and amortization, impairment and other lease charges and other income. Adjusted net loss represents net loss as adjusted to exclude impairment and other lease charges, acquisition costs and other non-recurring income or expense. |
(b) | Acquisition costs for the periods presented include legal and professional fees incurred in connection with restaurant acquisitions. |
(c) | The income tax effect related to the adjustments for impairment and other lease charges and acquisition costs during the periods presented was calculated using an effective income tax rate of 21% for the three months ended April 1, 2018 and 38% for the three months ended April 2, 2017. |