Press Release
Highlights for the fourth quarter ended
- Total revenue was
$110.3 million compared to$107.5 million . - System-wide comparable restaurant sales decreased 0.2%, including a 3.0% decrease for company-operated restaurants, and a 1.8% increase for franchised restaurants. System-wide comparable restaurant sales declined 2.1% in metropolitan
Los Angeles , while increasing 3.3% in other markets. - Income from operations was
$8.2 million compared to$5.3 million in the prior year period. Restaurant contribution was$15.3 million , or 15.8% of company-operated restaurant revenue, compared to$17.6 million , or 18.6% of company-operated restaurant revenue. Included in income from operations and restaurant contribution margin were approximately$2.9 million in COVID-19 related expenses. - Net income was
$5.5 million , or $0.15 per diluted share, compared to net income of$3.5 million , or$0 .10 per diluted share. - Pro forma net income(1) was
$5.7 million , or $0.16 per diluted share, compared to$6.2 million , or $0.18 per diluted share. - Adjusted EBITDA(1) was $13.6 million, compared to
$14.5 million .
(1) Pro forma net income and adjusted EBITDA are not presented in accordance with accounting principles generally accepted inthe United States of America ("GAAP") and are defined below under "Key Financial Definitions." A reconciliation of GAAP net income to pro forma net income and adjusted EBITDA is included in the accompanying financial data. See also “Non-GAAP Financial Measures.”
Acoca continued, “Despite an unusual 2020, we continued to make great progress toward strengthening our brand. During the year, our team was able to successfully complete the execution of our Transformation Agenda, during which we have established a people first culture, strengthened our brand fundamentals, simplified operations and laid the foundation for profitable and responsible growth. Completing this plan during a pandemic of this nature was truly a testament to the resilience and dedication of our restaurant teams and franchise partners, and I am proud to be able to work alongside every one of them.”
Acoca concluded, “As we enter 2021, our company is well positioned for the next phase of growth guided by our new three-year Acceleration Agenda. The strategies within our new agenda will focus on an asset light, franchise driven growth model, continuing to digitize our business to compete more effectively and expanding on what makes us so unique – our L.A. Mex brand identity. We are optimistic about the future of our business and are confident that our go-forward strategies, combined with all we have accomplished to date, will drive sales and profit growth when we return to a more normalized operating environment.”
Fourth Quarter 2020 Financial Results
As discussed previously, in March of 2020 the Company fully drew down its
Company-operated restaurant revenue in the fourth quarter of 2020 was
Franchise revenue in the fourth quarter of 2020 increased 9.4% to
Income from operations in the fourth quarter of 2020 was
General and administrative expenses in the fourth quarter of 2020 were
Net income for the fourth quarter of 2020 was $5.5 million, or $0.15 per diluted share, compared to net income of
First Quarter 2021 Update
The COVID-19 pandemic has continued to have a significant impact on our business in the first quarter of 2021. All company-owned and the vast majority of franchise restaurants located in
2021 Outlook
Due to the uncertainty surrounding the COVID-19 pandemic, the company is not yet providing a financial outlook for the year ending
- The opening of three to five new company-owned restaurants and four to six new franchised restaurants.
- Pro forma income tax rate of 26.5%.
Key Financial Definitions
Comparable restaurant sales reflect the change in year-over-year sales for the comparable company, franchised and total system restaurant base. The comparable restaurant base is defined to include those restaurants open for 15 months or longer and excludes restaurants that were closed during the applicable period. At
Restaurant contribution and restaurant contribution margin are neither required by, nor presented in accordance with GAAP. Restaurant contribution is defined as company-operated restaurant revenue less company restaurant expenses, which are food and paper costs, labor and related expenses, and occupancy and other operating expenses. Restaurant contribution excludes certain costs, such as general and administrative expenses, depreciation and amortization, asset impairment and closed-store reserves, loss on sale of restaurants, recovery of securities lawsuits related legal expenses and other costs that are considered normal operating costs. Accordingly, restaurant contribution is not indicative of overall Company results and does not accrue directly to the benefit of shareholders because of the exclusion of certain corporate-level expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of net company-operated restaurant revenue. See also “Non-GAAP Financial Measures.”
EBITDA and adjusted EBITDA are neither required by, nor presented in accordance with, GAAP. EBITDA represents net income before interest expense, provision for income taxes, depreciation, and amortization, and adjusted EBITDA represents EBITDA before items that we do not consider representative of our ongoing operating performance, as identified in the GAAP reconciliation in the accompanying financial data. See also “Non-GAAP Financial Measures.”
Pro forma net income is neither required by, nor presented in accordance with, GAAP. Pro forma net income represents net income adjusted for (i) costs (or gains) related to loss (or gains) on disposal of assets or assets held for sale and asset impairment and closed store costs, (ii) amortization expense and other estimate adjustments (whether expense or income) incurred on the Tax Receivable Agreement (“TRA”) completed at the time of our IPO, (iii) legal costs associated with securities class action litigation, (iv) extraordinary legal settlement costs, (v) insurance proceeds received related to securities class action legal expenses, (vi) costs associated with the transition of our CEO and (vii) provision for income taxes at a normalized tax rate of 26.5% for the fourteen and fifty-three weeks ended
Conference Call
The Company will host a conference call to discuss financial results for the fourth quarter of 2020 today at
The conference call can be accessed live over the phone by dialing 877-407-3982 or for international callers by dialing 201-493-6780. A replay will be available after the call and can be accessed by dialing 844-512-2921 or for international callers by dialing 412-317-6671; the passcode is 13715273. The replay will be available until
About
Forward-Looking Statements
This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, including in connection with the expected impact of the COVID-19 pandemic. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this press release and include statements regarding our ability to improve growth and profitability as businesses reopen and economic activity resumes from the impacts of COVID-19, as well as our ongoing business intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, sales levels, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those that we expected.
While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to: the impact of the COVID-19 pandemic on our company, our employees, our customers, our partners, our industry and the economy as a whole; our franchisees ability to maintain operations in their individual restaurants; our ability to open new restaurants in existing and new markets and to expand our franchise system, including difficulty in finding sites and in negotiating acceptable leases; our ability to compete successfully and the intense competition in the restaurant industry; the adverse impact of economic conditions on our (i) operating results and financial condition, (ii) ability to comply with the terms and covenants of our debt agreements, and (iii) ability to pay or refinance our existing debt or to obtain additional financing; vulnerability to changes in consumer preferences and economic conditions; political and social factors, including regarding trade, immigration and customer preferences; vulnerability to conditions in the greater
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures which include supplemental measures of operating performance of our restaurants. Our calculations of supplemental measures and other non-GAAP financial measures indicated above may not be comparable to those reported by other companies. These measures have limitations as analytical tools, and are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. We use non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons and to evaluate our restaurants’ financial performance against our competitors’ performance. We believe that they provide useful information about operating results, enhance understanding of past performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. These non-GAAP financial measures may also assist investors in evaluating our business and performance relative to industry peers and provide greater transparency with respect to the Company’s financial condition and results of operation.
Investor Contact:
fitzhugh.taylor@icrinc.com
714-599-5200
Media Contact:
hannah.gray@edible-inc.com
323-202-1477
| EL POLLO LOCO HOLDINGS, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data) |
||||||||||||||||||||||||||||
| Fourteen Weeks Ended | Fifty-Three Weeks Ended | |||||||||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||
| Company-operated restaurant revenue | $ | 96,447 | 87.4 | $ | 94,771 | 88.1 | $ | 374,064 | 87.8 | $ | 391,112 | 88.4 | ||||||||||||||||
| Franchise revenue | 7,856 | 7.1 | 7,184 | 6.7 | 29,418 | 6.9 | 28,819 | 6.5 | ||||||||||||||||||||
| Franchise advertising fee revenue | 6,038 | 5.5 | 5,591 | 5.2 | 22,605 | 5.3 | 22,399 | 5.1 | ||||||||||||||||||||
| Total revenue | 110,341 | 100.0 | 107,546 | 100.0 | 426,087 | 100.0 | 442,330 | 100.0 | ||||||||||||||||||||
| Costs of operations: | ||||||||||||||||||||||||||||
| Food and paper cost (1) | 25,417 | 26.4 | 26,714 | 28.2 | 98,774 | 26.4 | 109,264 | 27.9 | ||||||||||||||||||||
| Labor and related expenses (1) | 31,247 | 32.4 | 28,563 | 30.1 | 114,455 | 30.6 | 116,703 | 29.8 | ||||||||||||||||||||
| Occupancy and other operating expenses (1) | 24,555 | 25.5 | 21,902 | 23.1 | 92,422 | 24.7 | 92,005 | 23.5 | ||||||||||||||||||||
| Gain on recovery of insurance proceeds, lost profits (1) | — | — | — | — | (2,000 | ) | (0.5 | ) | — | — | ||||||||||||||||||
| Company restaurant expenses (1) | 81,219 | 84.3 | 77,179 | 81.4 | 303,651 | 81.2 | 317,972 | 81.3 | ||||||||||||||||||||
| General and administrative expenses | 8,885 | 8.1 | 10,154 | 9.4 | 35,918 | 8.4 | 40,389 | 9.1 | ||||||||||||||||||||
| Legal settlements | — | — | — | — | 2,566 | 0.6 | — | — | ||||||||||||||||||||
| Franchise expenses | 7,651 | 6.9 | 6,920 | 6.4 | 28,761 | 6.8 | 27,612 | 6.2 | ||||||||||||||||||||
| Depreciation and amortization | 4,249 | 3.9 | 4,297 | 4.0 | 16,878 | 4.0 | 17,855 | 4.0 | ||||||||||||||||||||
| Loss on disposal of assets | 33 | 0.0 | 53 | 0.0 | 189 | 0.0 | 266 | 0.1 | ||||||||||||||||||||
| Recovery of securities lawsuits related legal expenses and other insurance claims | — | — | — | — | (123 | ) | (0.0 | ) | (10,000 | ) | (2.3 | ) | ||||||||||||||||
| Impairment and closed-store reserves | 76 | 0.1 | 3,611 | 3.4 | 4,691 | 1.1 | 4,852 | 1.1 | ||||||||||||||||||||
| Loss on disposition of restaurants | — | — | (4 | ) | (0.0 | ) | — | — | 5,058 | 1.1 | ||||||||||||||||||
| Total expenses | 102,113 | 92.5 | 102,210 | 95.0 | 392,531 | 92.1 | 404,004 | 91.3 | ||||||||||||||||||||
| Income from operations | 8,228 | 7.5 | 5,336 | 5.0 | 33,556 | 7.9 | 38,326 | 8.7 | ||||||||||||||||||||
| Interest expense, net of interest income | 709 | 0.6 | 933 | 0.9 | 3,292 | 0.8 | 3,687 | 0.8 | ||||||||||||||||||||
| Income tax receivable agreement (income) expense | 113 | 0.1 | 177 | 0.2 | 139 | 0.0 | 57 | 0.0 | ||||||||||||||||||||
| Income before provision for income taxes | 7,406 | 6.7 | 4,226 | 3.9 | 30,125 | 7.1 | 34,582 | 7.8 | ||||||||||||||||||||
| Provision for income taxes | 1,951 | 1.8 | 728 | 0.7 | 5,651 | 1.3 | 9,682 | 2.2 | ||||||||||||||||||||
| Net income | $ | 5,455 | 4.9 | $ | 3,498 | 3.3 | $ | 24,474 | 5.7 | $ | 24,900 | 5.6 | ||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||||||
| Basic | $ | 0.15 | $ | 0.10 | $ | 0.70 | $ | 0.68 | ||||||||||||||||||||
| Diluted | $ | 0.15 | $ | 0.10 | $ | 0.68 | $ | 0.67 | ||||||||||||||||||||
| Weighted average shares used in computing net income per share: | ||||||||||||||||||||||||||||
| Basic | 35,762,655 | 34,503,722 | 35,193,325 | 36,739,209 | ||||||||||||||||||||||||
| Diluted | 36,290,666 | 35,242,122 | 35,796,406 | 37,441,503 | ||||||||||||||||||||||||
___________________________
(1) Percentages for line items relating to cost of operations and company restaurant expenses are calculated with company-operated restaurant revenue as the denominator. All other percentages use total revenue.
| EL POLLO LOCO HOLDINGS, INC. UNAUDITED SELECTED BALANCE SHEETS AND SELECTED OPERATING DATA (dollar amounts in thousands) |
||||||||
| As of | ||||||||
| Selected Balance Sheet Data: | ||||||||
| Cash and cash equivalents | $ | 13,219 | $ | 8,070 | ||||
| Total assets | 605,221 | 624,752 | ||||||
| Total debt | 62,800 | 97,000 | ||||||
| Total liabilities | 327,643 | 379,186 | ||||||
| Total stockholders’ equity | 277,578 | 245,566 | ||||||
| Fifty-Three Weeks Ended |
||||||||
| Selected Operating Data: | ||||||||
| Company-operated restaurants at end of period | 196 | 195 | ||||||
| Franchised restaurants at end of period | 283 | 287 | ||||||
| Company-operated: | ||||||||
| Comparable restaurant sales (decline) growth | (3.0 | )% | 1.9 | % | ||||
| Restaurants in the comparable base | 190 | 195 | ||||||
| EL POLLO LOCO HOLDINGS, INC. UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA (dollar amounts in thousands) |
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| Fourteen Weeks Ended | Fifty-Three Weeks Ended | |||||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net income, as reported | $ | 5,455 | $ | 3,498 | $ | 24,474 | $ | 24,900 | ||||||||
| Provision for income taxes | 1,951 | 728 | 5,651 | 9,682 | ||||||||||||
| Interest expense, net | 709 | 933 | 3,292 | 3,687 | ||||||||||||
| Depreciation and amortization | 4,249 | 4,297 | 16,878 | 17,855 | ||||||||||||
| EBITDA | $ | 12,364 | $ | 9,456 | $ | 50,295 | $ | 56,124 | ||||||||
| Stock-based compensation expense (a) | 923 | 677 | 3,093 | 2,474 | ||||||||||||
| Loss on disposal of assets (b) | 33 | 53 | 189 | 266 | ||||||||||||
| Recovery of securities lawsuits related legal expense and other insurance claims (c) | — | — | (123 | ) | (10,000 | ) | ||||||||||
| Impairment and closed-store reserves (d) | 76 | 3,611 | 4,691 | 4,852 | ||||||||||||
| Loss on disposition of restaurants (e) | — | (4 | ) | — | 5,058 | |||||||||||
| Income tax receivable agreement expense (f) | 113 | 177 | 139 | 57 | ||||||||||||
| Securities class action legal expense (g) | 77 | 372 | 604 | 3,181 | ||||||||||||
| Legal settlements (h) | — | — | 2,566 | — | ||||||||||||
| Pre-opening costs (i) | 31 | 173 | 141 | 366 | ||||||||||||
| Executive transition costs (j) | — | — | — | 151 | ||||||||||||
| Adjusted EBITDA | $ | 13,617 | $ | 14,515 | $ | 61,595 | $ | 62,529 | ||||||||
__________________________
| (a) | Includes non-cash, stock-based compensation. | |
| (b) | Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment. | |
| (c) | In fiscal 2020, we received insurance proceeds of |
|
| (d) | Includes costs related to impairment of long-lived assets and closing restaurants. During fiscal 2020, we recorded non-cash impairment charges of |
|
| During the quarter and year ended December 25, 2019, we recorded impairment charges of |
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| (e) | During fiscal 2019, we completed the sale of four company-operated restaurants within the |
|
| (f) | On |
|
| (g) | Consists of costs related to the defense of securities lawsuits. | |
| (h) | Includes an expense related to resolution of the longstanding lawsuit involving a contract dispute with one of the Company’s franchisees concerning asserted territory rights, as well as amounts incurred related to the payment of the final settlement amounts for consolidated wage and hour class action lawsuits resolved in prior quarters. | |
| (i) | Pre-opening costs are a component of general and administrative expenses, and consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs, and other related pre-opening costs. These are generally incurred over the three to five months prior to opening. Pre-opening costs also include occupancy costs incurred between the date of possession and the opening date for a restaurant. | |
| (j) | Includes costs associated with the transition of our CEO, such as CEO sign-on bonus. | |
| EL POLLO LOCO HOLDINGS, INC. UNAUDITED RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME (dollar amounts in thousands, except share data) |
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| Fourteen Weeks Ended | Fifty-Three Weeks Ended | |||||||||||||||
| Pro forma net income: | ||||||||||||||||
| Net income, as reported | $ | 5,455 | $ | 3,498 | $ | 24,474 | $ | 24,900 | ||||||||
| Provision for taxes, as reported | 1,951 | 728 | 5,651 | 9,682 | ||||||||||||
| Income tax receivable agreement expense | 113 | 177 | 139 | 57 | ||||||||||||
| Loss on disposal of assets | 33 | 53 | 189 | 266 | ||||||||||||
| Recovery of securities lawsuits related legal expense and other insurance claims | — | — | (123 | ) | (10,000 | ) | ||||||||||
| Loss on disposition of restaurants | — | (4 | ) | — | 5,058 | |||||||||||
| Impairment and closed-store reserves | 76 | 3,611 | 4,691 | 4,852 | ||||||||||||
| Securities lawsuits related legal expenses | 77 | 372 | 604 | 3,181 | ||||||||||||
| Legal settlements | — | — | 2,566 | — | ||||||||||||
| Executive transition costs | — | — | — | 151 | ||||||||||||
| Provision for income taxes | (2,042 | ) | (2,235 | ) | (10,121 | ) | (10,109 | ) | ||||||||
| Pro forma net income | $ | 5,663 | $ | 6,200 | $ | 28,070 | $ | 28,038 | ||||||||
| Pro forma weighted-average share and per share data: | ||||||||||||||||
| Pro forma net income per share | ||||||||||||||||
| Basic | $ | 0.16 | $ | 0.18 | $ | 0.80 | $ | 0.76 | ||||||||
| Diluted | $ | 0.16 | $ | 0.18 | $ | 0.78 | $ | 0.75 | ||||||||
| Weighted-average shares used in computing pro forma net income per share | ||||||||||||||||
| Basic | 35,762,655 | 34,503,722 | 35,193,325 | 36,739,209 | ||||||||||||
| Diluted | 36,290,666 | 35,242,122 | 35,796,406 | 37,441,503 | ||||||||||||
| EL POLLO LOCO HOLDINGS, INC. UNAUDITED RECONCILIATION OF INCOME FROM OPERATIONS TO RESTAURANT CONTRIBUTION (dollar amounts in thousands) |
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| Fourteen Weeks Ended | Fifty-Three Weeks Ended | ||||||||||||||||
| Restaurant contribution: | |||||||||||||||||
| Income from operations | $ | 8,228 | $ | 5,336 | $ | 33,556 | $ | 38,326 | |||||||||
| Add (less): | |||||||||||||||||
| General and administrative expenses | 8,885 | 10,154 | 35,918 | 40,389 | |||||||||||||
| Legal settlements | — | — | 2,566 | — | |||||||||||||
| Franchise expenses | 7,651 | 6,920 | 28,761 | 27,612 | |||||||||||||
| Depreciation and amortization | 4,249 | 4,297 | 16,878 | 17,855 | |||||||||||||
| Loss on disposal of assets | 33 | 53 | 189 | 266 | |||||||||||||
| Franchise revenue | (7,856 | ) | (7,184 | ) | (29,418 | ) | (28,819 | ) | |||||||||
| Franchise advertising fee revenue | (6,038 | ) | (5,591 | ) | (22,605 | ) | (22,399 | ) | |||||||||
| Recovery of securities lawsuits related legal expenses and other insurance claims | — | — | (123 | ) | (10,000 | ) | |||||||||||
| Impairment and closed-store reserves | 76 | 3,611 | 4,691 | 4,852 | |||||||||||||
| Loss on sale of restaurants | — | (4 | ) | — | 5,058 | ||||||||||||
| Restaurant contribution | $ | 15,228 | $ | 17,592 | $ | 70,413 | $ | 73,140 | |||||||||
| Company-operated restaurant revenue: | |||||||||||||||||
| Total revenue | $ | 110,341 | $ | 107,546 | $ | 426,087 | $ | 442,330 | |||||||||
| Less: | |||||||||||||||||
| Franchise revenue | (7,856 | ) | (7,184 | ) | (29,418 | ) | (28,819 | ) | |||||||||
| Franchise advertising fee revenue | (6,038 | ) | (5,591 | ) | (22,605 | ) | (22,399 | ) | |||||||||
| Company-operated restaurant revenue | $ | 96,447 | $ | 94,771 | $ | 374,064 | $ | 391,112 | |||||||||
| Restaurant contribution margin (%) | 15.8 | % | 18.6 | % | 18.8 | % | 18.7 | % | |||||||||
Source: El Pollo Loco Holdings, Inc.