Press Release
Highlights for the third quarter ended
-
Total revenue increased to
$88.9 million compared to$86.6 million . - System-wide comparable restaurant sales grew 0.6%, including flat growth for company-operated restaurants, and a 1.1% increase for franchised restaurants.
-
Net income was
$4.7 million , or$0.12 per diluted share, compared to net income of$25.8 million , or$0.70 per diluted share. -
Pro forma net income(1) increased 43.7% to
$7.2 million , or$0.18 per diluted share, compared to$5.0 million , or$0.13 per diluted share. -
Adjusted EBITDA(1) increased 9.9% to
$16.6 million .
(1) Pro forma net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See also "Non-GAAP Financial Measures."
Sather continued, "Our new restaurant pipeline is strong and growing stronger, and we continue to be excited about the long runway of growth that we believe is ahead of us in both new and existing markets. Customers love our food, and we look forward to bringing our delicious Fire-Grilled Chicken and authentic Mexican inspired entrees to consumers across the country."
Third Quarter 2015 Financial Results
Company-operated restaurant revenue in the third quarter of 2015 increased 2.6% to
Comparable company-operated restaurant sales in the third quarter were flat, driven by a 1.9% decrease in traffic, partially offset by a 1.9% increase in average check.
Franchise revenue in the third quarter of 2015 increased 3.3% to
Restaurant contribution was
Net income for the third quarter of 2015 was
Pro forma net income increased 43.7% to $7.2 million, or $0.18 per diluted share during the third quarter of 2015, compared to
2015 Outlook
Based upon current information, the Company is updating its guidance for fiscal year 2015.
The Company now expects 2015 pro forma diluted net income per share ranging from
Pro forma net income guidance for fiscal year 2015 is based, in part, on the following updated annual assumptions:
- System-wide comparable restaurant sales growth of approximately 1.7% (previously approximately 3%);
- The opening of 13-15 new company-owned restaurants and 5 new franchised restaurants (previously 16 new company-owned and 8 new franchised);
- Restaurant contribution margin of 21.2% to 21.5%;
- G&A expenses of between 7.8% and 8.0% of total revenue;
- Pro forma income tax rate of 41.0%; and
-
Adjusted EBITDA of between
$64.0 and$66.0 million (previously$65.0 million to$67.0 million ).
The following definitions apply to these terms as used in this release:
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. 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 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 reflects (i) the net decrease in interest expense resulting from the repayment of our second lien term loan facility with the proceeds from our IPO, (ii) the elimination of fees payable under the management agreement between us and affiliates of our sponsors, less sponsor expenses that were replaced with board of director costs after our IPO, (iii) providing for an estimate of recurring incremental legal, accounting, insurance and other compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, (iv) costs related to loss on disposal of assets and asset impairment and closed store costs, (v) amortization expense incurred on the Tax Receivable Agreement ("TRA") completed at the time of the IPO, (vi) professional fees incurred as a result of the block trade of 5.4 million common shares in the second quarter of 2015 and (vii) provision for income taxes at a normalized tax rate of 41.0%, which reflects our estimated long-term effective tax rate, including both federal and state income taxes. See the GAAP reconciliation in the accompanying financial data and "Non-GAAP Financial Measures."
Pro forma weighted-average share and per share data reflect the 8,214,286 additional shares of common stock issued in the IPO as if they had been issued on
Conference Call
The Company will host a conference call to discuss financial results for the third quarter of 2015 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 877-870-5176 or for international callers by dialing 858-384-5517; the passcode is 13620473. The replay will be available until
About
El Pollo Loco is the nation's leading fire-grilled chicken restaurant chain renowned for its masterfully citrus-marinated and fire-grilled chicken and handcrafted entrees using fresh ingredients inspired by Mexican recipes. With more than 415 company-owned and franchised restaurants in
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. 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 intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that may 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 disclosed in our annual report on Form 10-K for the year ended
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 including those indicated above. These measures 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. 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. The non-GAAP measures used in this press release may be different from the measures used by other companies.
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| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands, except share and per share data) | ||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||
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| $ | % | $ | % | $ | % | $ | % | |
| Revenue: | ||||||||
| Restaurant revenue | $ 82,986 | 93.4% | $ 80,861 | 93.4% | $ 251,295 | 93.5% | $ 238,432 | 93.5% |
| Franchise revenue | 5,884 | 6.6% | 5,696 | 6.6% | 17,456 | 6.5% | 16,456 | 6.5% |
| Total revenue | 88,870 | 100.0% | 86,557 | 100.0% | 268,751 | 100.0% | 254,888 | 100.0% |
| Costs of operations: | ||||||||
| Food and paper cost (1) | 26,371 | 31.8% | 25,881 | 32.0% | 80,549 | 32.1% | 75,834 | 31.8% |
| Labor and related expenses (1) | 20,822 | 25.1% | 20,137 | 24.9% | 63,493 | 25.3% | 59,552 | 25.0% |
| Occupancy and other operating expenses (1) | 18,207 | 21.9% | 18,102 | 22.4% | 52,732 | 21.0% | 51,091 | 21.4% |
| Company restaurant expenses (1) | 65,400 | 78.8% | 64,120 | 79.3% | 196,774 | 78.3% | 186,477 | 78.2% |
| General and administrative expenses | 6,316 | 7.1% | 7,509 | 8.7% | 20,206 | 7.5% | 20,974 | 8.2% |
| Franchise expenses | 925 | 1.0% | 901 | 1.0% | 2,620 | 1.0% | 2,827 | 1.1% |
| Depreciation and amortization | 3,278 | 3.7% | 2,924 | 3.4% | 9,624 | 3.6% | 8,271 | 3.2% |
| Loss on disposal of assets | 261 | 0.3% | 118 | 0.1% | 427 | 0.2% | 609 | 0.2% |
| Asset impairment and closed store reserves | 163 | 0.2% | 22 | 0.0% | 24 | 0.0% | 415 | 0.2% |
| Total expenses | 76,343 | 85.9% | 75,594 | 87.3% | 229,675 | 85.5% | 219,573 | 86.1% |
| Gain on sale of restaurant | -- | 0.0% | 2,658 | 3.1% | -- | 0.0% | 2,658 | 1.0% |
| Income from operations | 12,527 | 14.1% | 13,621 | 15.7% | 39,076 | 14.5% | 37,973 | 14.9% |
| Interest expense, net | 810 | 0.9% | 3,960 | 4.6% | 3,035 | 1.1% | 15,286 | 6.0% |
| Extinguishment of debt | -- | 0.0% | 5,082 | 5.9% | -- | 0.0% | 5,082 | 2.0% |
| Expenses related to selling shareholders | -- | 0.0% | -- | 0.0% | 50 | 0.0% | -- | 0.0% |
| TRA expense | 546 | 0.6% | 40,119 | 46.3% | 1,022 | 0.4% | 40,119 | 15.7% |
| Income (loss) before provision (benefit) for income taxes | 11,171 | 12.6% | (35,540) | -41.1% | 34,969 | 13.0% | (22,514) | -8.8% |
| Provision (benefit) for income taxes | 6,505 | 7.3% | (61,389) | -70.9% | 16,281 | 6.1% | (60,402) | -23.7% |
| Net Income | $ 4,666 | 5.3% | $ 25,849 | 29.9% | $ 18,688 | 7.0% | $ 37,888 | 14.9% |
| Net income per share: | ||||||||
| Basic | $ 0.12 | $ 0.76 | $ 0.49 | $ 1.24 | ||||
| Diluted | $ 0.12 | $ 0.70 | $ 0.48 | $ 1.17 | ||||
| Weighted average shares used in computing net income per share: | ||||||||
| Basic | 38,275,317 | 34,221,829 | 37,837,610 | 30,549,979 | ||||
| Diluted | 39,107,241 | 36,821,095 | 39,044,388 | 32,450,231 | ||||
| (1) As a percentage of restaurant revenue. | ||||||||
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| UNAUDITED SELECTED BALANCE SHEETS AND SELECTED OPERATING DATA | ||
| (dollar amounts in thousands) | ||
| As of | ||
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| Balance Sheet Data: | ||
| Cash and cash equivalents | $ 8,207 | $ 11,499 |
| Total assets | 450,785 | 455,306 |
| Total debt | 125,691 | 165,846 |
| Total liabilities | 211,169 | 244,906 |
| Total stockholders' equity | 239,616 | 210,400 |
| Thirty-Nine Weeks Ended | ||
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| Selected Operating Data: | ||
| Company-owned restaurants at end of period | 175 | 166 |
| Franchise restaurants at end of period | 245 | 239 |
| Company-owned: | ||
| Comparable restaurant sales | 1.0% | 5.6% |
| Units in the comparable base | 160 | 164 |
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| UNAUDITED RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA | ||||
| (dollar amounts in thousands) | ||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||
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| Adjusted EBITDA: | ||||
| Net income, as reported | $ 4,666 | $ 25,849 | $ 18,688 | $ 37,888 |
| Provision for income tax | 6,505 | (61,389) | 16,281 | (60,402) |
| Interest expense, net | 810 | 3,960 | 3,035 | 15,286 |
| Depreciation and amortization | 3,278 | 2,924 | 9,624 | 8,271 |
| EBITDA | 15,259 | (28,656) | 47,628 | 1,043 |
| Stock-based compensation expense | 165 | 297 | 608 | 635 |
| Management fees | -- | 51 | -- | 343 |
| Loss on disposal of assets | 261 | 118 | 427 | 609 |
| Impairments and closures | 163 | 22 | 24 | 415 |
| Pre-opening costs | 252 | 462 | 471 | 673 |
| Gain on sale of restaurant | -- | (2,658) | -- | (2,658) |
| Expenses related to selling shareholders | -- | -- | 50 | -- |
| TRA expense | 546 | 40,119 | 1,022 | 40,119 |
| Tax credit expense | -- | 316 | -- | 316 |
| Extinguishment of debt | -- | 5,082 | -- | 5,082 |
| Adjusted EBITDA | $ 16,646 | $ 15,153 | $ 50,230 | $ 46,577 |
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| UNAUDITED RECONCILIATION OF NET INCOME TO PRO FORMA NET INCOME | ||||
| (dollar amounts in thousands, except per share data) | ||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||
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| Pro forma net income: | ||||
| Net income, as reported | $ 4,666 | $ 25,849 | $ 18,688 | $ 37,888 |
| Provision (benefit) for taxes, as reported | 6,505 | (61,389) | 16,281 | (60,402) |
| Interest expense, as reported | 810 | 3,960 | 3,035 | 15,286 |
| Pro forma interest expense | (810) | (3,108) | (3,035) | (9,324) |
| IPO costs | -- | 164 | -- | 298 |
| Ongoing public company costs | -- | (112) | -- | (928) |
| Extinguishment of debt | -- | 5,082 | -- | 5,082 |
| Gain on sale of restaurant | -- | (2,658) | -- | (2,658) |
| TRA expense | 546 | 40,119 | 1,022 | 40,119 |
| Tax credit costs | -- | 316 | -- | 316 |
| Management fees | -- | 13 | -- | 173 |
| Expenses related to selling shareholders | -- | -- | 50 | -- |
| Loss on Disposal of Assets | 261 | 118 | 427 | 609 |
| Asset Impairment and Closed Store Costs | 163 | 22 | 24 | 415 |
| Provision for income taxes | (4,978) | (3,392) | (14,962) | (10,884) |
| Pro forma net income | $ 7,163 | $ 4,984 | $ 21,530 | $ 15,990 |
| Pro forma weighted-average share and per share data: | ||||
| Pro forma net income per share | ||||
| Basic | $ 0.19 | $ 0.13 | $ 0.57 | $ 0.43 |
| Diluted | $ 0.18 | $ 0.13 | $ 0.55 | $ 0.41 |
| Weighted-average shares used in computing pro forma net income per share | ||||
| Basic | 38,275,317 | 36,929,835 | 37,837,610 | 36,928,838 |
| Diluted | 39,107,241 | 39,529,101 | 39,044,388 | 38,829,091 |
CONTACT: Investor Contact:
Fitzhugh Taylor , ICR
fitzhugh.taylor@icrinc.com
714-599-5200
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