Bravo Brio Restaurant Group, Inc. (NASDAQ:BBRG) (the Company) owner
and operator of the BRAVO! Cucina Italiana (BRAVO!) and BRIO Tuscan
Grille (BRIO) restaurant concepts, today reported financial results
for the thirteen and thirty-nine week periods ended
September 25, 2016.
Selected Third Quarter 2016 Highlights
Compared to the Third Quarter 2015:
- Revenues decreased 3.8% to $94.6 million from $98.3
million.
- Total comparable restaurant sales decreased 5.3%.
- Comparable restaurant sales decreased 8.0% at BRAVO! and 3.7%
at BRIO.
- Restaurant-level operating profit decreased 37.8% to $7.9
million from $12.7 million.
- GAAP net loss was $(3.0) million, or $(0.20) per diluted share,
compared to GAAP net income of $0.9 million, or $0.06 per diluted
share.
- Adjusted net loss was $(2.4) million, or $(0.16) per diluted
share, compared to adjusted net income of $0.9 million, or $0.06
per diluted share. Please see the reconciliation from GAAP to
adjusted (non-GAAP) net income in the accompanying financial
tables.
Brian O'Malley, President and Chief Executive
Officer, said, “Comparable restaurant sales trends improved in the
latter half of the third quarter, primarily at BRIO, and we are
encouraged by positive guest feedback on our new menus as we
prepare for the important holiday season. Although the
execution phase of these menu rollouts meaningfully impacted both
cost of sales and labor during the third quarter, we made headway
working through near-term operating inefficiencies as the quarter
progressed.”
O’Malley continued, “With the onset of the
fourth quarter, we have pivoted away from the heavy operational and
financial investments incurred over the past six months into what
we believe will be a sustainable period of improvement in
comparable restaurant sales and traffic. We anticipate strong
holiday gift card sales due to our expanding partnership with
Costco as well as our annual holiday gift card promotion whereby
guests receive a $20 promotional card for each $100 gift card
purchased. We have also improved our technological
capabilities through a new online ordering system, which will soon
offer a convenient delivery option through third-party service
providers. Additionally, we are testing an upgrade to our banquet
reservation software that will enhance our ability to identify,
track, plan and execute our banquet program. These and other
initiatives, bolstered by the hard work and commitment of our team
members during this transitional year, have positioned us for what
we believe will be a successful holiday season and better
2017.”
Third Quarter 2016 Financial
Results
Revenues decreased $3.7 million, or 3.8%, to
$94.6 million in the third quarter of 2016, from $98.3 million in
the third quarter of 2015. The decrease in revenues was
primarily due to a 5.3% decrease in comparable restaurant sales
that was partially offset by a net additional 20 operating
weeks. The comparable restaurant sales decrease consisted of
a 5.4% decrease in guest counts and a 0.1% increase in average
check.
Total restaurant operating costs, which include
costs of sales, labor costs, operating costs and occupancy costs,
increased $1.1 million, or 1.3%, to $86.7 million in the third
quarter of 2016, from $85.6 million in the third quarter of
2015. Total restaurant-level operating profit decreased $4.8
million, or 37.8%, to $7.9 million from $12.7 million in the same
period last year. As a percentage of revenues, total
restaurant-level operating profit decreased to 8.4% in the third
quarter of 2016 from 13.0% in the third quarter of 2015.
GAAP net loss in the third quarter of 2016 was
$(3.0) million, or $(0.20) per diluted share, as compared to GAAP
net income of $0.9 million, or $0.06 per diluted share, in the same
period last year.
On an adjusted basis, a measure that the Company
believes provides additional information to facilitate a
year-over-year performance comparison, adjusted net loss in the
third quarter of 2016 was $(2.4) million, or $(0.16) per diluted
share, compared to adjusted net income of $0.9 million, or $0.06
per diluted share, in the same period last year. Please see the
accompanying financial tables for a reconciliation from GAAP net
income to adjusted (non-GAAP) net income.
Third Quarter 2016 Brand Operating
Highlights
Comparable restaurant sales decreased 8.0% at
BRAVO! and 3.7% at BRIO. Average weekly sales for BRAVO! and
BRIO were $53,000 and $71,200, respectively.
During the third quarter of 2016, the Company
closed two BRAVO! restaurants through lease expirations. As
of September 25, 2016, the Company operated 51 BRAVO!
restaurants, 64 BRIO restaurants, and one Bon Vie restaurant across
33 states. Included in this total is one BRIO restaurant that
is operated under a management agreement. Additionally, one BRIO
restaurant is operated under a franchise agreement.
2016 Outlook
The Company is providing the following outlook
for the 52-week period ending December 25, 2016:
- Revenues of $408 million to $413 million.
- Total comparable restaurant sales of minus 5.5% to minus
4.5%.
- Development of three Company-operated restaurants.
- Pre-opening costs of approximately $1.0 million to $1.5 million
(previously approximately $1.5 million).
- Adjusted net income per diluted share of $0.15 to $0.20, which
reflects adjustments made during the thirty-nine weeks ended
September 25, 2016. Please see the reconciliation from GAAP
net loss to adjusted (non-GAAP) net income and adjusted net income
per share in the tables below.
- Capital expenditures of $12.0 million to $14.0 million.
- Diluted share count of approximately 15.5 million.
|
|
(in thousands except
per share data) |
Fiscal 2016 |
|
Low |
|
High |
Net loss |
$ |
(1,625 |
) |
|
$ |
(550 |
) |
Impact from: |
|
|
|
Asset
impairment charges (1) |
1,249 |
|
|
1,249 |
|
Tax
expense related to an Internal Revenue Service audit settlement
(2) |
265 |
|
|
265 |
|
Tax
expense from excess tax deficiency for option exercises (3) |
2,500 |
|
|
2,200 |
|
Income
tax expense (4) |
(125 |
) |
|
(125 |
) |
Adjusted net
income |
$ |
2,264 |
|
|
$ |
3,039 |
|
Adjusted net income per
share |
$ |
0.15 |
|
|
$ |
0.20 |
|
Weighted average shares
outstanding - diluted |
15,500 |
|
|
15,500 |
|
_________________________1) Reflects non-cash asset impairment
charges for the thirty-nine weeks ended September 25, 2016 for
one restaurant.2) Reflects the tax expense associated with the
settlement of an Internal Revenue Service audit.3) Reflects the
excess tax deficiency associated with the exercise of stock options
during the period.4) Reflects the adjustments for income taxes
related to impairment charges.
Amendment to Senior Secured Revolving
Credit Facility
The Company also announced that it has entered
into an amendment to its existing senior secured revolving credit
facility. This amendment, among other things, converts an aggregate
of $35.0 million of the outstanding balance under the revolving
credit facility into a term loan facility, reduces the amount
available under the revolving credit facility to $30.0 million, as
well as adds and amends certain financial covenants. After giving
effect to the amendment, as of September 25, 2016 the Company would
have had $16.0 million in outstanding debt under our revolving
credit facility and $35.0 million in outstanding debt under its
term loan facility.
Investor Conference Call and
Webcast
The Company will host an investor conference
call to discuss third quarter 2016 financial results today at 5:00
PM ET. Hosting the call will be Brian O'Malley, President and
Chief Executive Officer and Jim O'Connor, Executive Vice President
and Chief Financial Officer.
The conference call can be accessed live over
the phone by dialing (800) 818-6592. A replay will be
available one hour after the call and can be accessed by dialing
(858) 384-5517; the conference ID is 9361679. The replay will
be available until Wednesday, November 9, 2016.
The call will also be webcast live and later
archived on the Company's investor relations website at
http://investors.bbrg.com in the ‘Presentations & Events’
section.
Non-GAAP Measures.
Adjusted net (loss) income and Adjusted net
(loss) income per share are supplemental measures of the Company's
performance that are not required or presented in accordance with
generally accepted accounting principles, or GAAP. These non-GAAP
measures may not be comparable to similarly titled measures used by
other companies and should not be considered by themselves or as a
substitute for measures of performance prepared in accordance with
GAAP.
The Company calculates these non-GAAP measures
by adjusting net (loss) income and net (loss) income per share for
the impact of certain non-comparable items that are reflected in
the its GAAP results. The Company believes these adjusted measures
provide investors with additional information to facilitate the
comparison of its past and present financial results and assist
users of the financial statements to better understand these
results. The Company utilizes results that both include and exclude
the identified items in evaluating its business performance.
However, the inclusion of these adjusted measures should not be
construed as an indication that the Company's future results will
not be affected by certain unusual or non-comparable items.
About Bravo Brio Restaurant Group,
Inc.
Bravo Brio Restaurant Group, Inc. is a leading
owner and operator of two distinct Italian restaurant brands,
BRAVO! Cucina Italiana and BRIO Tuscan Grille. BBRG has positioned
its brands as multifaceted culinary destinations that deliver the
ambiance, design elements and food quality reminiscent of fine
dining restaurants at a value typically offered by casual dining
establishments, a combination known as the upscale affordable
dining segment. Each of BBRG's brands provides its guests with a
fine dining experience and value by serving affordable cuisine
prepared using fresh flavorful ingredients and authentic Italian
cooking methods, combined with attentive service in an attractive,
lively atmosphere. BBRG strives to be the best Italian restaurant
company in America and is focused on providing its guests an
excellent dining experience through consistency of execution.
Forward-Looking Statements
Some of the statements in this release contain
forward-looking statements, which involve risks and
uncertainties. These statements relate to future events or
Bravo Brio Restaurant Group, Inc.'s future financial
performance. The Company has attempted to identify
forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should” or
“will” or the negative of these terms or other comparable
terminology. These statements are only predictions and involve
known and unknown risks, uncertainties, and other factors,
including those discussed under the heading “Risk Factors” in
the Annual Report on Form 10-K filed by the Company with the
Securities and Exchange Commission on February 29, 2016.
Although Bravo Brio Restaurant Group, Inc.
believes that the expectations reflected in the forward-looking
statements are reasonable based on its current knowledge of the
business and operations, it cannot guarantee future results, levels
of activity, performance or achievements. The Company assumes
no obligation to provide revisions to any forward-looking
statements should circumstances change.
|
BRAVO BRIO RESTAURANT GROUP, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
FOR THE THIRTEEN AND THIRTY-NINE WEEKS ENDED
SEPTEMBER 25, 2016 AND SEPTEMBER 27, 2015
(UNAUDITED) |
(in thousands except per share
data) |
|
|
Thirteen Weeks Ended |
|
Thirty-Nine Weeks Ended |
|
September 25, 2016 |
|
September 27, 2015 |
|
September 25, 2016 |
|
September 27, 2015 |
Revenues |
$ |
94,588 |
|
|
|
$ |
98,294 |
|
|
|
$ |
308,601 |
|
|
|
$ |
316,709 |
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
25,265 |
|
26.7 |
% |
|
24,463 |
|
24.9 |
% |
|
80,507 |
|
26.1 |
% |
|
79,905 |
|
25.2 |
% |
Labor |
36,938 |
|
39.1 |
% |
|
36,274 |
|
36.9 |
% |
|
115,954 |
|
37.6 |
% |
|
114,271 |
|
36.1 |
% |
Operating |
16,432 |
|
17.4 |
% |
|
16,905 |
|
17.2 |
% |
|
51,626 |
|
16.7 |
% |
|
52,445 |
|
16.6 |
% |
Occupancy |
8,036 |
|
8.5 |
% |
|
7,913 |
|
8.1 |
% |
|
23,622 |
|
7.7 |
% |
|
24,012 |
|
7.6 |
% |
General
and administrative expenses |
6,896 |
|
7.3 |
% |
|
5,401 |
|
5.5 |
% |
|
20,141 |
|
6.5 |
% |
|
17,231 |
|
5.4 |
% |
Restaurant preopening costs |
107 |
|
0.1 |
% |
|
628 |
|
0.6 |
% |
|
621 |
|
0.2 |
% |
|
2,383 |
|
0.8 |
% |
Impairment |
— |
|
— |
% |
|
— |
|
— |
% |
|
1,249 |
|
0.4 |
% |
|
— |
|
— |
% |
Depreciation and amortization |
5,600 |
|
5.9 |
% |
|
5,637 |
|
5.7 |
% |
|
16,680 |
|
5.4 |
% |
|
16,532 |
|
5.2 |
% |
Total
costs and expenses |
99,274 |
|
105.0 |
% |
|
97,221 |
|
98.9 |
% |
|
310,400 |
|
100.6 |
% |
|
306,779 |
|
96.9 |
% |
(Loss) income from
operations |
(4,686 |
) |
(5.0 |
)% |
|
1,073 |
|
1.1 |
% |
|
(1,799 |
) |
(0.6 |
)% |
|
9,930 |
|
3.1 |
% |
Interest expense,
net |
406 |
|
0.4 |
% |
|
353 |
|
0.4 |
% |
|
1,098 |
|
0.4 |
% |
|
1,142 |
|
0.4 |
% |
(Loss) income before
income taxes |
(5,092 |
) |
(5.4 |
)% |
|
720 |
|
0.7 |
% |
|
(2,897 |
) |
(0.9 |
)% |
|
8,788 |
|
2.8 |
% |
Income tax (benefit)
expense |
(2,107 |
) |
(2.2 |
)% |
|
(190 |
) |
(0.2 |
)% |
|
(1,506 |
) |
(0.5 |
)% |
|
1,506 |
|
0.5 |
% |
Net (loss) income |
$ |
(2,985 |
) |
(3.2 |
)% |
|
$ |
910 |
|
0.9 |
% |
|
$ |
(1,391 |
) |
(0.5 |
)% |
|
$ |
7,282 |
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
basic share |
$ |
(0.20 |
) |
|
|
$ |
0.06 |
|
|
|
$ |
(0.09 |
) |
|
|
$ |
0.48 |
|
|
Net (loss) income per
diluted share |
$ |
(0.20 |
) |
|
|
$ |
0.06 |
|
|
|
$ |
(0.09 |
) |
|
|
$ |
0.46 |
|
|
Weighted average shares
outstanding-basic |
14,582 |
|
|
|
15,202 |
|
|
|
14,648 |
|
|
|
15,174 |
|
|
Weighted average shares
outstanding-diluted |
14,582 |
|
|
|
15,948 |
|
|
|
14,648 |
|
|
|
15,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain
percentage amounts may not sum due to rounding. |
|
|
ADJUSTMENTS TO RECONCILE GAAP TO ADJUSTED
RESULTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment charge
(1) |
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
1,249 |
|
|
|
$ |
— |
|
|
Tax expense related to
an Internal Revenue Service audit settlement (2) |
— |
|
|
|
— |
|
|
|
265 |
|
|
|
— |
|
|
Tax expense from excess
tax deficiency for option exercises (3) |
624 |
|
|
|
— |
|
|
|
758 |
|
|
|
— |
|
|
Income tax expense
(4) |
— |
|
|
|
— |
|
|
|
(125 |
) |
|
|
— |
|
|
Total adjustments |
624 |
|
|
|
— |
|
|
|
2,147 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net (loss)
income |
$ |
(2,361 |
) |
|
|
$ |
910 |
|
|
|
$ |
756 |
|
|
|
$ |
7,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
basic share- adjusted |
$ |
(0.16 |
) |
|
|
$ |
0.06 |
|
|
|
$ |
0.05 |
|
|
|
$ |
0.48 |
|
|
Net (loss) income per
diluted share- adjusted |
$ |
(0.16 |
) |
|
|
$ |
0.06 |
|
|
|
$ |
0.05 |
|
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding-basic |
14,582 |
|
|
|
15,202 |
|
|
|
14,648 |
|
|
|
15,174 |
|
|
Weighted average shares
outstanding-diluted (5) |
14,582 |
|
|
|
15,948 |
|
|
|
15,372 |
|
|
|
15,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________
1) Reflects non-cash asset impairment charges for the
thirty-nine weeks ended September 25, 2016 for one
restaurant.2) Reflects the tax expense associated with the
settlement of an Internal Revenue Service audit during the
period.3) Reflects the excess tax deficiency associated with the
exercise of stock options during the period.4) Reflects the
adjustments for income taxes related to impairment charges.5)
Diluted weighted average shares outstanding includes potentially
issuable common shares. Shares of common stock equivalents of
90,520 and 29,250 were excluded from the diluted calculation due to
their anti-dilutive effect for the thirty-nine weeks ended
September 25, 2016 and September 27, 2015,
respectively.
|
BRAVO BRIO RESTAURANT GROUP, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
AS OF SEPTEMBER 25, 2016 AND
DECEMBER 27, 2015 |
(Dollars in thousands) |
|
|
September 25, 2016 |
|
December 27, 2015 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
388 |
|
|
$ |
447 |
|
Accounts
receivable |
6,481 |
|
|
9,617 |
|
Tenant
improvement allowance receivable |
901 |
|
|
286 |
|
Inventories |
2,712 |
|
|
3,163 |
|
Prepaid
expenses and other current assets |
1,053 |
|
|
1,859 |
|
Total
current assets |
11,535 |
|
|
15,372 |
|
Property and equipment
— net |
162,477 |
|
|
170,463 |
|
Deferred income taxes —
net |
59,560 |
|
|
58,054 |
|
Other assets — net |
4,081 |
|
|
4,171 |
|
Total assets |
$ |
237,653 |
|
|
$ |
248,060 |
|
|
|
|
|
Liabilities and
stockholders’ equity |
|
|
|
Current
liabilities |
|
|
|
Trade and construction
payables |
$ |
13,279 |
|
|
$ |
16,283 |
|
Accrued
expenses |
25,347 |
|
|
28,869 |
|
Current
portion of long-term debt |
4,000 |
|
|
— |
|
Deferred
lease incentives |
7,228 |
|
|
7,230 |
|
Deferred
gift card revenue |
11,147 |
|
|
14,728 |
|
Total
current liabilities |
61,001 |
|
|
67,110 |
|
Deferred lease
incentives |
55,583 |
|
|
59,553 |
|
Long-term debt |
47,000 |
|
|
43,300 |
|
Other long-term
liabilities |
23,119 |
|
|
23,273 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity |
|
|
|
Common
shares, no par value per share— authorized 100,000,000 shares;
20,656,917 shares issued at September 25, 2016 and 20,293,296
shares issued at December 27, 2015 |
201,717 |
|
|
200,739 |
|
Preferred
shares, no par value per share— authorized 5,000,000 shares; issued
and outstanding, 0 shares at September 25, 2016 and December 27,
2015 |
— |
|
|
— |
|
Treasury
shares, 5,977,860 shares at September 25, 2016 and 5,534,308 shares
at December 27, 2015 |
(81,019 |
) |
|
(77,558 |
) |
Retained
deficit |
(69,748 |
) |
|
(68,357 |
) |
Total
stockholders’ equity |
50,950 |
|
|
54,824 |
|
Total liabilities and
stockholders’ equity |
$ |
237,653 |
|
|
$ |
248,060 |
|
|
|
|
|
Contacts:
Investor Relations
Don Duffy / Raphael Gross
(203) 682-8200
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