BOJA Bojangles, Inc.

Bojangles’, Inc. (Bojangles’) (NASDAQ:BOJA) today announced financial results for the 13-week fourth fiscal quarter and 52-week fiscal year ended December 25, 2016.  Bojangles’ also provided annual guidance for the 53-week fiscal year 2017 ending on December 31, 2017.

Highlights for the Fourth Fiscal Quarter 2016 Compared to the Fourth Fiscal Quarter 2015

• System-wide comparable restaurant sales increased 2.4%, while company-operated comparable restaurant sales increased 1.1% and franchised comparable restaurant sales increased 3.2%;
• Total revenues increased 8.3% to $139.4 million from $128.8 million;
• 21 system-wide restaurants were opened – 9 company-operated restaurants and 12 franchised restaurants;
• Net Income increased 25.2% to $9.8 million from $7.8 million;
• Diluted Net Income per Share increased 23.8% to $0.26 from $0.21;
• Adjusted Net Income* increased 28.9% to $10.6 million from $8.2 million;
• Adjusted Diluted Net Income per Share* increased 27.3% to $0.28 from $0.22; and
• Adjusted EBITDA* increased 15.3% to $24.6 million from $21.3 million.

Highlights for Fiscal Year 2016 Compared to Fiscal Year 2015

• System-wide comparable restaurant sales increased 1.3%, while company-operated comparable restaurant sales increased 1.1% and franchised comparable restaurant sales increased 1.5%;
• Total revenues increased 8.9% to $531.9 million from $488.2 million;
• 58 system-wide restaurants were opened – 29 company-operated restaurants and 29 franchised restaurants;
• Net Income increased 42.2% to $37.7 million from $26.5 million;
• Diluted Net Income per Share increased 40.8% to $1.00 from $0.71;
• Adjusted Net Income* increased 21.6% to $37.9 million from $31.1 million;
• Adjusted Diluted Net Income per Share* increased 20.5% to $1.00 from $0.83; and
• Adjusted EBITDA* increased 12.1% to $88.9 million from $79.3 million.

* Descriptions of Adjusted Net Income, Adjusted Diluted Net Income per Share, Adjusted EBITDA and other non-GAAP financial measures are provided in “Use and Definition of Non-GAAP Measures,” and reconciliations to GAAP figures are provided in the tables at the end of this release.

“We are pleased the Bojangles’® system has now achieved 27 consecutive quarters of comparable restaurant sales growth through the fourth fiscal quarter of 2016 and that Adjusted Diluted Net Income per Share growth for fiscal year 2016 exceeded our annual guidance despite widespread softness affecting the limited service restaurant category,” said Bojangles’ President and CEO Clifton Rutledge.

“Ahead of Bojangles’ 40th anniversary celebration in July, we are as focused as ever on executing our strategic plans and building the brand in a measured and sustainable way.  We will continue developing restaurants in core and adjacent markets through our company-operated and franchised model, with our long-term goal of franchising leading our expansion efforts over time.  We are striving to offer the best dining experience possible through exceptional service, menu innovation, and compelling limited time offers that solidify our reputation for unique, great tasting, freshly-made food, at an exceptional value.  Together with our franchisees, we are also exploring technology solutions such as mobile payment, apps and loyalty programs that will elevate our customer interactions,” he added.

“Our first ‘Bojangles’ of the Future’ restaurant in Greenville, South Carolina is getting rave reviews and it will be followed by the opening of a second location in Charlotte, North Carolina later this year.  We expect this exciting new restaurant prototype to set the standard for Bojangles' restaurants as we continue testing the various elements of this new design.  Although we recognize and are addressing near-term headwinds affecting our business, we have also never been more energized about the future of this Company,” he concluded.

Fourth Fiscal Quarter 2016 Financial ReviewSystem-wide comparable restaurant sales increased 2.4%, consisting of a 1.1% increase in company-operated comparable restaurant sales and a 3.2% increase in franchised comparable restaurant sales.  The comparable restaurant sales increase at company-operated restaurants was composed of increases in price, partially offset by a decrease in transactions and mix.

Total revenues increased 8.3% to $139.4 million in the fourth fiscal quarter of 2016 from $128.8 million in the prior year fiscal quarter.  The increase was primarily due to a net additional 54 system-wide restaurants at December 25, 2016 compared to December 27, 2015, and comparable restaurant sales growth at our company-operated and franchised restaurants.

Company restaurant revenues increased 8.2% to $132.2 million in the fourth fiscal quarter of 2016 from $122.2 million in the prior year fiscal quarter.  Franchise royalty revenues increased 7.4% to $6.8 million in the fourth fiscal quarter of 2016 from $6.4 million in the prior year fiscal quarter.

Restaurant contribution, a non-GAAP measure, increased 12.6% to $26.0 million in the fourth fiscal quarter of 2016 from $23.1 million in the prior year fiscal quarter.  As a percentage of company restaurant revenues, restaurant contribution margin, a non-GAAP measure, increased to 19.6% in the fourth fiscal quarter of 2016 from 18.9% in the prior year fiscal quarter.

General and administrative expenses increased 6.9% to $10.9 million in the fourth fiscal quarter of 2016 from $10.2 million in the prior year fiscal quarter.  The increase was primarily due to higher stock-based compensation expense as a result of the vesting of certain performance awards, legal, accounting, and other expenses directly related to public offerings and headcount added to support our growing restaurant system.  These increases were partially offset by expenses incurred in connection with the transition to a new distributor in the prior year fiscal quarter.

Net Income increased 25.2% to $9.8 million in the fourth fiscal quarter of 2016 compared to $7.8 million in the prior year fiscal quarter.  Diluted Net Income per Share increased 23.8% to $0.26 in the fourth fiscal quarter of 2016 compared to $0.21 in the prior year fiscal quarter.

Adjusted Net Income, a non-GAAP measure, increased 28.9% to $10.6 million in the fourth fiscal quarter of 2016 compared to $8.2 million in the prior year fiscal quarter.  Adjusted Diluted Net Income per Share increased 27.3% to $0.28 in the fourth fiscal quarter of 2016 compared to $0.22 in the prior year fiscal quarter.

Adjusted EBITDA, a non-GAAP measure, increased 15.3% to $24.6 million in the fourth fiscal quarter of 2016 from $21.3 million in the prior year fiscal quarter.  

Fiscal Year 2017 GuidanceBojangles’ is providing an annual outlook for the 53-week period ending on December 31, 2017:

• Total revenues of $560.0 million to $569.0 million, which includes the impact of our planned refranchising of five company-operated restaurants;
• System-wide comparable restaurant sales of negative low-single digits to flat;
• The opening of 57 to 62 system-wide restaurants;
  • 27 to 28 company-operated restaurants;
  • 30 to 34 franchised restaurants;
• Net increase of 49 to 54 system-wide restaurants;
  • Net increase of 19 to 20 company-operated restaurants, which includes the impact of our planned refranchising of five company-operated restaurants;
  • Net increase of 30 to 34 franchised restaurants, which includes the impact of our planned refranchising of five company-operated restaurants;
• Restaurant contribution margin of 17.0% to 17.5%;
• General and administrative expenses of $40.5 million to $41.5 million;
• Adjusted Diluted Net Income per Share of $0.87 to $0.93; and
• Adjusted EBITDA of $84.0 million to $89.0 million.

We have not reconciled guidance for Adjusted Diluted Net Income per Share or Adjusted EBITDA to the corresponding GAAP financial measures because we do not provide guidance for the various reconciling items. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period.  Accordingly, reconciliations to the corresponding GAAP financial measures are not available without unreasonable effort.

Conference Call and Webcast TodayBojangles’ will host a conference call and webcast to discuss the fourth fiscal quarter 2016 results and fiscal year 2016 results, as well as fiscal year 2017 guidance today at 5:00 p.m. Eastern Time.  The conference call dial-in number is 201-493-6725.  A telephone replay will be available through Friday, April 7, 2017 and may be accessed by dialing 858-384-5517.  The conference ID is 13653614.

The conference call will also be webcast live and later archived on the Investors section of our website at www.bojangles.com.

Conference ParticipationBojangles’ will participate in the Bank of America Merrill Lynch 2017 Consumer & Retail Tech Conference on Tuesday, March 14, 2017 at the Lotte New York Palace hotel in New York City.  In addition to holding investor meetings, we will webcast our presentation live beginning at 2:40 p.m. Eastern Time on the Investors section of the Company's website at www.bojangles.com.  The presentation will later be archived.

About Bojangles’, Inc.Bojangles', Inc. is a highly differentiated and growing restaurant operator and franchisor dedicated to serving customers high-quality, craveable food made from our Southern recipes.  Founded in 1977 in Charlotte, N.C., Bojangles' serves menu items such as delicious, famous chicken, made-from-scratch buttermilk biscuits, flavorful fixin's and Legendary Iced Tea®.  At December 25, 2016, Bojangles' had 716 system-wide restaurants, of which 309 were company-operated and 407 were franchised restaurants, primarily located in the Southeastern United States.  For more information, visit www.bojangles.com or follow Bojangles' on Facebook and Twitter.

Note Regarding Comparable Restaurant SalesComparable restaurant sales reflects the change in year-over-year sales for the comparable restaurant base (as applicable, system-wide, franchised or company-operated restaurants). A restaurant enters our comparable restaurant base the first full day of the month after being open for 15 months using a mid-month convention. If a company-operated restaurant is temporarily closed for a full calendar week due to items such as a remodel, scrape and rebuild, casualty event, severe weather conditions or any other short-term closure, it is removed from the comparable restaurant sales calculations for such period it is temporarily closed. If a franchised restaurant is temporarily closed for a full calendar week due to items such as a remodel, scrape and rebuild, casualty event, severe weather conditions or any other short-term closure, it is removed from the comparable restaurant sales calculations for the entire month(s) impacted by the temporary closure.

Use and Definition of Non-GAAP MeasuresWe utilize certain non-GAAP measures when assessing the operational strength and the performance of our business.  We believe these non-GAAP measures assist our board of directors, management and investors in comparing our operating performance, on a consistent basis from period to period, by isolating the effects of certain items that vary from period to period without any correlation to core operating performance or that vary significantly among similar companies. Bojangles’ cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, reported GAAP results.  

Restaurant contribution is defined as company restaurant revenues less food and supplies costs, restaurant labor costs and operating costs, as identified by the reconciliation table below.  Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant revenues.  Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of our company-operated restaurants and our calculations thereof may not be comparable to those reported by other companies.  Restaurant contribution and restaurant contribution margin have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. 

Adjusted Net Income represents company net income before items that we do not consider representative of our ongoing operating performance, as well as an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, both as identified in the reconciliation table below.  Adjusted Diluted Net Income per Share represents company diluted net income per share before items that we do not consider representative of our ongoing operating performance, as well as an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, both as identified in the reconciliation table below.

EBITDA represents company net income before interest expense (net of interest income), provision for income taxes and depreciation and amortization. Adjusted EBITDA represents company net income before interest expense (net of interest income), provision for income taxes, depreciation and amortization, items that we do not consider representative of our ongoing operating performance and certain non-cash items, as identified in the reconciliation table below.

Adjusted Net Income, Adjusted Diluted Net Income per Share, EBITDA and Adjusted EBITDA are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP.  Adjusted Net Income, Adjusted Diluted Net Income per Share, EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities as a measure of our liquidity.  Adjusted Net Income, Adjusted Diluted Net Income per Share, EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation, or as substitutes for analysis of our results as reported under GAAP.  In addition, in evaluating Adjusted Net Income, Adjusted Diluted Net Income per Share, EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses or charges such as those added back to calculate Adjusted Net Income, Adjusted Diluted Net Income per Share, EBITDA and Adjusted EBITDA.

Forward-Looking StatementsThis release contains forward-looking statements.  All statements other than statements of historical or current facts included in this release are forward-looking statements. Forward-looking statements discuss our current expectations, projections and guidance relating to our financial condition, results of operations, plans, objectives, future performance and business.  These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance.  Actual results may differ materially from these expectations due to risks relating to, among other risks, our vulnerability to changes in consumer preferences and economic conditions; our ability to open restaurants in new and existing markets and expand our franchise system; our ability to generate comparable restaurant sales growth; financial or other difficulties, which could cause our restaurants and our franchisees’ restaurants to close; our ability to generate increased sales or profits from new menu items, advertising campaigns, changes in discounting strategy or restaurant designs and remodels; cancellation of or delay in anticipated future restaurant openings; our reliance on, limited degree of control over and potential responsibility for, our franchisees; increases in the cost of chicken, pork, dairy, wheat, corn and other products; our ability to compete successfully with other quick-service and fast-casual restaurants; our vulnerability to conditions in the Southeastern United States; negative publicity, whether or not valid; concerns about food safety and quality and about food-borne illnesses, including adverse public perception due to the occurrence of avian flu, swine flu or other food-borne illnesses, such as salmonella, E. coli, or others; changes in employment and labor laws; labor shortages and increases in labor costs; and our dependence upon frequent and timely deliveries of restaurant food and other supplies.  For further details and discussion of these and other risks and uncertainties, see our Annual Report on Form 10-K for the fiscal year ended December 25, 2016, which we expect to file with the Securities and Exchange Commission on March 7, 2017, and which will be available at www.sec.gov.  You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events.  Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.

All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.  In addition, all forward-looking statements speak only as of the date of this earnings release.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Assets								December 25,  2016		December 27, 2015
Current assets:
	Cash and cash equivalents						$	13,898		14,263
	Accounts and vendor receivables, net							5,421		4,736
	Accounts receivable, related parties, net							386		403
	Inventories, net							3,326		3,080
	Other current assets							3,033		5,639
			Total current assets					26,064		28,121
	Property and equipment, net							52,275		48,137
	Goodwill							161,140		161,140
	Brand							290,500		290,500
	Franchise rights, net							24,243		25,341
	Favorable leases, net							981		1,394
	Other noncurrent assets							4,569		3,673
			Total assets				$	559,772		558,306
Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable						$	16,818		17,893
	Accrued expenses							17,940		19,086
	Current maturities of long-term debt							2,132		—
	Current maturities of capital lease obligations							7,299		5,968
	Other current liabilities							4,390		2,155
			Total current liabilities					48,579		45,102
	Long-term debt, less current maturities and deferred debt issuance costs, net							153,630		197,735
	Deferred income taxes							111,312		115,028
	Capital lease obligations, less current maturities							22,524		21,483
	Other noncurrent liabilities							12,937		11,834
			Total liabilities					348,982		391,182
Stockholders’ equity:
	Preferred stock							—		—
	Common stock							365		360
	Additional paid-in capital							124,802		119,084
	Retained earnings							85,377		47,661
	Accumulated other comprehensive income							246		19
			Total stockholders’ equity					210,790		167,124
			Total liabilities and stockholders’ equity				$	559,772		558,306

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
								Thirteen Weeks Ended							Fiscal Year Ended
								December 25,  2016			December 27,  2015				December 25,  2016			December 27,  2015
Revenues:
	Company restaurant revenues						$	132,219			122,223				504,664			462,138
	Franchise royalty revenues							6,832			6,364				26,364			25,104
	Other franchise revenues							383			193				853			960
					Total revenues			139,434			128,780				531,881			488,202
Company restaurant operating expenses:
	Food and supplies costs							41,772			40,055				158,644			150,563
	Restaurant labor costs							35,862			32,305				138,839			126,380
	Operating costs							28,611			26,796				112,256			100,916
	Depreciation and amortization							3,278			3,078				12,709			11,456
					Total Company restaurant operating expenses			109,523			102,234				422,448			389,315
					Operating income before other operating expenses			29,911			26,546				109,433			98,887
Other operating expenses:
	General and administrative							10,852			10,150				39,041			42,844
	Depreciation and amortization							739			735				2,917			2,809
	Impairment							947			1,002				1,927			1,210
	Loss on disposal of property and equipment							98			104				47			336
					Total other operating expenses			12,636			11,991				43,932			47,199
					Operating income			17,275			14,555				65,501			51,688
Amortization of deferred debt issuance costs								(196	)		(198	)			(763	)		(821	)
Interest income								1			1				4			7
Interest expense								(1,708	)		(1,920	)			(7,489	)		(8,314	)
					Income before income taxes			15,372			12,438				57,253			42,560
Income taxes								5,550			4,594				19,537			16,034
					Net income		$	9,822			7,844				37,716			26,526
Net income per share:
					Basic		$	0.27			0.22				1.04			1.15
					Diluted		$	0.26			0.21				1.00			0.71
Weighted average shares used in computing net income per share:
					Basic			36,448			35,979				36,258			23,118
					Diluted			37,806			37,436				37,684			37,464

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
								Fiscal Year Ended
								December 25,  2016			December 27,  2015
Cash flows from operating activities:
	Net income						$	37,716			26,526
	Adjustments to reconcile net income to net cash provided by operating activities:
			Deferred income tax benefit					(2,177	)		(1,992	)
			Depreciation and amortization					15,626			14,265
			Amortization of deferred debt issuance costs					763			821
			Impairment					1,927			1,210
			Loss on disposal of property and equipment					47			336
			(Benefit) provision for doubtful accounts					(72	)		239
			Provision for inventory spoilage					20			23
			(Benefit) provision for closed stores					(51	)		36
			Stock-based compensation					1,827			1,963
			Excess tax benefit from stock-based compensation					(2,686	)		(680	)
			Changes in operating assets and liabilities					1,360			2,779
					Net cash provided by operating activities			54,300			45,526
Cash flows from investing activities:
	Purchases of franchisee's assets							(100	)		(186	)
	Purchases of property and equipment							(9,695	)		(12,047	)
	Proceeds from disposition of property and equipment							51			47
					Net cash used in investing activities			(9,744	)		(12,186	)
Cash flows from financing activities:
	Principal payments on long-term debt							(42,736	)		(28,055	)
	Debt issuance costs							—			(554	)
	Stock option exercises							1,210			330
	Excess tax benefit from stock-based compensation							2,686			680
	Principal payments on capital lease obligations							(6,081	)		(4,679	)
					Net cash used in financing activities			(44,921	)		(32,278	)
					Net (decrease) increase in cash and cash equivalents			(365	)		1,062
Cash and cash equivalents balance, beginning of fiscal year								14,263			13,201
Cash and cash equivalents balance, end of fiscal year							$	13,898			14,263

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to Adjusted Net Income
(in thousands)
								Thirteen Weeks Ended							Fiscal Year Ended
								December 25,  2016			December 27,  2015				December 25,  2016			December 27,  2015
Net income							$	9,822			7,844				37,716			26,526
Certain professional and transaction costs (a)								398			213				464			5,254
Incremental public company costs (b)								—			(41	)			—			(940	)
Vesting of performance-based stock options (c)								495			—				495			708
Payroll taxes associated with stock option exercises (d)								44			12				124			28
Distributor transition costs (e)								—			377				81			594
Executive separation expenses (f)								81			25				278			533
State income tax rate change (g)								—			—				(908	)		(903	)
Tax impact of adjustments (h)								(236	)		(204	)			(392	)		(673	)
Total adjustments								782			382				142			4,601
Adjusted Net Income							$	10,604			8,226				37,858			31,127
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Income Per Share
								Thirteen Weeks Ended							Fiscal Year Ended
								December 25,  2016			December 27,  2015				December 25,  2016			December 27,  2015
Diluted net income per share							$	0.26			0.21				1.00			0.71
Certain professional and transaction costs (a)								0.01			0.01				0.01			0.14
Incremental public company costs (b)								—			—				—			(0.03	)
Vesting of performance-based stock options (c)								0.01			—				0.01			0.02
Payroll taxes associated with stock option exercises (d)								—			—				—			—
Distributor transition costs (e)								—			0.01				—			0.02
Executive separation expenses (f)								—			—				0.01			0.01
State income tax rate change (g)								—			—				(0.02	)		(0.02	)
Tax impact of adjustments (h)								—			(0.01	)			(0.01	)		(0.02	)
Total adjustments								0.02			0.01				0.00			0.12
Adjusted Diluted Net Income per Share							$	0.28			0.22				1.00			0.83
(a)	Includes costs associated with third-party consultants for one-time projects, public offering expenses and certain professional fees and transaction costs related to financing transactions. We could incur similar expenses in future periods if we commence additional public offerings, financing transactions or other one-time projects.
(b)	Reflects an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company in addition to actual amounts incurred. By its nature, this adjustment involves risks and uncertainties, and the actual costs incurred could be different than this adjustment. No adjustments will be made beyond the second fiscal quarter 2016 since the one year anniversary of our initial public offering occurred during the thirteen weeks ended June 26, 2016.
(c)	Includes non-cash, stock-based compensation related to the vesting of certain performance based stock option awards. We could incur similar expenses in future periods upon the achievement of the performance metrics indicated in the stock option grants.
(d)	Represents payroll taxes associated with stock option exercises related to stock options that were outstanding prior to our initial public offering. We expect to incur similar expenses in future periods when our directors or employees exercise stock options that were outstanding prior to our initial public offering.
(e)	Includes expenses incurred in connection with the transition to our new distributor.
(f)	Represents severance and legal fees associated with a former executive's departure from the Company.
(g)	As a result of the enacted reductions to the North Carolina corporate income tax rate, we adjusted our deferred income taxes by applying the lower rate, which resulted in a corresponding decrease to income tax expense.
(h)	Represents the income tax expense associated with the adjustments in (a) through (g) that are deductible for income tax purposes.

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands)
								Thirteen Weeks Ended					Fiscal Year Ended
								December 25,  2016		December 27,  2015			December 25,  2016		December 27,  2015
Net income							$	9,822		7,844			37,716		26,526
Income taxes								5,550		4,594			19,537		16,034
Interest expense, net								1,707		1,919			7,485		8,307
Depreciation and amortization (a)								4,213		4,011			16,389		15,086
EBITDA								21,292		18,368			81,127		65,953
Non-cash rent (b)								370		474			1,556		1,642
Stock-based compensation (c)								874		252			1,827		1,963
Payroll taxes associated with stock option exercises (d)								44		12			124		28
Preopening expenses (e)								465		475			1,407		1,540
Sponsor and board member fees and expenses (f)								—		—			—		166
Certain professional, transaction and other costs (g)								398		213			464		5,254
Distributor transition costs (h)								—		377			81		594
Executive separation expenses (i)								81		25			278		533
Impairment and dispositions (j)								1,047		1,117			2,025		1,592
Adjusted EBITDA							$	24,571		21,313			88,889		79,265
(a)	Includes amortization of deferred debt issuance costs.
(b)	Includes deferred rent, which represents the extent to which our rent expense has been above or below our cash rent payments, amortization of favorable (unfavorable) leases and closed store reserves for rent net of cash payments. We expect to continue to incur similar expenses in future periods as we record rent expense in accordance with GAAP, as well as continue to amortize favorable (unfavorable) leases and record closed store reserves.
(c)	Represents non-cash, stock-based compensation. We expect to incur similar expenses in future periods as we record stock-based compensation related to existing grants (and any potential future grants) in accordance with GAAP.
(d)	Represents payroll taxes associated with stock option exercises related to stock options that were outstanding prior to our initial public offering. We expect to incur similar expenses in future periods when our directors or employees exercise stock options that were outstanding prior to our initial public offering.
(e)	Includes expenses directly associated with the opening of company-operated restaurants and incurred prior to the opening of a company-operated restaurant. We expect to continue to incur similar expenses as we open company-operated restaurants.
(f)	Includes reimbursement of expenses to our sponsor prior to our initial public offering and compensation and expense reimbursement to members of our board prior to our initial public offering.
(g)	Includes costs associated with third-party consultants for one-time projects, public offering expenses and certain professional fees and transaction costs related to financing transactions. We could incur similar expenses in future periods if we commence additional public offerings, financing transactions or other one-time projects.
(h)	Includes expenses incurred in connection with the transition to our new distributor.
(i)	Represents severance and legal fees associated with a former executive's departure from the Company.
(j)	Includes loss (gain) on disposal of property and equipment, impairment and cash proceeds on disposals from disposition of property and equipment. We could continue to record impairment expense in future periods if performance of company-operated restaurants is not sufficient to recover the carrying amount of the related long-lived assets. We may incur future losses (gains) and receive cash proceeds on disposal of property and equipment associated with retirement, replacement or write-off of fixed assets.

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Company Restaurant Revenues to Restaurant Contribution
(in thousands)
								Thirteen Weeks Ended							Fiscal Year Ended
								December 25,  2016			December 27,  2015				December 25,  2016			December 27,  2015
Company restaurant revenues							$	132,219			122,223				504,664			462,138
Food and supplies costs								(41,772	)		(40,055	)			(158,644	)		(150,563	)
Restaurant labor costs								(35,862	)		(32,305	)			(138,839	)		(126,380	)
Operating costs								(28,611	)		(26,796	)			(112,256	)		(100,916	)
Restaurant contribution							$	25,974			23,067				94,925			84,279
Restaurant contribution margin								19.6	%		18.9	%			18.8	%		18.2	%

 

For Investor Relations Inquiries:
Raphael Gross of ICR
203.682.8253

For Media Inquiries:
Brian Little of Bojangles’ Restaurants, Inc.
704.519.2118