Fogo de Chão, Inc. (NASDAQ:FOGO) today reported financial results
for its 13-week fiscal fourth quarter and 52-week fiscal year ended
January 1, 2017.
Key Highlights for the Fourth Quarter of
2016 compared to the Fourth Quarter of 2015 Include:
- Total revenue of $80.9 million increased 4.4% on a reported
basis and 11.2% on a constant currency basis(1) excluding the
benefit of incremental revenue attributable to the extra week in
Fiscal 2015.
- GAAP net income was $7.7 million, or $0.27 per
diluted share.
- Adjusted net income(2) was $8.0 million, or $0.28 per
diluted share.
- U.S. comparable restaurant sales decreased 1.0%.
Key Highlights for Fiscal Year 2016
compared to Fiscal Year 2015 Include:
- Total full-year revenue of $288.3 million increased 6.1% on a
reported basis and 8.9% on a constant currency basis(1) excluding
the benefit of incremental revenue attributable to the Olympics in
Fiscal 2016 and the extra week in Fiscal 2015.
- GAAP net income was $24.4 million, or $0.85 per
diluted share.
- Adjusted net income(2) was $25.1 million,
or $0.87 per diluted share.
- U.S. comparable restaurant traffic increased 0.5%, which
represents the third consecutive year of positive traffic
gains.
- U.S. comparable restaurant sales decreased 0.6%.(1) In
order to assess how the business performed in the current period,
the Company has adjusted the prior period on a constant currency
basis. Constant currency calculations compare results between
periods as if exchange rates had remained constant
period-over-period. The Company compares the percent change in the
results from one period to another period using constant currency
to exclude the effects of foreign currency fluctuations. A
reconciliation of GAAP revenue to constant currency revenue is
included in the accompanying financial data. See also "Non-GAAP
Financial Measures" below.(2) Adjusted net income is a
non-GAAP measure. A reconciliation of GAAP net income to adjusted
net income is included in the accompanying financial data. See also
"Non-GAAP Financial Measures" below.
“We are pleased to post our third consecutive
year of positive U.S. comparable traffic gains. The initiatives in
place around daypart expansion and price optionality are helping to
drive these gains with further revenue growth coming from our
company-owned restaurant development,” said Larry Johnson, Chief
Executive Officer of Fogo de Chão, Inc. “We plan to grow our
restaurant base during 2017- opening up to seven locations in 2017,
including up to two international joint venture locations, as well
as driving our comparable restaurant sales by continuous innovation
on our strategic platforms.”
Fourth Quarter 2016 Financial
Results
Total revenue for the fourth quarter of Fiscal
2016 was $80.9 million compared to $77.5 million in the fourth
quarter of Fiscal 2015. The $3.4 million increase is
primarily attributable to new restaurant locations opened in the
last 18 months and a favorable foreign exchange impact, offset by
the incremental revenue generated during the extra week in Fiscal
2015 and a comparable sales decrease of 2.0%. Excluding the impact
of the extra week in Fiscal 2015 and the foreign exchange impact,
total revenues for the fourth quarter increased 11.2% over the
prior year period.
U.S. restaurant revenue increased 5.0% to $68.6
million in the fourth quarter of Fiscal 2016 primarily due to new
restaurant locations opened in the last 18 months, offset by the
incremental revenue generated during the extra week in Fiscal 2015,
and a U.S. comparable restaurant sales decrease of 1.0%. Excluding
the impact of the extra week in Fiscal 2015, U.S. restaurant
revenue for the fourth quarter increased 15.6% over the prior year
period.
Brazil restaurant revenue was $12.2 million in
the fourth quarter of Fiscal 2016 compared to $12.1 million in the
fourth quarter of Fiscal 2015. The favorable foreign exchange
impact and incremental revenue attributable to the restaurant
location opened in the last 18 months was virtually offset by a
Brazil comparable restaurant sales decrease of 6.9%. Excluding the
impact of the extra week in Fiscal 2015 and the favorable foreign
exchange impact, Brazil restaurant revenue for the fourth quarter
decreased 8.5% over the prior year period.
GAAP net income for the fourth quarter of Fiscal
2016 was $7.7 million, compared to $12.9 million in the fourth
quarter of Fiscal 2015. Adjusted net income in the fourth
quarter of Fiscal 2016 was $8.0 million, or $0.28 per diluted
share, compared to $8.3 million, or $0.29 per diluted share in the
fourth quarter of Fiscal 2015. Excluding the impact of the extra
week in Fiscal 2015 and the unfavorable foreign exchange, adjusted
net income for the fourth quarter increased 13.5% over the prior
year period. A reconciliation between GAAP net income and adjusted
net income is included in the accompanying financial data.
Development Update
As of January 1, 2017, the Company operated 45
restaurants, ten of which are in Brazil, and two joint venture
restaurants in Mexico City.
The Company opened locations in Tysons, Virginia
and Uptown in Dallas in January and February 2017,
respectively. The Company plans to open at least three
additional Company-owned restaurants during the remainder of Fiscal
2017, one of which is currently under construction, and up to two
additional international joint venture restaurants. In addition to
the restaurant under construction, the Company has three signed
leases and is negotiating multiple letters of intent for planned
2017 and 2018 Company-owned locations.
Investors are reminded that the actual number
and timing of new restaurant openings is subject to a number of
factors outside of the Company's control including, but not limited
to, weather conditions and factors under the control of landlords,
contractors and regulatory/licensing authorities.
2017 Outlook
Based on current information, the Company is
providing its initial guidance for the 52-week fiscal year 2017,
which ends on December 31, 2017. Adjusted diluted net income per
share is expected to range between $0.92 and $0.95, which
represents growth of 7.0% to 11.0% over adjusted diluted net income
per share of $0.86 in Fiscal 2016. Adjusted diluted net income per
share guidance for Fiscal 2017 is based, in part, on the following
annual assumptions:
- Total revenue of $315 million to $320 million, assuming an
exchange rate of 3.25 Brazilian reais to 1 U.S. dollar, which
represents 10% to 12% growth on a constant currency and Olympics
adjusted basis;
- Company-owned comparable restaurant sales of -0.5% to
0.5%;
- Restaurant contribution margin of 28.8% to 29.2%;
- Pre-opening expenses of $3.0 million to $3.5 million;
- General and administrative expenses of $20 million to $22
million;
- Opening up to seven restaurants, including up to two
international joint venture locations;
- Capital expenditures of $26 million to $30 million;
- Depreciation expense of $18.5 million to $19.0 million;
and
- Tax rate of 32% to 33%.(1) The Company’s 2016 results are
adjusted for comparison to 2017 by ($0.02) to exclude the estimated
effects of the Olympics benefit and by $0.01 to adjust 2016 to the
same Brazilian Real exchange rate that we have projected for our
2017 guidance (3.25 reais to 1 U.S. dollar).
Guidance Policy
The Company intends to provide annual guidance
as it relates to revenue, comparable restaurant sales growth,
restaurant contribution margin, general and administrative expense,
tax expense, and development schedule. The Company expressly
disclaims any duty to update this guidance.
Conference Call/ Webcast
The Company will host a conference call to
discuss its fourth quarter and fiscal year 2016 financial results
today at 5:00 PM Eastern Time. Hosting the call will be Larry
Johnson, Chief Executive Officer, Barry McGowan, President, and
Tony Laday, Chief Financial Officer.
The conference call can be accessed live over
the phone by dialing (877) 407-0789 or for international callers by
dialing (201) 689-8562. A replay will be available two hours after
the call and can be accessed by dialing (844) 512-2921 or for
international callers by dialing (412) 317-6671; the passcode is
13652685. The replay will be available through Tuesday, March 21,
2017. The conference call will also be webcast live and later
archived on Fogo’s corporate website at ir.fogodechao.com under the
‘News & Events’ section.
About Fogo de Chão
Fogo de Chão (fogo-dee-shown) is a leading
Brazilian steakhouse, or churrascaria, which has specialized for
more than 37 years in fire-roasting high-quality meats utilizing
the centuries-old Southern Brazilian cooking technique of
churrasco. Fogo delivers a distinctive and authentic Brazilian
dining experience through the combination of high-quality Brazilian
cuisine and a differentiated service model known as espeto corrido
(Portuguese for "continuous service") delivered by gaucho chefs.
Fogo offers its guests a tasting menu of a variety of meats
including beef, lamb, pork and chicken, simply seasoned and
carefully fire-roasted to expose their natural flavors, a gourmet
Market Table with seasonal salads, soup and fresh vegetables,
seafood, desserts, signature cocktails and an award-winning wine
list. The first Fogo de Chão opened in Brazil in 1979. The Company
currently operates 35 restaurants in the United States, ten in
Brazil and two joint venture restaurants in Mexico. Visit FOGO.com
for more information.
Safe Harbor Statement
This release contains forward-looking
statements, within the meaning of the Private Securities Litigation
Reform Act of 1995, which are subject to risks and uncertainties.
Forward-looking statements relate to expectations, beliefs,
projections, guidance, future plans, objectives and strategies,
anticipated events or trends and similar expressions concerning
matters that are not historical facts, such as statements regarding
our future financial condition or results of operations, our
prospects and strategies for future growth, the development and
introduction of new products, and the implementation of our
marketing and branding strategies. Forward-looking statements can
also be identified by words such as “may,” “will,” “should,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “potential,” “seeks,” “intends,” “targets” or the
negative of these terms or other comparable
terminology. Forward-looking statements are not guarantees of
future performance and actual results may differ significantly from
the results discussed in the forward-looking statements. Factors
that might cause such differences include, but are not limited to,
those discussed in the section entitled "Risk Factors" in our
recent annual report on Form 10-K for the fiscal year ended January
3, 2016 filed with the Securities and Exchange Commission, and our
discussion of risks in our quarterly reports on Form 10-Q. The
forward-looking statements included in this press release are made
only as of the date hereof. Except as required by applicable
securities law, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the
occurrence of unanticipated events.
Non-GAAP Financial Measures
The Company uses the following non-GAAP
financial measures: EBITDA, Adjusted EBITDA, Adjusted net income
(loss), and constant currency (collectively the "non-GAAP financial
measures"). The Company also presents certain results of operations
on a constant currency basis to exclude the effects of foreign
currency fluctuations. The Company uses these non-GAAP financial
measures for financial and operational decision making and as a
means to evaluate period-to-period comparisons. The Company
believes that they provide useful information about operating
results, enhance the overall understanding of past financial
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 by the Company in this press release may be different from the
methods used by other companies.
|
Key Financial Data - Fiscal Quarter |
|
Fiscal Quarter Ended |
|
Adjusted(a) |
|
|
(in thousands, except restaurant and per share
amounts) |
|
January 1, 2017 |
|
January 3, 2016 |
|
Change |
|
Change |
|
Change |
|
|
|
|
(13 weeks) |
|
(14 weeks) |
|
|
|
|
|
|
|
|
Comparable store sales: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
-1.0 |
% |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
Brazil |
|
|
-6.9 |
% |
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
Consolidated |
|
|
-2.0 |
% |
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurants opened during period |
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Restaurants open at period end |
|
|
45 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(b): |
|
|
|
|
|
|
|
|
|
|
|
|
U.S.(c) |
|
$ |
68,594 |
|
|
$ |
65,328 |
|
|
$ |
3,266 |
|
|
5.0 |
% |
|
15.6 |
% |
|
|
Brazil |
|
$ |
12,177 |
|
|
$ |
12,081 |
|
|
$ |
96 |
|
|
0.8 |
% |
|
-8.5 |
% |
|
|
Consolidated |
|
$ |
80,877 |
|
|
$ |
77,496 |
|
|
$ |
3,381 |
|
|
4.4 |
% |
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA attributable to Fogo de
Chão, Inc. |
|
$ |
18,268 |
|
|
$ |
19,368 |
|
|
$ |
(1,100 |
) |
|
-5.7 |
% |
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Fogo de Chão, Inc. |
|
$ |
7,698 |
|
|
$ |
12,941 |
|
|
$ |
(5,243 |
) |
|
-40.5 |
% |
|
-34.7 |
% |
|
|
Adjusted net income attributable to Fogo de
Chão, Inc. |
|
$ |
8,018 |
|
|
$ |
8,339 |
|
|
$ |
(321 |
) |
|
-3.8 |
% |
|
13.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.27 |
|
|
$ |
0.45 |
|
|
$ |
(0.18 |
) |
|
-40.0 |
% |
|
-34.1 |
% |
|
|
Adjusted diluted earnings per share |
|
$ |
0.28 |
|
|
$ |
0.29 |
|
|
$ |
(0.01 |
) |
|
-3.4 |
% |
|
16.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Fully adjusted to exclude the effects of the 53rd week
benefit ($6,795) and currency fluctuation in the
Brazilian Real $2,047 in Fiscal 2015. |
|
(b)
We have two operating segments: United States and Brazil. Our joint
venture in Mexico is included in the
United States for segment reporting purposes as the operations of
the joint venture are monitored by the
United States segment management. |
|
(c)
U.S. revenue excludes gift card breakage revenue. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Financial Data - Fiscal Year |
|
Fiscal Year Ended |
|
Adjusted(a) |
|
|
(in thousands, except restaurant and per share
amounts) |
|
January 1, 2017 |
|
January 3, 2016 |
|
Change |
|
Change |
|
Change |
|
|
|
|
(52 weeks) |
|
(53 weeks) |
|
|
|
|
|
|
|
|
Comparable store sales: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
-0.6 |
% |
|
|
2.7 |
% |
|
|
|
|
|
|
|
|
Brazil |
|
|
-0.5 |
% |
|
|
-8.8 |
% |
|
|
|
|
|
|
|
|
Brazil
adjusted for Olympics |
|
|
-2.5 |
% |
|
|
N/A |
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
-0.6 |
% |
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
Consolidated adjusted for Olympics |
|
|
-0.9 |
% |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurants opened during period |
|
|
4 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
Restaurants open at period end |
|
|
45 |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(b): |
|
|
|
|
|
|
|
|
|
|
|
|
U.S.(c) |
|
$ |
245,381 |
|
|
$ |
227,073 |
|
|
$ |
18,308 |
|
|
8.1 |
% |
|
11.0 |
% |
|
|
Brazil |
|
$ |
42,753 |
|
|
$ |
44,425 |
|
|
$ |
(1,672 |
) |
|
-3.8 |
% |
|
-1.9 |
% |
|
|
Consolidated |
|
$ |
288,296 |
|
|
$ |
271,634 |
|
|
$ |
16,662 |
|
|
6.1 |
% |
|
8.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA attributable to Fogo de
Chão, Inc. |
|
$ |
59,892 |
|
|
$ |
63,181 |
|
|
$ |
(3,289 |
) |
|
-5.2 |
% |
|
-2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Fogo de Chão, Inc. |
|
$ |
24,437 |
|
|
$ |
27,865 |
|
|
$ |
(3,428 |
) |
|
-12.3 |
% |
|
-9.3 |
% |
|
|
Adjusted net Income attributable to Fogo de
Chão, Inc. |
|
$ |
25,062 |
|
|
$ |
27,195 |
|
|
$ |
(2,133 |
) |
|
-7.8 |
% |
|
-4.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share |
|
$ |
0.85 |
|
|
$ |
1.06 |
|
|
$ |
(0.21 |
) |
|
-19.8 |
% |
|
-17.0 |
% |
|
|
Adjusted diluted earnings per share |
|
$ |
0.87 |
|
|
$ |
1.03 |
|
|
$ |
(0.16 |
) |
|
-15.5 |
% |
|
-12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Fully adjusted to exclude the effects of the Olympics benefit in
Fiscal 2016 ($1,367) and the 53rd week
benefit ($6,795) and currency fluctuation in the Brazilian Real
($1,442) in Fiscal 2015. |
|
(b)
We have two operating segments: United States and Brazil. Our joint
venture in Mexico is included in the
United States for segment reporting purposes as the operations of
the joint venture are monitored by the
United States segment management. |
|
(c)
U.S. revenue excludes gift card breakage revenue. |
|
Fogo de Chão,
Inc. |
|
|
Unaudited Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss) |
|
|
(in thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
Fiscal Year Ended |
|
|
|
|
January 1, 2017 |
|
January 3, 2016 |
|
January 1, 2017 |
|
January 3, 2016 |
|
|
|
|
(13 weeks) |
|
(14 weeks) |
|
(52 weeks) |
|
(53 weeks) |
|
|
Revenue |
|
$ |
80,877 |
|
|
$ |
77,496 |
|
|
$ |
288,296 |
|
|
$ |
271,634 |
|
|
|
Restaurant operating costs: |
|
|
|
|
|
|
|
|
|
|
Food and
beverage costs |
|
|
22,606 |
|
|
|
21,558 |
|
|
|
82,145 |
|
|
|
80,062 |
|
|
|
Compensation and benefit costs |
|
|
18,046 |
|
|
|
17,022 |
|
|
|
66,376 |
|
|
|
60,224 |
|
|
|
Occupancy
and other operating expenses (excluding depreciation and
amortization) |
|
|
14,802 |
|
|
|
12,475 |
|
|
|
54,001 |
|
|
|
46,153 |
|
|
|
Total
restaurant operating costs |
|
|
55,454 |
|
|
|
51,055 |
|
|
|
202,522 |
|
|
|
186,439 |
|
|
|
Marketing and advertising costs |
|
|
2,016 |
|
|
|
2,009 |
|
|
|
7,132 |
|
|
|
6,618 |
|
|
|
General
and administrative costs |
|
|
5,192 |
|
|
|
5,598 |
|
|
|
20,576 |
|
|
|
32,566 |
|
|
|
Pre-opening costs |
|
|
1,467 |
|
|
|
2,524 |
|
|
|
3,580 |
|
|
|
4,858 |
|
|
|
Loss on
extinguishment/modification of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,991 |
|
|
|
Non-cash
impairment charges |
|
|
320 |
|
|
|
— |
|
|
|
320 |
|
|
|
— |
|
|
|
Depreciation and amortization |
|
|
4,139 |
|
|
|
3,234 |
|
|
|
15,729 |
|
|
|
12,471 |
|
|
|
Other
operating (income) expense, net |
|
|
187 |
|
|
|
(168 |
) |
|
|
21 |
|
|
|
(291 |
) |
|
|
Total
costs and expenses |
|
|
68,775 |
|
|
|
64,252 |
|
|
|
249,880 |
|
|
|
248,652 |
|
|
|
Income
from operations |
|
|
12,102 |
|
|
|
13,244 |
|
|
|
38,416 |
|
|
|
22,982 |
|
|
|
Other
income (expense): |
|
|
|
|
|
|
|
|
|
|
Interest
expense, net of capitalized interest |
|
|
(1,080 |
) |
|
|
(1,090 |
) |
|
|
(4,387 |
) |
|
|
(9,975 |
) |
|
|
Interest
income |
|
|
674 |
|
|
|
307 |
|
|
|
2,208 |
|
|
|
856 |
|
|
|
Other
income (expense), net |
|
|
(4 |
) |
|
|
4 |
|
|
|
(18 |
) |
|
|
(34 |
) |
|
|
Total
other income (expense), net |
|
|
(410 |
) |
|
|
(779 |
) |
|
|
(2,197 |
) |
|
|
(9,153 |
) |
|
|
Income
before income taxes |
|
|
11,692 |
|
|
|
12,465 |
|
|
|
36,219 |
|
|
|
13,829 |
|
|
|
Income
tax expense (benefit) |
|
|
3,980 |
|
|
|
(586 |
) |
|
|
11,957 |
|
|
|
(14,168 |
) |
|
|
Net
income |
|
|
7,712 |
|
|
|
13,051 |
|
|
|
24,262 |
|
|
|
27,997 |
|
|
|
Less: Net
income (loss) attributable to noncontrolling interest |
|
|
14 |
|
|
|
110 |
|
|
|
(175 |
) |
|
|
132 |
|
|
|
Net
income attributable to Fogo de Chão, Inc. |
|
$ |
7,698 |
|
|
$ |
12,941 |
|
|
$ |
24,437 |
|
|
$ |
27,865 |
|
|
|
Net
income |
|
$ |
7,712 |
|
|
$ |
13,051 |
|
|
$ |
24,262 |
|
|
$ |
27,997 |
|
|
|
Other
comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
Currency
translation adjustment |
|
|
(474 |
) |
|
|
146 |
|
|
|
14,261 |
|
|
|
(29,888 |
) |
|
|
Total
other comprehensive income (loss) |
|
$ |
(474 |
) |
|
$ |
146 |
|
|
$ |
14,261 |
|
|
$ |
(29,888 |
) |
|
|
Comprehensive income (loss) |
|
|
7,238 |
|
|
|
13,197 |
|
|
|
38,523 |
|
|
|
(1,891 |
) |
|
|
Less:
Comprehensive income (loss) attributable to noncontrolling
interest |
|
|
(133 |
) |
|
|
82 |
|
|
|
(616 |
) |
|
|
(11 |
) |
|
|
Comprehensive income (loss) attributable to Fogo de Chão,
Inc. |
|
$ |
7,371 |
|
|
$ |
13,115 |
|
|
$ |
39,139 |
|
|
$ |
(1,880 |
) |
|
|
Earnings
per common share attributable to Fogo de Chão, Inc.: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.27 |
|
|
$ |
0.46 |
|
|
$ |
0.87 |
|
|
$ |
1.09 |
|
|
|
Diluted |
|
$ |
0.27 |
|
|
$ |
0.45 |
|
|
$ |
0.85 |
|
|
$ |
1.06 |
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
28,119,196 |
|
|
|
28,021,576 |
|
|
|
28,119,196 |
|
|
|
25,519,312 |
|
|
|
Diluted |
|
|
28,822,616 |
|
|
|
28,926,777 |
|
|
|
28,822,616 |
|
|
|
26,324,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
to Adjusted Net Income attributable to Fogo de Chão,
Inc.(a) |
|
|
|
|
|
|
|
|
(in thousands,
except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
Constant Currency(f) |
|
|
|
|
January 1, 2017 |
|
January 3, 2016 |
|
January 3, 2016 |
|
|
|
|
(13 weeks) |
|
(14 weeks) |
|
(14 weeks) |
|
|
Net
income attributable to Fogo de Chão, Inc. |
|
$ |
7,698 |
|
$ |
12,941 |
|
|
$ |
13,511 |
|
|
|
Retention agreement payments(b) |
|
|
— |
|
|
106 |
|
|
|
106 |
|
|
|
Non-cash
impairment charge(c) |
|
|
320 |
|
|
— |
|
|
|
— |
|
|
|
Income
tax expense(d) |
|
|
3,997 |
|
|
(647 |
) |
|
|
(562 |
) |
|
|
Pre-tax
adjusted net income |
|
|
12,015 |
|
|
12,400 |
|
|
|
13,055 |
|
|
|
Estimated tax provision(e) |
|
|
3,997 |
|
|
4,061 |
|
|
|
4,276 |
|
|
|
Adjusted
net income attributable to Fogo de Chão, Inc. |
|
$ |
8,018 |
|
$ |
8,339 |
|
|
$ |
8,779 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income per common share attributable to Fogo de Chão,
Inc.: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.29 |
|
$ |
0.30 |
|
|
$ |
0.31 |
|
|
|
Diluted |
|
$ |
0.28 |
|
$ |
0.29 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
28,119,196 |
|
|
28,021,576 |
|
|
|
28,021,576 |
|
|
|
Diluted |
|
|
28,822,616 |
|
|
28,926,777 |
|
|
|
28,926,777 |
|
|
|
|
|
|
|
|
|
|
|
|
(a) Excludes impacts attributable to our joint venture
in Mexico. |
|
(b) Consists of cash payments to our regional managers
pursuant to retention and non-compete agreements
executed in Fiscal 2012. The final payments under
these agreements were paid in October 2015. |
|
(c) Consists of non-cash impairment charge related to
the reduction in carrying value of an underperforming
restaurant in Brazil. |
|
(d) Consists of recorded income tax expense for the
period. Actual taxes are added back and recalculated against
pre-tax adjusted net income. There is no
current year tax effect for the non-cash impairment charge as it
is considered a non-taxable event in
Brazil. Refer to (e). |
|
(e) Our effective tax rate for the fourth quarter ended
January 1, 2017 is 34.44%. Our estimated effective tax rate
for the fourth quarter ended January 3, 2016
is 32.75% before discrete items. |
|
(f) We compare the percent change in the results
from one period to another period using constant currency to
exclude the effects of foreign currency
fluctuations. |
|
Reconciliation
to Adjusted Net Income attributable to Fogo de Chão,
Inc.(a) |
|
|
|
|
|
|
|
|
(in thousands,
except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
Constant Currency(m) |
|
|
|
|
January 1, 2017 |
|
January 3, 2016 |
|
January 3, 2016 |
|
|
|
|
(52 weeks) |
|
(53 weeks) |
|
(53 weeks) |
|
|
Net
income attributable to Fogo de Chão, Inc. |
|
$ |
24,437 |
|
$ |
27,865 |
|
|
$ |
28,029 |
|
|
|
Credit
facility interest adjustment(b) |
|
|
— |
|
|
5,510 |
|
|
|
5,510 |
|
|
|
Loss on
extinguishment/modification of debt(c) |
|
|
— |
|
|
5,991 |
|
|
|
5,991 |
|
|
|
Share-based compensation(d) |
|
|
— |
|
|
5,840 |
|
|
|
5,840 |
|
|
|
Management and consulting fees(e) |
|
|
— |
|
|
8,137 |
|
|
|
8,137 |
|
|
|
Retention agreement payments(f) |
|
|
— |
|
|
1,042 |
|
|
|
1,042 |
|
|
|
IPO
related expenses(g) |
|
|
— |
|
|
782 |
|
|
|
782 |
|
|
|
Recurring public company costs(h) |
|
|
— |
|
|
(500 |
) |
|
|
(500 |
) |
|
|
Non-recurring expenses(i) |
|
|
456 |
|
|
— |
|
|
|
— |
|
|
|
Non-cash
impairment charge(j) |
|
|
320 |
|
|
— |
|
|
|
— |
|
|
|
Income
tax expense(k) |
|
|
11,923 |
|
|
(14,229 |
) |
|
|
(14,277 |
) |
|
|
Pre-tax
adjusted net income |
|
|
37,136 |
|
|
40,438 |
|
|
|
40,554 |
|
|
|
Estimated tax provision(l) |
|
|
12,074 |
|
|
13,243 |
|
|
|
13,281 |
|
|
|
Adjusted
net income attributable to Fogo de Chão, Inc. |
|
$ |
25,062 |
|
$ |
27,195 |
|
|
$ |
27,273 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income per common share attributable to Fogo de Chão,
Inc.: |
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.89 |
|
$ |
1.07 |
|
|
$ |
1.07 |
|
|
|
Diluted |
|
$ |
0.87 |
|
$ |
1.03 |
|
|
$ |
1.04 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
|
28,119,196 |
|
|
25,519,312 |
|
|
|
25,519,312 |
|
|
|
Diluted |
|
|
28,822,616 |
|
|
26,324,115 |
|
|
|
26,324,115 |
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Excludes impacts attributable to our joint venture in Mexico. |
|
(b)
Credit facility interest represents the adjustment to interest
expense that would have been recorded if the extinguishment of our
2012 Credit Facility had occurred at the
beginning of Fiscal 2014. |
|
(c)
Consists primarily of non-cash charges resulting from the
extinguishment or our 2012 Credit Facility. For the fiscal year
ended January 3, 2016, includes $250
pre-payment premium and $76 in legal and other expenses paid in
connection with the termination. |
|
(d)
For the fiscal year ended January 3, 2016, includes $5,658 of
compensation expense recognized upon the closing of our IPO
attributable to the vesting of stock
options. |
|
(e)
Consists primarily of payments to an affiliate of THL and advisors
engaged by an affiliate of THL for advisory and consulting
services. For the fiscal year ended
January 3, 2016, includes the $7,544 fee paid to an affiliate of
THL as a result of the termination of the advisory
services agreement with that affiliate. |
|
(f)
Consists of cash payments to our regional managers pursuant
to retention and non-compete agreements executed in Fiscal 2012.
The final payments under these
agreements were paid in October 2015. |
|
(g)
Represents external professional service costs incurred as we
assessed and initiated the process of becoming a public company.
These costs include accounting and legal
fees for public readiness services, documentation of internal
controls to comply with Section 404 of the
Sarbanes-Oxley Act and external auditor fees incurred for
review of all fiscal quarters included in the registration
statement. |
|
(h)
Recurring public company costs represent estimated costs that we
would have incurred if the IPO had occurred at the beginning of
Fiscal 2014. |
|
(i)
Consists of one-time expenses related to the realignment of
management of the Brazilian subsidiaries, the legal transfer of the
Brazilian subsidiaries to the Company’s
Dutch holding company to support the Company’s expansion into
international markets and other one-time
legal and accounting fees. |
|
(j)
Consists of non-cash impairment charge related to the
reduction in carrying value of an underperforming restaurant in
Brazil. |
|
(k)
Consists of recorded income tax expense for the period. Actual
taxes are added back and recalculated against pre-tax adjusted net
income. There is no current year tax
effect for the non-cash impairment charge as it is considered a
non-taxable event in Brazil. Refer to (l). |
|
(l)
Our effective tax rate for the fiscal year ended January 1,
2017 is 33.15%. Our estimated effective tax rate for the fiscal
year ended January 3, 2016 is 32.75%
before discrete items. |
|
(m)
We compare the percent change in the results from one period
to another period using constant currency to exclude the effects of
foreign currency fluctuations. |
|
Reconciliation
Adjusted EBITDA attributable to Fogo de Chão,
Inc.(a): |
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
Constant Currency(f) |
|
|
|
|
January 1, 2017 |
|
January 3, 2016 |
|
January 3, 2016 |
|
|
|
|
(13 weeks) |
|
(14 weeks) |
|
(14 weeks) |
|
|
Net
income attributable to Fogo de Chão, Inc. |
|
$ |
7,698 |
|
|
$ |
12,941 |
|
|
$ |
13,511 |
|
|
|
Depreciation and amortization expense |
|
|
4,048 |
|
|
|
3,172 |
|
|
|
3,249 |
|
|
|
Interest
expense, net |
|
|
1,080 |
|
|
|
1,090 |
|
|
|
1,090 |
|
|
|
Interest
income |
|
|
(674 |
) |
|
|
(307 |
) |
|
|
(359 |
) |
|
|
Income
tax expense (benefit) |
|
|
3,997 |
|
|
|
(647 |
) |
|
|
(562 |
) |
|
|
EBITDA |
|
|
16,149 |
|
|
|
16,249 |
|
|
|
16,929 |
|
|
|
Pre-opening costs |
|
|
1,402 |
|
|
|
2,524 |
|
|
|
2,524 |
|
|
|
Share-based compensation |
|
|
172 |
|
|
|
281 |
|
|
|
281 |
|
|
|
Retention
agreement payments(b) |
|
|
— |
|
|
|
106 |
|
|
|
106 |
|
|
|
Non-cash
adjustments(c) |
|
|
225 |
|
|
|
208 |
|
|
|
205 |
|
|
|
Non-recurring expenses(d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Non-cash
impairment charge(e) |
|
|
320 |
|
|
|
— |
|
|
|
— |
|
|
|
Adjusted
EBITDA attributable to Fogo de Chão, Inc. |
|
$ |
18,268 |
|
|
$ |
19,368 |
|
|
$ |
20,045 |
|
|
|
|
|
|
|
|
|
|
|
|
(a)
Excludes impacts attributable to our joint venture in Mexico. |
|
(b)
Consists of cash payments to our regional managers pursuant to
retention and non-compete agreements
executed in 2012. The final payments under these agreements were
paid in October 2015. |
|
(c)
Consists of non-cash portion of straight line rent expense. |
|
(d)
Consists of one-time expenses related to the realignment of
management of the Brazilian subsidiaries. |
|
(e)
Consists of non-cash impairment charge related to the reduction in
carrying value of an underperforming
restaurant in Brazil. |
|
(f)
We compare the percent change in the results from one period
to another period using constant currency to
exclude the effects of foreign currency fluctuations. |
|
Reconciliation
Adjusted EBITDA attributable to Fogo de Chão,
Inc.(a): |
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
Constant Currency(j) |
|
|
|
|
January 1, 2017 |
|
January 3, 2016 |
|
January 3, 2016 |
|
|
|
|
(52 weeks) |
|
(53 weeks) |
|
(53 weeks) |
|
|
Net
income attributable to Fogo de Chão, Inc. |
|
$ |
24,437 |
|
|
$ |
27,865 |
|
|
$ |
28,029 |
|
|
|
Depreciation and amortization expense |
|
|
15,437 |
|
|
|
12,302 |
|
|
|
12,249 |
|
|
|
Interest
expense, net |
|
|
4,387 |
|
|
|
9,975 |
|
|
|
9,975 |
|
|
|
Interest
income |
|
|
(2,208 |
) |
|
|
(856 |
) |
|
|
(851 |
) |
|
|
Income
tax expense (benefit) |
|
|
11,923 |
|
|
|
(14,229 |
) |
|
|
(14,277 |
) |
|
|
EBITDA |
|
|
53,976 |
|
|
|
35,057 |
|
|
|
35,125 |
|
|
|
Pre-opening costs |
|
|
3,389 |
|
|
|
4,560 |
|
|
|
4,510 |
|
|
|
Loss on
extinguishment of debt(b) |
|
|
— |
|
|
|
5,991 |
|
|
|
5,991 |
|
|
|
Share-based compensation(c) |
|
|
792 |
|
|
|
6,792 |
|
|
|
6,792 |
|
|
|
Management and consulting fees(d) |
|
|
— |
|
|
|
8,137 |
|
|
|
8,137 |
|
|
|
Retention
agreement payments(e) |
|
|
— |
|
|
|
1,042 |
|
|
|
1,042 |
|
|
|
IPO
related expenses(f) |
|
|
— |
|
|
|
782 |
|
|
|
782 |
|
|
|
Non-cash
adjustments(g) |
|
|
959 |
|
|
|
820 |
|
|
|
810 |
|
|
|
Non-recurring expenses(h) |
|
|
456 |
|
|
|
— |
|
|
|
— |
|
|
|
Non-cash
impairment charge(i) |
|
|
320 |
|
|
|
— |
|
|
|
— |
|
|
|
Adjusted
EBITDA attributable to Fogo de Chão, Inc. |
|
$ |
59,892 |
|
|
$ |
63,181 |
|
|
$ |
63,189 |
|
|
|
|
|
(a)
Excludes impacts attributable to our joint venture in Mexico. |
|
(b)
Consists primarily of non-cash charges resulting from the
extinguishment or our 2012 Credit Facility. For the
fiscal year ended January 3, 2016, includes $250
pre-payment premium and $76 in legal and other expenses
paid in connection with the termination. |
|
(c)
For the fiscal year ended January 3, 2016, includes $5,658 of
compensation expense recognized upon the
closing of our IPO attributable to the vesting of stock
options. |
|
(d)
Consists primarily of payments to an affiliate of THL and
advisors engaged by an affiliate of THL for
advisory and consulting services. For the fiscal year ended
January 3, 2016, includes the $7,544 fee paid to an
affiliate of THL as a result of the termination of
the advisory services agreement with that affiliate. |
|
(e)
Consists of cash payments to our regional managers pursuant to
retention and non-compete agreements
executed in 2012. The final payments under these agreements were
paid in October 2015. |
|
(f)
Represents external professional service costs incurred as we
assessed and initiated the process of becoming a
public company. These costs include accounting and
legal fees for public readiness services, documentation of
internal controls to comply with Section 404
of the Sarbanes-Oxley Act and external auditor fees incurred
for review of all fiscal quarters
included in the registration statement. |
|
(g)
Consists of non-cash portion of straight line rent expense. |
|
(h)
Consists of one-time expenses related to the realignment of
management of the Brazilian subsidiaries, the
legal transfer of the Brazilian subsidiaries to the
Company’s Dutch holding company to support the
Company’s expansion into international markets and other
one-time legal and accounting fees. |
|
(i)
Consists of non-cash impairment charge related to the
reduction in carrying value of an underperforming
restaurant in Brazil. |
|
(j)
We compare the percent change in the results from one period
to another period using constant currency to
exclude the effects of foreign currency fluctuations. |
|
Supplemental Selected Constant Currency
Adjustment Information |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Quarter Ended |
|
|
Constant Currency reconciliation |
|
January 1, 2017 |
|
January 3, 2016 |
|
|
|
|
(13 weeks) |
|
(14 weeks) |
|
|
Revenue
as reported |
|
$ |
80,877 |
|
|
$ |
77,496 |
|
|
|
Effect of
foreign currency(a) |
|
|
— |
|
|
|
2,047 |
|
|
|
Revenue
at constant currency |
|
$ |
80,877 |
|
|
$ |
79,543 |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
18,268 |
|
|
$ |
19,368 |
|
|
|
Effect of
foreign currency(a) |
|
|
— |
|
|
|
677 |
|
|
|
Adjusted
EBITDA at constant currency |
|
$ |
18,268 |
|
|
$ |
20,045 |
|
|
|
Adjusted
EBITDA margin at constant currency |
|
|
22.6 |
% |
|
|
25.2 |
% |
|
|
|
|
|
|
|
|
|
Restaurant contribution |
|
$ |
25,423 |
|
|
$ |
26,441 |
|
|
|
Effect of
foreign currency(a) |
|
|
— |
|
|
|
806 |
|
|
|
Restaurant contribution at constant currency |
|
$ |
25,423 |
|
|
$ |
27,247 |
|
|
|
Restaurant contribution margin at constant currency |
|
|
31.4 |
% |
|
|
34.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
Constant Currency reconciliation |
|
January 1, 2017 |
|
January 3, 2016 |
|
|
|
|
(52 weeks) |
|
(53 weeks) |
|
|
Revenue
as reported |
|
$ |
288,296 |
|
|
$ |
271,634 |
|
|
|
Effect of
foreign currency(a) |
|
|
— |
|
|
|
(1,442 |
) |
|
|
Revenue
at constant currency |
|
$ |
288,296 |
|
|
$ |
270,192 |
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
59,892 |
|
|
$ |
63,181 |
|
|
|
Effect of
foreign currency(a) |
|
|
— |
|
|
|
8 |
|
|
|
Adjusted
EBITDA at constant currency |
|
$ |
59,892 |
|
|
$ |
63,189 |
|
|
|
Adjusted
EBITDA margin at constant currency |
|
|
20.8 |
% |
|
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
Restaurant contribution |
|
$ |
85,774 |
|
|
$ |
85,195 |
|
|
|
Effect of
foreign currency(a) |
|
|
— |
|
|
|
(191 |
) |
|
|
Restaurant contribution at constant currency |
|
$ |
85,774 |
|
|
$ |
85,004 |
|
|
|
Restaurant contribution margin at constant currency |
|
|
29.8 |
% |
|
|
31.5 |
% |
|
|
|
|
|
|
|
|
|
(a)
As exchange rates are an important factor in understanding
period-to-period comparisons, we believe the
presentation of certain results on a constant currency basis in
addition to reported results helps improve
investors’ ability to understand our operating results and evaluate
our performance in comparison to prior periods.
Constant currency information compares results between periods as
if exchange rates had remained constant
period-over-period. We use results on a constant currency basis as
one measure to evaluate our performance. We
calculate constant currency by retranslating results across all
prior periods presented using a derived
exchange rate for the most current year periods presented based on
actual results. The tables set forth below
calculate constant currency at a foreign currency exchange rate of
3.3002 and 3.4411 Brazilian reais to 1 US
dollar, which represents the derived exchange rate for the fiscal
quarter and fiscal year ended January 1, 2017,
respectively, calculated as explained above. These results should
be considered in addition to, not as a
substitute for, results reported in accordance with GAAP. Results
on a constant currency basis, as we present
them, may not be comparable to similarly titled measures used by
other companies and are not measures of
performance presented in accordance with GAAP. |
|
UNAUDITED SELECTED CONSOLIDATED BALANCE SHEET
DATA |
(in thousands) |
|
|
|
|
|
|
|
As of |
|
As of |
|
|
January 1, 2017 |
|
January 3, 2016 |
Cash and
cash equivalents |
|
$ |
31,275 |
|
$ |
24,919 |
Total
assets |
|
|
522,395 |
|
|
484,577 |
Long-term debt, including current portion |
|
|
150,000 |
|
|
165,000 |
Deferred
taxes |
|
|
21,838 |
|
|
13,033 |
Total
liabilities |
|
|
229,536 |
|
|
232,023 |
Total
Fogo de Chão, Inc. shareholders' equity |
|
|
290,644 |
|
|
250,611 |
Total
equity |
|
|
292,859 |
|
|
252,554 |
Investor Contact:
IR@fogodechao.com
(972) 361-6225
Media Contact:
Joy Murphy, ICR
Joy.Murphy@icrinc.com
(646) 277‐1242
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