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 twenty-six week periods ended June 25,
2017 and reiterated earnings guidance for the full year 2017.
Selected Second Quarter 2017 Highlights
Compared to the Second Quarter 2016:
- GAAP net income was $1.9 million, or $0.13 per diluted share,
compared to GAAP net loss of $(0.7) million, or $(0.04) per diluted
share.
- Adjusted net income was $1.9 million, or $0.13 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.
- Total comparable restaurant sales decreased 1.0%.
- Revenues decreased 2.1% to $103.0 million from $105.2
million.
- Comparable restaurant sales decreased 1.1% at BRAVO! and 0.9%
at BRIO.
- Restaurant-level operating profit increased 8.8% to $14.3
million from $13.1 million.
Brian O'Malley, President and Chief Executive
Officer, said, “We are encouraged by the sequential improvement in
comparable restaurant sales during the second quarter and
particularly the strength of our banquet and off-premises channels,
which grew 7.5% and 23.9%, respectively. Guests appreciate the new
flavors and options introduced on our menus, are making greater use
of our new and upgraded private dining facilities, and are ordering
more food to-go for pick-up or delivery. Most importantly, the
number of core restaurant locations with positive sales trends is
growing.”
O’Malley continued, “During the latter half of
the second quarter, we began cycling over the investments made last
year that reaffirmed our brands as culinary food-forward
destinations and ensured excellence in all elements of service and
hospitality. This in turn has enabled us to significantly expand
restaurant-level operating profit and adjusted EPS despite a modest
decline in comparable restaurant sales. We also closed three
underperforming locations during the quarter which enhanced
profitability in the current period and will continue to have a
positive impact as the year progresses. We will further optimize
our restaurant base with up to three additional closures this
year.”
O’Malley concluded, “We are pleased to be
reiterating our guidance range for adjusted EPS. While the casual
dining industry certainly remains challenging and volatile, our
investments are now bearing fruit and have positioned us for
greater profitability in the third and fourth quarters compared to
last year.”
Second Quarter 2017 Financial
Results
Revenues decreased $2.2 million, or 2.1%, to
$103.0 million in the second quarter of 2017, from $105.2 million
in the second quarter of 2016. The decrease in revenues was due to
a 1.0% decrease in comparable restaurant sales and 40 fewer
operating weeks as a result of three restaurant closures in the
second quarter of 2017 and two restaurant closures in the third
quarter of 2016. The comparable restaurant sales decrease consisted
of a 4.0% decrease in guest counts and a 3.0% increase in average
check.
Total restaurant operating costs, which include
costs of sales, labor costs, operating costs and occupancy costs,
decreased $3.4 million, or 3.6%, to $88.7 million in the second
quarter of 2017, from $92.1 million in the second quarter of 2016.
Total restaurant-level operating profit increased $1.2 million, or
8.8%, to $14.3 million from $13.1 million in the same period last
year. As a percentage of revenues, total restaurant-level operating
profit increased to 13.9% in the second quarter of 2017 from 12.5%
in the second quarter of 2016.
GAAP net income in the second quarter of 2017
was $1.9 million, or $0.13 per diluted share, as compared to GAAP
net loss of $(0.7) million, or $(0.04) 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 income in the
second quarter of 2017 was $1.9 million, or $0.13 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.
Second Quarter 2017 Brand Operating
Highlights
Comparable restaurant sales decreased 1.1% at
BRAVO! and 0.9% at BRIO. Average weekly sales for BRAVO! and BRIO
were $58,300 and $79,300, respectively.
As of June 25, 2017, the Company operated
50 BRAVO! restaurants, 63 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.
2017 Outlook
The Company is providing the following outlook
for the 53-week period ending December 31, 2017:
- Revenues of $405 million to $415 million.
- Total comparable restaurant sales of minus 2.5% to flat.
- Development of one Company-operated restaurant in Siesta Key,
Florida.
- Pre-opening costs of approximately $0.5 million to $1.0
million.
- Capital expenditures of $9.0 million to $11.0 million
(previously $10.0 million to $12.0 million).
- Diluted share count of approximately 15.4 million.
- Estimated annual tax rate of approximately 5%.
- Adjusted net income per diluted share of $0.22 to $0.32.
The Company has not reconciled guidance for
Annual adjusted net income per diluted share to the corresponding
GAAP financial measures because we do not provide guidance for the
various reconciling items. The Company is unable to provide
guidance for these reconciling items because it cannot determine
their probable significance, as certain items are outside of its
control and cannot be reasonably predicted since these items could
vary significantly from period to period. Accordingly,
reconciliations to the corresponding GAAP financial measures are
not available without unreasonable effort.
As part of a review of its restaurant portfolio,
the Company expects to close up to six underperforming restaurants
and reinvest capital into certain existing restaurants through
reimaging and private dining room initiatives. There were three
restaurant closures during the second quarter - two BRIOs and one
BRAVO! Up to three additional restaurants will close in the second
half of the year.
Second Amendment to Senior Secured
Credit Facilities
The Company also has entered into a second
amendment to its existing senior secured credit facilities. This
amendment, among other things, provides the Company with a
permanent waiver of noncompliance with certain financial tests for
the thirteen weeks ended June 25, 2017. Additionally, the amendment
modifies certain financial covenants applicable to the Company,
accelerates the maturity date (and related amortization payment
schedule) of the senior credit facilities to December 1, 2018 and
reduces the availability under the Company’s revolving credit
facility.
Investor Conference Call and
Webcast
The Company will host an investor conference
call to discuss second quarter 2017 financial results today at 4:30
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 (719) 457-2652. A replay will be available two
hours after the call and can be accessed by dialing (412) 317-6671;
the conference ID is 3194806. The replay will be available until
Thursday, August 10, 2017.
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 income and Adjusted net 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 income and net income per share for the impact of
certain non-comparable items that are reflected in 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 March 6, 2017.
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
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONSFOR THE TWENTY-SIX WEEKS ENDED
JUNE 25, 2017 AND JUNE 26, 2016
(UNAUDITED)(in thousands except per share
data) |
|
|
|
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
|
June 25, 2017 |
|
June 26, 2016 |
|
June 25, 2017 |
|
June 26, 2016 |
Revenues |
$ |
103,041 |
|
|
|
$ |
105,213 |
|
|
|
$ |
209,760 |
|
|
|
$ |
214,013 |
|
|
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
26,277 |
|
25.5 |
% |
|
27,235 |
|
25.9 |
% |
|
54,488 |
|
26.0 |
% |
|
55,242 |
|
25.8 |
% |
Labor |
38,467 |
|
37.3 |
% |
|
39,751 |
|
37.8 |
% |
|
77,537 |
|
37.0 |
% |
|
79,016 |
|
36.9 |
% |
Operating |
16,700 |
|
16.2 |
% |
|
17,612 |
|
16.7 |
% |
|
33,785 |
|
16.1 |
% |
|
35,194 |
|
16.4 |
% |
Occupancy |
7,307 |
|
7.1 |
% |
|
7,477 |
|
7.1 |
% |
|
15,756 |
|
7.5 |
% |
|
15,586 |
|
7.3 |
% |
General
and administrative expenses |
6,375 |
|
6.2 |
% |
|
6,574 |
|
6.2 |
% |
|
14,046 |
|
6.7 |
% |
|
13,245 |
|
6.2 |
% |
Restaurant preopening costs |
121 |
|
0.1 |
% |
|
73 |
|
0.1 |
% |
|
150 |
|
0.1 |
% |
|
514 |
|
0.2 |
% |
Impairment |
— |
|
— |
% |
|
1,249 |
|
2.0 |
% |
|
— |
|
— |
% |
|
1,249 |
|
1.0 |
% |
Depreciation and amortization |
5,143 |
|
5.0 |
% |
|
5,547 |
|
5.3 |
% |
|
10,257 |
|
4.9 |
% |
|
11,080 |
|
5.2 |
% |
Total
costs and expenses |
100,390 |
|
97.4 |
% |
|
105,518 |
|
100.3 |
% |
|
206,019 |
|
98.2 |
% |
|
211,126 |
|
98.7 |
% |
Income (loss) from
operations |
2,651 |
|
2.6 |
% |
|
(305 |
) |
(0.3 |
)% |
|
3,741 |
|
1.8 |
% |
|
2,887 |
|
1.3 |
% |
Interest expense,
net |
529 |
|
0.5 |
% |
|
344 |
|
0.3 |
% |
|
1,040 |
|
0.5 |
% |
|
692 |
|
0.3 |
% |
Income (loss) before
income taxes |
2,122 |
|
2.1 |
% |
|
(649 |
) |
(0.6 |
)% |
|
2,701 |
|
1.3 |
% |
|
2,195 |
|
1.0 |
% |
Income tax expense |
176 |
|
0.2 |
% |
|
5 |
|
— |
% |
|
205 |
|
0.1 |
% |
|
601 |
|
0.3 |
% |
Net income (loss) |
$ |
1,946 |
|
1.9 |
% |
|
$ |
(654 |
) |
(0.6 |
)% |
|
$ |
2,496 |
|
1.2 |
% |
|
$ |
1,594 |
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
basic share |
$ |
0.13 |
|
|
|
$ |
(0.04 |
) |
|
|
$ |
0.16 |
|
|
|
$ |
0.11 |
|
|
Net income (loss) per
diluted share |
$ |
0.13 |
|
|
|
$ |
(0.04 |
) |
|
|
$ |
0.16 |
|
|
|
$ |
0.10 |
|
|
Weighted average shares
outstanding-basic |
15,174 |
|
|
|
14,597 |
|
|
|
15,144 |
|
|
|
14,681 |
|
|
Weighted average shares
outstanding-diluted |
15,221 |
|
|
|
14,597 |
|
|
|
15,175 |
|
|
|
15,331 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain
percentage amounts may not sum due to rounding. |
|
|
ADJUSTMENTS TO RECONCILE GAAP TO ADJUSTED
RESULTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation settlements
and expenses, net (1) |
$ |
— |
|
|
|
$ |
— |
|
|
|
$ |
1,560 |
|
|
|
$ |
— |
|
|
Asset impairment
charges (2) |
— |
|
|
|
1,249 |
|
|
|
— |
|
|
|
1,249 |
|
|
Tax expense related to
an Internal Revenue Service audit settlement (3) |
— |
|
|
|
265 |
|
|
|
— |
|
|
|
265 |
|
|
Tax expense from excess
tax deficiency for option exercises (4) |
— |
|
|
|
134 |
|
|
|
— |
|
|
|
134 |
|
|
Income tax expense
(5) |
— |
|
|
|
(125 |
) |
|
|
(78 |
) |
|
|
(125 |
) |
|
Total adjustments |
— |
|
|
|
1,523 |
|
|
|
1,482 |
|
|
|
1,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income |
$ |
1,946 |
|
|
|
$ |
869 |
|
|
|
$ |
3,978 |
|
|
|
$ |
3,117 |
|
|
Net income per basic
share- adjusted |
$ |
0.13 |
|
|
|
$ |
0.06 |
|
|
|
$ |
0.26 |
|
|
|
$ |
0.21 |
|
|
Net income per diluted
share- adjusted |
$ |
0.13 |
|
|
|
$ |
0.06 |
|
|
|
$ |
0.26 |
|
|
|
$ |
0.20 |
|
|
Weighted average shares
outstanding-basic |
15,174 |
|
|
|
14,597 |
|
|
|
15,144 |
|
|
|
14,681 |
|
|
Weighted average shares
outstanding-diluted (6) |
15,221 |
|
|
|
15,227 |
|
|
|
15,175 |
|
|
|
15,331 |
|
|
_________________________
1) Reflects the net impact for litigation settlements and
expenses recorded during the period.2) Reflects non-cash asset
impairment charges for the thirteen weeks ended June 26, 2016
for one restaurant.3) Reflects the tax expense associated with the
settlement of an Internal Revenue Service audit during the
period.4) Reflects the excess tax deficiency associated with the
exercise of stock options during the period.5) Reflects the
adjustments for income taxes related to the accrued liability for
current litigation.6) Diluted weighted average shares outstanding
includes all potentially issuable common shares, except in a loss
position, in which case diluted weighted average shares outstanding
is equal to basic weighted average shares outstanding.
BRAVO BRIO RESTAURANT GROUP, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF
JUNE 25, 2017 AND DECEMBER 25, 2016
(Dollars in thousands) |
|
|
June 25, 2017 |
|
December 25,2016 |
|
(Unaudited) |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
365 |
|
|
$ |
444 |
|
Accounts
receivable |
5,564 |
|
|
9,587 |
|
Tenant
improvement allowance receivable |
— |
|
|
799 |
|
Inventories |
2,760 |
|
|
3,114 |
|
Prepaid
expenses and other current assets |
2,751 |
|
|
3,339 |
|
Total
current assets |
11,440 |
|
|
17,283 |
|
Property and equipment
— net |
139,800 |
|
|
145,120 |
|
Other assets — net |
4,045 |
|
|
4,359 |
|
Total assets |
$ |
155,285 |
|
|
$ |
166,762 |
|
|
|
|
|
Liabilities and
shareholders' deficiency in assets |
|
|
|
Current
liabilities |
|
|
|
Trade and construction
payables |
$ |
14,232 |
|
|
$ |
15,514 |
|
Accrued
expenses |
28,861 |
|
|
27,351 |
|
Current
portion of long-term debt |
7,000 |
|
|
4,000 |
|
Deferred
lease incentives |
7,269 |
|
|
7,334 |
|
Deferred
gift card revenue |
12,933 |
|
|
18,618 |
|
Total
current liabilities |
70,295 |
|
|
72,817 |
|
Deferred lease
incentives |
49,262 |
|
|
54,459 |
|
Long-term debt |
31,700 |
|
|
37,500 |
|
Other long-term
liabilities |
22,558 |
|
|
23,516 |
|
Commitments and
contingencies |
|
|
|
Shareholders’
deficiency in assets |
|
|
|
Common
shares, no par value per share— authorized 100,000,000 shares;
21,171,355 shares issued at June 25, 2017 and 21,069,454 shares
issued at December 25, 2016 |
203,065 |
|
|
202,561 |
|
Preferred
shares, no par value per share— authorized 5,000,000 shares; issued
and outstanding, 0 shares at June 25, 2017 and December 25,
2016 |
— |
|
|
— |
|
Treasury
shares, 5,977,860 shares at June 25, 2017 and December 25,
2016 |
(81,019 |
) |
|
(81,019 |
) |
Retained
deficit |
(140,576 |
) |
|
(143,072 |
) |
Total
shareholders’ deficiency in assets |
(18,530 |
) |
|
(21,530 |
) |
Total liabilities and
shareholders’ deficiency in assets |
$ |
155,285 |
|
|
$ |
166,762 |
|
Contacts:
Investor Relations
Don Duffy / Raphael Gross
(203) 682-8200
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