Same Store Sales and Guest Counts Up In All
Concepts
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner
and operator of the J. Alexander’s Restaurants, Redlands Grill,
Stoney River Steakhouse and Grill and Lyndhurst Grill collection of
restaurants, today announced financial results for the second
quarter and first six months ended July 2, 2017.
Second Quarter 2017 Highlights Compared To The Second Quarter
Of 2016
- Net sales increased 8.0% to $58,216,000
in the most recent quarter from $53,921,000 in the second quarter
of 2016.
- For the J. Alexander’s/Grill
restaurants, average weekly same store sales per restaurant(1) were
$114,000, up 4.4% from $109,200 in the second quarter of 2016. For
the Stoney River Steakhouse and Grill restaurants, average weekly
same store sales amounted to $70,400, an increase of 2.5% from
$68,700 posted in the comparable quarter a year ago.
- Income from continuing operations
before income taxes in the second quarter of 2017 was $42,000,
compared to $1,684,000 achieved in the second quarter of 2016, a
decrease of $1,642,000. This decrease was primarily due to the
impact of the quarterly valuation of the profits interest grant
issued in October 2015 to Black Knight Advisory Services, LLC
(“Black Knight”). For the most recent quarter, Black Knight profits
interest expense was $1,714,000, an increase of $1,396,000 compared
to expense of $318,000 recorded in the second quarter of 2016. The
non-cash expense associated with this grant is required to be
recognized over the three-year vesting period of the grant and is
calculated each quarter based upon the most recent valuation
performed using the Black-Scholes valuation model, with any
cumulative change associated with the most recent valuation
impacting the current quarter. Primarily due to the $12.25 closing
price of the Company’s stock at the end of the most recent quarter,
the grant’s valuation increased from $5,347,000 as of April 2, 2017
to $7,533,000 at July 2, 2017. Also during the second quarter of
2017, the Company incurred consulting fees of $174,000 from its
management agreement with Black Knight. This compares to consulting
fees of $158,000 in the second quarter of the prior year. In
addition, the second quarter of 2017 reflects transaction and
integration expenses of $460,000 related to the Company’s planned
acquisition of the Ninety Nine Restaurant and Pub concept as
discussed further below.
- On August 4, 2017, the Company
announced that it had entered into a definitive agreement with
Fidelity Newport Holdings, LLC (“FNH”), a majority-owned subsidiary
of Fidelity National Financial, Inc. (“FNF”) and Fidelity National
Financial Ventures, LLC (“FNFV”), a direct wholly-owned subsidiary
of FNF, to acquire 99 Restaurants, LLC (“99 Restaurants”) in an
all-stock transaction valued at approximately $199 million,
including the assumption of approximately $20 million in net debt.
The transaction is expected to close in the fourth quarter of 2017
and, in conjunction therewith, the Company negotiated a termination
of the consulting agreement currently in place with Black Knight
Advisory Services, LLC (“Black Knight”) effective upon the
transaction’s closing. Once the consulting agreement is terminated,
Black Knight will have 90 days in which to exercise the exchange of
their rights under the profits interest grant into Class A Common
Stock of J. Alexander’s Holdings, Inc. Subsequent to such an
election, or the expiration of the 90 day period, the Company will
no longer be required to perform a quarterly valuation relative to
this grant.
- Net income for the second quarter of
2017 was $186,000, a decrease from $1,087,000 recorded in the
corresponding quarter a year ago.
- Adjusted EBITDA(2) in the second
quarter of 2017 was $5,465,000, an increase of 11.0% from
$4,922,000 for the second quarter of 2016.
- Basic and diluted earnings per share
totaled $0.01 for the second quarter of 2017 and $0.07 for the
second quarter of 2016.
- Restaurant Operating Profit Margin(3)
was 12.1% for the second quarter of 2017 compared to 12.4% in the
second quarter of 2016.
- Cost of sales as a percentage of net
sales in the second quarter of 2017 amounted to 33.0% compared to
32.2% in the second quarter of 2016.
(1)Average weekly same store sales per restaurant is computed by
dividing total restaurant same store sales for the period by the
total number of days all same store restaurants were open for the
period to obtain a daily sales average. The daily same store sales
average is then multiplied by seven to arrive at average weekly
same store sales per restaurant. Days on which restaurants are
closed for business for any reason other than scheduled closures on
Thanksgiving and Christmas are excluded from this calculation.
Sales and sales days used in this calculation and amounts of other
“same store” figures in this release include only those for
restaurants in operation at the end of the period which have been
open for more than eighteen months. Revenue associated with
reduction in liabilities for gift cards which are considered to be
only remotely likely to be redeemed (based on historical redemption
rates) is not included in the calculation of average weekly same
store sales per restaurant. Average weekly same store sales is
computed from sales amounts that have been determined in accordance
with U.S. generally accepted accounting principles (GAAP).
(2)Please refer to the financial information accompanying this
release for our definition of and a reconciliation of the non‐GAAP
financial measure Adjusted EBITDA to net income. Management uses
Adjusted EBITDA to evaluate operating performance and the
effectiveness of its business strategies.
(3)”Restaurant Operating Profit Margin” is the ratio of
Restaurant Operating Profit, a non‐GAAP financial measure, to net
sales. Please refer to the financial information accompanying this
release for our definition of and a reconciliation of the non‐GAAP
financial measure Restaurant Operating Profit to net income.
Management uses Restaurant Operating Profit and Restaurant
Operating Profit Margin to measure operating performance at the
restaurant level.
Chief Executive Officer’s Review/Second Quarter
“We were pleased with results of the second quarter in the face
of a very difficult operating environment,” said Lonnie J. Stout
II, President and Chief Executive Officer. “Guest counts and same
store sales increased in all of our restaurant collections, and we
continue to be encouraged with progress of our new J. Alexander’s
and Stoney River restaurants.”
Stout said the Company’s cost of sales was under intense
pressure during the second quarter due to sharply higher beef costs
(up an estimated 5.1% at the J. Alexander’s/Grills restaurants and
an estimated 6.9% at the Stoney River restaurants). Produce prices
were also under pressure at the beginning of the second quarter and
had an unfavorable impact on cost of sales.
“As we enter the third quarter,” Stout continued, “produce
prices have normalized while beef prices continue to be a concern.
While there have been glimpses of encouraging news during the first
few weeks of the current quarter, we remain concerned about trends
in beef costs for the remainder of the year and, unless the market
shifts significantly in a favorable direction, we will likely take
a modest increase in menu pricing between now and year-end to
partially offset the impact of increased beef costs.”
“During the final half of 2017,” Stout added, “we will continue
to be tightly focused on growing sales through traffic while
delivering superior dining experiences for our restaurant
guests.”
For the second quarter of 2017, the Company’s consolidated
operating income totaled $215,000 compared to $1,822,000 recorded
in the corresponding quarter a year earlier.
For the quarter ended July 2, 2017, the Company’s restaurant
labor and related costs as a percent of net sales were 30.8%,
consistent with the second quarter a year ago. Other restaurant
operating expenses were 19.8% of net sales in the second quarter of
2017 compared to 20.5% of net sales in the second quarter of
2016.
The average weekly guest counts within the same store base of
the Company’s J. Alexander’s/Grills collection increased 1.0% for
the second quarter of 2017 compared to the corresponding quarter of
2016. Guest counts within the same store base at the Company’s
Stoney River Steakhouse and Grill restaurants were up 4.5% for the
second quarter of 2017 compared to the same quarter of 2016. With
respect to average guest checks, which include alcoholic beverage
sales, the average guest check within the J. Alexander’s/Grills
same store base of restaurants during the second quarter of 2017
totaled $30.80, up 3.4% from $29.80 during the second quarter of
2016. The average guest check within the same store base of Stoney
River Steakhouse and Grill restaurants totaled $44.10, a 2.0%
decrease from $44.99 for the second quarter of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations rose 1.0% for the second
quarter of 2017 compared to the second quarter of the prior year.
On a consolidated basis, average weekly guest counts within the
Company’s Stoney River Steakhouse Grill locations increased 2.5%
for the second quarter of 2017 compared to the second quarter of
2016. Average guest checks for the combined J. Alexander’s/Grills
concepts rose 3.3% from $29.86 in the second quarter of 2016 to
$30.85 in the most recent quarter. The average guest check for the
Stoney River Steakhouse and Grill restaurants decreased 2.2% to
$42.17 in the second quarter of 2017 compared to $43.13 in the
second quarter of 2016.
The effect of menu pricing for the quarter just ended was
estimated to be a 2.3% increase for the J. Alexander’s/Grills
restaurants and a 0.4% decrease for the Stoney River Steakhouse and
Grill restaurants compared to the same quarter a year earlier.
Inflation in food costs for the second quarter of 2017 was
estimated to total 3.5% for the J. Alexander’s/Grill restaurants,
with beef costs increasing by an estimated 5.1% compared to the
second quarter of 2016. For the Stoney River Steakhouse and Grill
restaurants, inflation for the second quarter of 2017 was an
estimated 4.4%, with beef costs up approximately 6.9%.
Stock Repurchase Program
The Company’s Board of Directors has authorized a share
repurchase program for up to 1.5 million shares of the Company’s
outstanding common stock through October 29, 2018. The Company has
funded and expects to fund any future share repurchases from cash
on hand and operating cash flow. Repurchases have been and will
continue to be made in accordance with applicable securities laws
and may be made from time to time in the open market. The timing,
prices and amount of repurchases will depend upon prevailing market
prices, general economic and market conditions and other
considerations. The repurchase program does not obligate the
Company to acquire any particular amount of stock. No shares have
been repurchased by the Company in fiscal 2017. Since inception of
the stock repurchase program, 305,059 shares have been repurchased
by the Company under the program at an average purchase price of
$10.50 per share.
Restaurant Development
During the second quarter of 2017, the Company signed leases to
build a new J. Alexander’s Restaurant in King of Prussia, PA and a
new Stoney River Steakhouse and Grill in Troy, MI. Construction on
these two new restaurants is scheduled to begin in the third
quarter of 2017 with completion targeted for 2018.
First Half Highlights For 2017
For the first 26 weeks of 2017, the Company posted net sales of
$118,038,000, up from $110,800,000 recorded during the comparable
first half of 2016. Within the J. Alexander’s/Grill restaurants,
average weekly same store sales per restaurant were $116,900 for
the first six months of 2017, up 4.0% from $112,400 posted in the
same two quarters of the prior year. For the Stoney River
Steakhouse and Grill restaurants, average weekly same store sales
totaled $72,900, an increase of 1.4% from $71,900 reported in the
comparable two quarters of 2016. Income from continuing operations
before income taxes was $3,683,000, down from $4,683,000 achieved
in the first half of 2016.
The Company recorded net income of $2,870,000 for the first six
months of 2017 compared to $3,377,000 achieved in the first half of
the previous year. Adjusted EBITDA for the first half of 2017
totaled $13,066,000, an increase from $11,650,000 recorded in the
first two quarters of 2016. Basic and diluted earnings per share
were $0.20 and $0.19 for the first six months of 2017,
respectively, and $0.23 for the comparable six months of 2016.
The Company’s consolidated operating income for the most recent
six months was $4,009,000 compared to $4,994,000 recorded in the
corresponding six months of 2016.
For the two quarters ended July 2, 2017, the Company’s
restaurant labor and related costs as a percent of net sales were
30.4% compared to 30.3% in the first six months of 2016. Other
restaurant operating expenses were 19.6% of net sales in the first
half of 2017 compared to 19.9% of net sales in the first half of
2016.
The average weekly guest counts within the same store base for
the Company’s J. Alexander’s/Grills collection increased 1.2% for
the first six months of 2017 compared to the corresponding six
months of 2016. Guest counts within the same store base at the
Company’s Stoney River Steakhouse and Grill restaurants were up
3.0% for the first two quarters of 2017 compared to the same two
quarters of 2016. With respect to average guest checks, the average
guest check within the J. Alexander’s/Grills same store base of
restaurants during the first six months of 2017 totaled $30.95, up
2.7% from $30.15 during the same six months of the prior year. The
average guest check within the same store base of Stoney River
Steakhouse and Grill restaurants totaled $44.93, a 1.6% decrease
from $45.68 for the first six months of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations advanced 1.3% for the
first half of 2017 compared to the first half of 2016. With respect
to the Stoney River Steakhouse and Grill locations, consolidated
average weekly guest counts increased 2.4% for the first two
quarters of 2017 compared to the same two quarters of 2016. Average
guest checks for the combined J. Alexander’s/Grills concepts
increased 2.6% from $30.20 in the first two quarters of 2016 to
$31.00 in the first half of 2017. The average guest check for the
Stoney River Steakhouse and Grill restaurants decreased 2.7% to
$42.88 in the first two quarters of 2017 from $44.05 in the same
two quarters of 2016.
The effect of menu pricing for the first six months of 2017 was
estimated to be a 2.2% increase for the J. Alexander’s/Grills
restaurants and a 0.3% decrease for the Stoney River Steakhouse and
Grill restaurants compared to the first half a year ago. Inflation
in food costs for the first six months of 2017 was estimated to
total 0.3% for the J. Alexander’s/Grills restaurants, with beef
costs down by an estimated 2.4% compared to the same six months of
the previous year. For the Stoney River Steakhouse and Grill
restaurants, inflation for the first half of 2017 was an estimated
0.4%, with beef costs down approximately 0.3%.
Outlook For 2017/Guidance
Based upon current information, the Company views its business
prospects for the balance of 2017 as favorable and therefore the
Company is updating certain items of its previously released
guidance for 2017, previously disclosed in the Company’s release
dated March 2, 2017. This update is as follows:
Updated Guidance
Same Store Sales:
Prior
Guidance
Full‐Year
2017
J. Alexander’s/Grills +1.5% - 2.5% +2.5% - 3.5% Stoney River
Steakhouse and Grill +1.5% - 2.5% +1.0% - 2.0% Revenue $232MM -
$234MM $233MM - $235MM
The Company’s Adjusted EBITDA guidance range included in the
March 2, 2017 release is unchanged, as is the Company’s guidance
range included in the May 2, 2017 release relative to capital
expenditures for 2017. As a result of the Company’s planned
acquisition of 99 Restaurants discussed above, and the uncertainty
of transaction costs and changes to the Company’s financial
statements that may result from the transaction, the Company is not
presenting other items of guidance, and previous disclosures of
those items should not be relied upon.
Conference Call
The Company will hold a conference call on Friday, August 11,
2017 at 10 a.m. Central time to discuss its financial results for
the second quarter ended July 2, 2017. The conference call can be
accessed live over the phone by dialing 1‐877‐407‐0789 (Toll‐Free)
or 1‐201‐689‐8562 (Toll/International). To access the call via the
internet, go to the J. Alexander’s website at
http://investor.jalexandersholdings.com or
http://public.viavid.com/index.php?id=125061.
A replay of the conference call will be available shortly
following the conclusion of the call at
http://investor.jalexandersholdings.com and
http://public.viavid.com/index.php?id=125061, as well as dialing
1‐844‐512‐2921 or 1‐412‐317‐6671 and providing the access code
13665051. The replay will be accessible through August 18, 2017 via
telephone and for 30 days on the internet.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of boutique
restaurants that focus on providing high quality food, outstanding
professional service and an attractive ambiance. On July 2, 2017,
the Company owned and operated the following restaurant concepts:
J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill
and Lyndhurst Grill.
The Company has its headquarters in Nashville, TN.
Forward‐Looking Statements
This press release issued by J. Alexander’s Holdings, Inc.
contains forward‐looking statements, which include all statements
that do not relate solely to historical or current facts, such as
statements regarding our expectations, intentions or strategies
regarding the future, and in particular, our statements concerning
the agreement to acquire 99 Restaurants, LLC and the termination of
the Black Knight consulting agreement the impact of such
termination on the Black Knight profits interest grant, as well as
our guidance disclosure. These forward‐looking statements are based
on management's beliefs, as well as assumptions made by, and
information currently available to, management. Because such
statements are based on expectations as to future financial and
operating results and are not statements of fact, actual results
may differ materially from those projected and are subject to a
number of known and unknown risks and uncertainties, including the
Company’s ability to maintain satisfactory guest count levels and
maintain or increase sales and operating margins in its restaurants
under varying economic conditions; the effect of higher commodity
prices, unemployment and other economic factors on consumer demand;
increases in food input costs or product shortages and the
Company’s response to them; the number and timing of new restaurant
openings, associated costs and the Company’s ability to operate new
restaurants profitably; competition within the casual dining
industry and within the markets in which our restaurants are
located; adverse weather conditions in regions in which the
Company’s restaurants are located; factors that are under the
control of third parties, including government agencies;
uncertainties concerning the recently announced 99 Restaurants
transactions, including the following: uncertainties as to whether
the requisite approvals of the J. Alexander’s shareholders will be
obtained; the risk of shareholder litigation in connection with the
transaction and any related significant costs of defense,
indemnification and liability; the possibility that competing
offers will be made; the possibility that various closing
conditions for the transaction may not be satisfied or waived; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement, including
circumstances that may give rise to the payment of a termination
fee by J. Alexander’s; the effects of disruptions to respective
business operations of J. Alexander’s or Ninety Nine resulting from
the transactions, including the ability of the combined company to
retain and hire key personnel and maintain relationships with
suppliers and other business partners; the risks associated with
the future performance of the Ninety Nine business; the risk of
changes in the 2016 reported performance of the Ninety Nine
business based on an audit of its financial statements, which is
pending; the risks of integration of the Ninety Nine business and
the possibility that costs or difficulties related to such
integration of the Ninety Nine business and J. Alexander’s will be
greater than expected; the possibility that the anticipated
benefits and synergies from the proposed transaction cannot be
fully realized or may take longer to realize than expected; as well
as other risks and uncertainties described under the headings
"Forward‐Looking Statements," "Risk Factors" and other sections of
the Company’s Annual Report on Form 10‐K filed with the Securities
and Exchange Commission on March 16, 2017 and subsequent filings.
The Company undertakes no obligation to update any forward‐looking
statements, whether as a result of new information, future events
or otherwise.
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited in
thousands, except per share amounts)
Quarter ended Six Months Ended July 2
July 3 July 2 July
3 2017 2016 2017 2016 Net
sales
$ 58,216 $ 53,921
$ 118,038 $
110,800 Costs and expenses: Cost of sales
19,197 17,353
37,628 35,443 Restaurant labor and related costs
17,959 16,608
35,904 33,547
Depreciation and amortization of
restaurant property and equipment
2,500 2,232
4,878 4,404 Other operating expenses
11,539 11,064
23,109 22,076 Total restaurant
operating expenses
51,195 47,257
101,519 95,470
Transaction and integration expenses
460 15
460 62
General and administrative expenses
6,336 4,750
11,164 9,859 Pre-opening expense
10
77
886 415 Total
operating expenses
58,001 52,099
114,029 105,806 Operating income
215 1,822
4,009 4,994 Other income (expense):
Interest expense
(224 ) (185 )
(398 )
(367 ) Other, net
51 47
72 56 Total other expense
(173 ) (138 )
(326 )
(311 )
Income from continuing operations before
income taxes
42 1,684
3,683 4,683 Income tax benefit (expense)
254 (486 )
(590 ) (1,089 ) Loss from
discontinued operations, net
(110 )
(111 )
(223 ) (217 ) Net income
$ 186 $ 1,087
$ 2,870
$ 3,377 Basic Earnings per share: Income from
continuing operations, net of tax
$ 0.02 $ 0.08
$ 0.21 $ 0.24 Loss from discontinued operations, net
(0.01 ) (0.01 )
(0.02
) (0.01 ) Basic earnings per share
$
0.01 $ 0.07
$ 0.20 $ 0.23
Diluted Earnings per share: Income from continuing
operations, net of tax
$ 0.02 $ 0.08
$
0.21 $ 0.24 Loss from discontinued operations, net
(0.01 ) (0.01 )
(0.02 )
(0.01 ) Diluted earnings per share
$ 0.01
$ 0.07
$ 0.19 $ 0.23
Weighted average common shares outstanding: Basic
14,695 14,888
14,695 14,943 Diluted
14,905
14,888
14,800 14,954
J. Alexander's
Holdings, Inc. and Subsidiaries Condensed Consolidated
Statements of Income Data as a Percentage of Net Sales and
Other Financial and Performance Data (Unaudited)
Quarter ended Six Months Ended
July 2 July 3 July 2
July 3 2017 2016 2017
2016 Net sales
100.0 % 100.0 %
100.0
% 100.0 % Costs and expenses: Cost of sales
33.0 32.2
31.9 32.0 Restaurant labor and related costs
30.8
30.8
30.4 30.3
Depreciation and amortization of
restaurant property and equipment
4.3 4.1
4.1 4.0 Other operating expenses
19.8 20.5
19.6
19.9 Total restaurant operating expenses
87.9
87.6
86.0 86.2 Transaction and integration expenses
0.8 0.0
0.4 0.1 General and administrative expenses
10.9 8.8
9.5 8.9 Pre-opening expense
0.0 0.1
0.8
0.4 Total operating expenses
99.6
96.6
96.6 95.5
Operating income
0.4 3.4
3.4 4.5 Other income
(expense): Interest expense
(0.4 ) (0.3 )
(0.3
) (0.3 ) Other, net
0.1 0.1
0.1 0.1 Total other
expense
(0.3 ) (0.3 )
(0.3 ) (0.3 )
Income from continuing operations before
income taxes
0.1 3.1
3.1 4.2 Income tax benefit (expense)
0.4 (0.9 )
(0.5 ) (1.0 ) Loss from
discontinued operations, net
(0.2 )
(0.2 )
(0.2 ) (0.2 ) Net income
0.3 % 2.0 %
2.4 %
3.0 %
Note: Certain percentage totals do not sum
due to rounding.
Other Financial and Performance Data: Adjusted
EBITDA(1)
$ 5,465 $ 4,922
$ 13,066 $
11,650 As a % of net sales
9.4 % 9.1 %
11.1
% 10.5 %
Average weekly sales per restaurant:
J. Alexander’s Restaurant/ Grills
$ 112,600 $
107,900
$ 115,400 $ 111,100 Percent change
4.4
% 3.9 % Stoney River Steakhouse and
Grill
$ 73,100 $ 73,000
$ 75,400 $
75,600 Percent change
0.1 % -0.3 %
Average weekly same store sales per restaurant:
J. Alexander’s Restaurant/ Grills
$ 114,000 $
109,200
$ 116,900 $ 112,400 Percent change
4.4
% 4.0 % Stoney River Steakhouse and
Grill
$ 70,400 $ 68,700
$ 72,900 $
71,900 Percent change
2.5 % 1.4 %
(1) See definitions and reconciliation attached.
J. Alexander's Holdings, Inc. and
Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited in thousands) July 2 January
1 2017 2017 Assets Current assets: Cash
and cash equivalents
$ 6,753 $ 6,632 Other current
assets
8,991 7,741 Total current assets
15,744 14,373 Other assets
6,017 6,012
Property and equipment, net
101,340 101,470 Goodwill
15,737 15,737 Tradename and other indefinite-lived
intangibles
25,160 25,155 Deferred Charges, net
209 291
$ 164,207 $ 163,038
Liabilities and Stockholders'
Equity
Current liabilities
$ 25,088 $ 27,704
Long term debt, net of portion classified
as current and unamortized deferred loan costs
13,237 15,418 Deferred compensation obligations
6,186
6,010 Deferred income taxes
3,698 4,031 Other long-term
liabilities
6,500 5,555 Stockholders' equity
109,498 104,320
$ 164,207 $ 163,038
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited in thousands) Six Months
Ended July 2 July 3 2017
2016 Cash flows from operating activities: Net income
$ 2,870 $ 3,377 Adjustments to reconcile net income
to net cash provided by operating activities: Depreciation and
amortization of property and equipment
5,021 4,537
Equity-based compensation expense
2,308 1,364 Other, net
52 (555 ) Changes in assets and liabilities, net
(2,147 ) (5,619 ) Net cash provided by
operating activities
8,104 3,104 Cash flows from
investing activities: Purchase of property and equipment
(6,597 ) (6,879 ) Other investing activities
(273 ) (219 ) Net cash used in investing
activities
(6,870 ) (7,098 ) Cash flows from
financing activities: Payments on long-term debt and obligations
under capital leases
(1,111 ) (833 ) Purchases of
common stock
- (3,153 ) Other financing activities
(2 ) - Net cash used in financing
activities
(1,113 ) (3,986 ) Increase
(decrease) in cash and cash equivalents
121 (7,980 ) Cash
and cash equivalents at beginning of period
6,632
13,424 Cash and cash equivalents at end of
period
$ 6,753 $ 5,444
Supplemental disclosures: Property and equipment obligations
accrued at beginning of period
$ 2,587 $ 1,845
Property and equipment obligations accrued at end of period
969 906 Cash paid for interest
395 338 Cash paid for
income taxes
1,838 3,511 Tax distributions obligation
accrued at end of period
- 1,319
J. Alexander's
Holdings, Inc. and Subsidiaries Non-GAAP Financial Measures
and Reconciliations (Unaudited in thousands)
Non-GAAP Financial Measures Within this press release, we
present the following non-GAAP financial measures which we believe
are useful to investors as key measures of our operating
performance:
We define Adjusted Earnings Before
Interest, Taxes, Depreciation and Amortization, or “Adjusted
EBITDA”, as net income (loss) before interest expense, income tax
expense (benefit), depreciation and amortization, and adding asset
impairment charges and restaurant closing costs, loss on disposals
of fixed assets, transaction and integration costs, non-cash
compensation, loss from discontinued operations, gain on debt
extinguishment and pre-opening costs.
Adjusted EBITDA is a non-GAAP financial
measure that we believe is useful to investors because it provides
information regarding certain financial and business trends
relating to our operating results and excludes certain items that
are not indicative of our operations. Adjusted EBITDA does not
fully consider the impact of investing or financing transactions as
it specifically excludes depreciation and interest charges, which
should also be considered in the overall evaluation of our results
of operations.
We define “Restaurant Operating Profit” as
net sales less restaurant operating costs, which are cost of sales,
restaurant labor and related costs, depreciation and amortization
of restaurant property and equipment, and other operating expenses.
Restaurant Operating Profit is a non-GAAP financial measure that we
believe is useful to investors because it provides a measure of
profitability for evaluation that does not reflect corporate
overhead and other non-operating or unusual costs. “Restaurant
Operating Profit Margin” is the ratio of Restaurant Operating
Profit to net sales.
Our management uses Adjusted EBITDA and
Restaurant Operating Profit to evaluate the effectiveness of our
business strategies. We caution investors that amounts presented in
accordance with the above definitions of Adjusted EBITDA or
Restaurant Operating Profit may not be comparable to similar
measures disclosed by other companies, because not all companies
calculate these non-GAAP financial measures in the same manner.
Adjusted EBITDA and Restaurant Operating Profit should not be
assessed in isolation from, or construed as a substitute for, net
income or other measures presented in accordance with GAAP.
A reconciliation of these non-GAAP financial measures to the
closest GAAP measure is set forth in the following tables:
Quarter
Ended Six Months Ended July 2 July 3
July 2 July 3 2017 2016 2017
2016 Net income
$ 186 $ 1,087
$
2,870 $ 3,377 Income tax expense
(254 )
486
590 1,089 Interest expense
224 185
398 367
Depreciation and amortization
2,586
2,315
5,048 4,570 EBITDA
2,742
4,073
8,906 9,403 Transaction and integration
expenses
460 15
460 62 Loss on disposal of fixed
assets
54 66
88 110
Asset impairment charges and restaurant
closing costs
27 1
133 2 Non-cash compensation
2,062 579
2,370 1,441 Loss from discontinued operations, net
110 111
223 217 Pre-opening expense
10
77
886 415 Adjusted
EBITDA
$ 5,465 $ 4,922
$ 13,066
$ 11,650 Note: For purposes of computing Adjusted
EBITDA, the $1,714 and $318 for the quarters ended July 2, 2017 and
July 3, 2016, respectively, and $1,676 and $912 for the six months
ended July 2, 2017 and July 3, 2016, respectively, in non-cash
compensation associated with a profits interest grant issued to
Black Knight Advisory Services, LLC ("BKAS") on October 6, 2015 has
been included in "Non-cash compensation" above. Additional expenses
associated with the Company's management agreement with BKAS
totaling $174 and $158 for the quarters ended July 2, 2017 and July
3, 2016, respectively, and totaling $439 and $318 for the six
months ended July 2, 2017 and July 3, 2016, respectively, are
included in general and administrative expenses and have not been
included in the reconciliation set forth above.
J.
Alexander's Holdings, Inc. and Subsidiaries Non-GAAP
Financial Measures and Reconciliations (Unaudited in
thousands) Quarter Ended
Six Months Ended July 2 July
3 July 2 July 3 2017
2016 2017 2016 Amount
Percent of Net Sales Amount Percent
of Net Sales Amount Percent of Net
Sales Amount Percent of Net Sales
Operating
income
$ 215 0.4% $ 1,822 3.4%
$
4,009 3.4% $ 4,994 4.5% General and
administrative expenses
6,336 10.9% 4,750 8.8%
11,164 9.5% 9,859 8.9% Transaction and integration
expenses
460 0.8% 15 0.0%
460 0.4% 62
0.1% Pre-opening expense
10 0.0%
77 0.1%
886
0.8% 415 0.4% Restaurant
Operating Profit
$ 7,021 12.1% $
6,664 12.4%
$ 16,519
14.0% $ 15,330 13.8%
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version on businesswire.com: http://www.businesswire.com/news/home/20170810006137/en/
J. Alexander’s Holdings, Inc.Mark A. Parkey, 615-269‐1900Chief
Financial Officer
J Alexanders (NYSE:JAX)
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