Operating profit in 2016 increases
2.6 times and operating margin more than
doubles on higher revenue and lower costs
Diversified Restaurant Holdings, Inc. (NASDAQ:SAUC) ("DRH" or the
"Company"), the largest franchisee for Buffalo Wild Wings® ("BWW")
with 64 stores across five states, today announced results for its
fourth quarter and fiscal year ended December 25, 2016
(“2016”). On December 25, 2016, DRH completed the spinoff of
its former subsidiary, Bagger Dave’s Burger Tavern, Inc., which is
now reported as discontinued operations.
Results from continuing operations for 2016, versus the
same period a year ago, were:
- Total revenue increased 15% to $166.5 million
- Same-store sales decreased 3.0%
- Restaurant-level EBITDA increased 8.7% to $32.3 million
(1)
- Restaurant-level EBITDA margin decreased 1.1 points to
19.4%
- Operating profit increased 157.3% to $7.3 million
- Adjusted EBITDA improved 8.0% to $23.3 million (1)
Improvements in total revenue, EBITDA and operating profit were
impacted, in part, by the inclusion of a full year of operations
for 18 restaurants acquired in mid-2015, in addition to three new
unit openings and one unit closing in 2015, and two new unit
openings in 2016.
Results from continuing operations for the fourth
quarter of 2016, versus the same period a year ago,
were:
- Total revenue decreased 3.6% to $40.8 million
- Same-store sales decreased 5.4%
- Restaurant-level EBITDA decreased 19.1% to $6.7 million
(1)
- Restaurant-level EBITDA margin decreased 2.2 points to
16.5%
- Operating profit increased $0.6 to $0.9 million
- Adjusted EBITDA decreased 29.8% to $4.5 million (1)
Same-store sales declined in the month of December 2016
partially as a result of unfavorable weather in the Midwest and
exacerbated by the calendar shift in 2016 vs. 2015 whereby the
Christmas holiday fell on a weekend and the vast majority of
important sports events fell into early 2017.
(1) See attached table for a reconciliation of GAAP net loss to
Restaurant-level EBITDA and Adjusted EBITDA
David G. Burke, President and CEO, commented, “With the
successful spin-off of Bagger Dave’s, we are now exclusively
focused on driving strong performance and growth with our Buffalo
Wild Wings franchise stores, after another strong year of growth in
2016. We will continue to tightly manage our costs and use
our strong positive cash flow to reduce debt and strengthen our
balance sheet, providing greater financial flexibility and
enhancing our future growth potential.
“While faced with the headwinds hitting the restaurant industry,
particularly in the fourth quarter, we believe we are doing what it
takes to increase traffic, deliver on our value proposition and
enhance the customer experience. In concert with corporate
efforts, we are promoting FastBreak™ Lunch, Half-Price Wing
Tuesdays®, and the Blazin' Rewards® loyalty program, all of
which are attracting customers. We now offer delivery service
through third parties in 24 locations, and recently began to
promote large group private parties and events in many of our key
markets. We also completed six renovations in 2016 and now
have 27 restaurants with the newer Stadia design - another traffic
booster. We expect 2017 to be a stronger year.”
Full Year 2016
Highlights (Unaudited) |
|
|
|
|
|
|
|
($ in thousands) |
2016 |
|
2015 |
|
Change |
|
% Change |
Revenue |
$ |
166,520.9 |
|
|
$ |
144,800.0 |
|
|
$ |
21,720.9 |
|
|
15.0 |
% |
Operating profit |
$ |
7,304.0 |
|
|
$ |
2,838.5 |
|
|
$ |
4,465.5 |
|
|
157.3 |
% |
Operating
margin |
4.4 |
% |
|
2.0 |
% |
|
|
|
|
Net income (loss) from
continuing operations |
$ |
3,639.0 |
|
|
$ |
(506.9 |
) |
|
$ |
4,145.9 |
|
|
(60.1 |
%) |
Diluted net income
(loss) per share (cont. ops.) |
$ |
0.14 |
|
|
$ |
(0.02 |
) |
|
$ |
— |
|
|
(60.4 |
%) |
|
|
|
|
|
|
|
|
Comparable-store
sales |
(3.0 |
%) |
|
3.0 |
% |
|
|
|
|
Restaurant-level
EBITDA(1) |
$ |
32,275.0 |
|
|
$ |
29,681.5 |
|
|
$ |
2,593.5 |
|
|
8.7 |
% |
Restaurant-level
EBITDA margin |
19.4 |
% |
|
20.5 |
% |
|
|
|
|
Adjusted EBITDA(1) |
$ |
23,345.2 |
|
|
$ |
21,621.7 |
|
|
$ |
1,723.5 |
|
|
8.0 |
% |
Adjusted EBITDA
margin |
14.0 |
% |
|
14.9 |
% |
|
|
|
|
Fourth Quarter
2016 Highlights (Unaudited) |
|
|
|
|
|
|
|
($ in thousands) |
Q4 2016 |
|
Q4 2015 |
|
Change |
|
% Change |
Revenue |
$ |
40,801.2 |
|
|
$ |
42,303.3 |
|
|
$ |
(1,502.1 |
) |
|
(3.6 |
)% |
Operating profit |
$ |
854.3 |
|
|
$ |
279.4 |
|
|
$ |
574.9 |
|
|
205.8 |
% |
Operating
margin |
2.1 |
% |
|
0.7 |
% |
|
|
|
|
Net income (loss) from
continuing operations |
$ |
186.3 |
|
|
$ |
(908.9 |
) |
|
$ |
1,095.2 |
|
|
(60.1 |
)% |
Diluted net income
(loss) per share (cont. ops.) |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
— |
|
|
(60.4 |
)% |
|
|
|
|
|
|
|
|
Comparable-store
sales |
(5.4 |
%) |
|
0.8 |
% |
|
|
|
|
Restaurant-level
EBITDA(1) |
$ |
6,727.4 |
|
|
$ |
8,319.0 |
|
|
$ |
(1,591.6 |
) |
|
(19.1 |
)% |
Restaurant-level
EBITDA margin |
16.5 |
% |
|
19.7 |
% |
|
|
|
|
Adjusted EBITDA(1) |
$ |
4,459.9 |
|
|
$ |
6,356.1 |
|
|
$ |
(1,896.2 |
) |
|
(29.8 |
)% |
Adjusted EBITDA
margin |
10.9 |
% |
|
15.0 |
% |
|
|
|
|
(1) See attached table for a reconciliation of GAAP net loss to
Restaurant-level EBITDA and Adjusted EBITDA
Balance Sheet Highlights - Continuing
OperationsCash and cash equivalents were $4.0 million at
December 25, 2016 compared with $13.5 million at 2015
year-end. Total debt decreased $5.1 million to $121.2 million
at the end of 2016. Capital expenditures were $12.5 million in 2016
and were for new restaurant development, restaurant refreshes and
remodels, down from $20.2 million in 2015.
Fiscal 2017 GuidanceThe Company expects the
following in 2017:
- Revenue of $173 million to $178 million
- Restaurant-level EBITDA of $33 million to $36 million
- Adjusted EBITDA between $23.5 million to $26.5 million
- Capital expenditures of approximately $4 million to $6 million-
One new restaurant is under construction and expected to open
in the second quarter- Two to four remodels are planned for
2017 which are targeted at approximately $0.6 million
each
Webcast, Conference Call and PresentationDRH
will host a conference call and live webcast on Friday, March 10,
2017 at 10:00 A.M. Eastern Time, during which management will
review the financial and operating results for the fourth quarter
and full year 2016, and discuss its corporate strategies and
outlook. A question-and-answer session will follow.
A presentation that will be referenced during the conference
call is available on the Company’s website
at www.diversifiedrestaurantholdings.com.
The teleconference can be accessed by calling (201)
689-8562. The webcast can be monitored on the Company’s
website at www.diversifiedrestaurantholdings.com.
A telephonic replay will be available from 1:00 P.M. ET on the
day of the call through Friday, March 17, 2017. To listen to
the archived call, dial (412) 317-6671 and enter the conference ID
number 13653306, or access the webcast replay at
www.diversifiedrestaurantholdings.com, where a transcript will also
be posted once available.
About Diversified Restaurant Holdings,
Inc.Diversified Restaurant Holdings, Inc. is the largest
franchisee for Buffalo Wild Wings Grill & Bar with 64 BWW
franchised restaurants in key markets in Florida, Illinois,
Indiana, Michigan and Missouri. The Company routinely posts
news and other important information on its website at
www.diversifiedrestaurantholdings.com.
Safe Harbor StatementThe information made
available in this news release and the Company’s March 10, 2017
earnings conference call contain forward-looking statements which
reflect DRH's current view of future events, results of operations,
cash flows, performance, business prospects and opportunities.
Wherever used, the words "anticipate," "believe," "expect,"
"intend," "plan," "project," "will continue," "will likely result,"
"may," and similar expressions identify forward-looking statements
as such term is defined in the Securities Exchange Act of
1934. Any such forward-looking statements are subject to
risks and uncertainties and the Company's spinoff, actual growth,
results of operations, financial condition, cash flows,
performance, business prospects and opportunities could differ
materially from historical results or current expectations. Some of
these risks include, without limitation, the impact of economic and
industry conditions, competition, food and drug safety issues,
store expansion and remodeling, labor relations issues, costs of
providing employee benefits, regulatory matters, legal and
administrative proceedings, information technology, security,
severe weather, natural disasters, accounting matters, other risk
factors relating to business or industry and other risks detailed
from time to time in the Securities and Exchange Commission filings
of DRH. Forward-looking statements contained herein speak only as
of the date made and, thus, DRH undertakes no obligation to update
or publicly announce the revision of any of the forward-looking
statements contained herein to reflect new information, future
events, developments or changed circumstances or for any other
reason.
FINANCIAL TABLES FOLLOW
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS
OF OPERATIONS (Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
|
December 25, 2016 |
|
December 27, 2015 |
|
December 25, 2016 |
|
December 27, 2015 |
Revenue |
|
$ |
40,801,180 |
|
|
$ |
42,303,292 |
|
|
$ |
166,520,925 |
|
|
$ |
144,800,046 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
Restaurant operating
costs (exclusive of depreciation and amortization shown separately
below): |
|
|
|
|
|
|
|
|
Food,
beverage, and packaging |
|
11,912,429 |
|
|
11,668,245 |
|
|
46,794,091 |
|
|
40,730,583 |
|
Compensation costs |
|
10,195,132 |
|
|
10,483,229 |
|
|
41,307,718 |
|
|
35,287,202 |
|
Occupancy |
|
2,930,147 |
|
|
2,780,927 |
|
|
11,370,223 |
|
|
8,935,702 |
|
Other
operating costs |
|
9,036,117 |
|
|
9,819,119 |
|
|
34,845,059 |
|
|
31,293,900 |
|
General and
administrative expenses |
|
2,368,613 |
|
|
2,217,483 |
|
|
9,265,432 |
|
|
11,385,201 |
|
Pre-opening costs |
|
(54,758 |
) |
|
292,225 |
|
|
599,279 |
|
|
1,439,390 |
|
Depreciation and
amortization |
|
3,484,290 |
|
|
4,464,324 |
|
|
14,696,846 |
|
|
11,922,548 |
|
Impairment and loss on
asset disposals |
|
74,935 |
|
|
298,323 |
|
|
338,306 |
|
|
967,035 |
|
Total operating
expenses |
|
39,946,905 |
|
|
42,023,875 |
|
|
159,216,954 |
|
|
141,961,561 |
|
|
|
|
|
|
|
|
|
|
Operating
profit |
|
854,275 |
|
|
279,417 |
|
|
7,303,971 |
|
|
2,838,485 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(1,438,919 |
) |
|
(1,377,518 |
) |
|
(5,763,684 |
) |
|
(4,214,452 |
) |
Other income (expense),
net |
|
(259,886 |
) |
|
39,408 |
|
|
(172,031 |
) |
|
785,591 |
|
|
|
|
|
|
|
|
|
|
Income (loss)
from continuing operations before income taxes |
|
(844,530 |
) |
|
(1,058,693 |
) |
|
1,368,256 |
|
|
(590,376 |
) |
Income tax benefit |
|
(1,030,816 |
) |
|
(149,762 |
) |
|
(2,270,792 |
) |
|
(83,514 |
) |
Income (loss)
from continuing operations |
|
186,286 |
|
|
(908,931 |
) |
|
3,639,048 |
|
|
(506,862 |
) |
|
|
|
|
|
|
|
|
|
Discontinued
operations |
|
|
|
|
|
|
|
|
Loss from
discontinued operations before income taxes |
|
(5,633,088 |
) |
|
(15,023,466 |
) |
|
(10,226,996 |
) |
|
(25,588,123 |
) |
Income
tax benefit |
|
(585,467 |
) |
|
(6,377,141 |
) |
|
(585,467 |
) |
|
(9,902,493 |
) |
Loss from
discontinued operations |
|
(5,047,621 |
) |
|
(8,646,325 |
) |
|
(9,641,529 |
) |
|
(15,685,630 |
) |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(4,861,335 |
) |
|
$ |
(9,555,256 |
) |
|
$ |
(6,002,481 |
) |
|
$ |
(16,192,492 |
) |
|
|
|
|
|
|
|
|
|
Basic earnings
(loss) per share from: |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
0.14 |
|
|
$ |
(0.02 |
) |
Discontinued operations |
|
$ |
(0.19 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.60 |
) |
Basic net loss per
share |
|
$ |
(0.18 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.62 |
) |
|
|
|
|
|
|
|
|
|
Fully diluted
earnings (loss) per share from: |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
0.14 |
|
|
$ |
(0.02 |
) |
Discontinued operations |
|
$ |
(0.19 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.37 |
) |
|
$ |
(0.60 |
) |
Fully diluted net loss
per share |
|
$ |
(0.18 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.23 |
) |
|
$ |
(0.62 |
) |
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
26,663,482 |
|
|
26,294,530 |
|
|
26,491,549 |
|
|
26,211,669 |
|
Diluted |
|
26,663,482 |
|
|
26,294,530 |
|
|
26,491,549 |
|
|
26,211,669 |
|
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
(Unaudited) |
|
|
|
December 25, 2016 |
|
December 27, 2015 |
ASSETS |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash
equivalents |
|
$ |
4,021,126 |
|
|
$ |
13,499,890 |
|
Accounts
receivable |
|
276,238 |
|
|
247,323 |
|
Inventory |
|
1,700,604 |
|
|
1,598,379 |
|
Prepaid and other
current assets |
|
1,305,936 |
|
|
1,314,463 |
|
Current assets,
discontinued operations |
|
— |
|
|
1,714,429 |
|
Total current
assets |
|
7,303,904 |
|
|
18,374,484 |
|
|
|
|
|
|
Deferred income
taxes |
|
16,250,928 |
|
|
4,368,683 |
|
Property and equipment,
net |
|
56,630,031 |
|
|
59,272,611 |
|
Intangible assets,
net |
|
2,666,364 |
|
|
2,844,963 |
|
Goodwill |
|
50,097,081 |
|
|
50,097,081 |
|
Other long-term
assets |
|
233,539 |
|
|
987,499 |
|
Long-term assets,
discontinued operations |
|
— |
|
|
29,827,174 |
|
Total
assets |
|
$ |
133,181,847 |
|
|
$ |
165,772,495 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable |
|
$ |
3,995,846 |
|
|
$ |
5,960,310 |
|
Accrued
compensation |
|
2,803,549 |
|
|
2,408,476 |
|
Other accrued
liabilities |
|
2,642,269 |
|
|
2,235,351 |
|
Current portion of
long-term debt |
|
11,307,819 |
|
|
9,891,825 |
|
Current portion of
deferred rent |
|
194,206 |
|
|
207,045 |
|
Current liabilities,
discontinued operations |
|
— |
|
|
4,143,577 |
|
Total current
liabilities |
|
20,943,689 |
|
|
24,846,584 |
|
|
|
|
|
|
Deferred rent, less
current portion |
|
2,020,199 |
|
|
1,899,623 |
|
Unfavorable operating
leases |
|
591,247 |
|
|
671,553 |
|
Other liabilities |
|
3,859,231 |
|
|
3,755,888 |
|
Long-term debt, less
current portion |
|
109,878,201 |
|
|
116,364,165 |
|
Long-term liabilities,
discontinued operations |
|
— |
|
|
1,634,330 |
|
Total
liabilities |
|
137,292,567 |
|
|
149,172,143 |
|
|
|
|
|
|
Stockholders'
equity (deficit) |
|
|
|
|
Common stock - $0.0001
par value; 100,000,000 shares authorized; 26,632,222 and
26,298,725, respectively, issued and outstanding |
|
2,610 |
|
|
2,597 |
|
Additional paid-in
capital |
|
21,355,270 |
|
|
36,136,319 |
|
Accumulated other
comprehensive loss |
|
(934,222 |
) |
|
(1,006,667 |
) |
Accumulated
deficit |
|
(24,534,378 |
) |
|
(18,531,897 |
) |
Total
stockholders' equity (deficit) |
|
(4,110,720 |
) |
|
16,600,352 |
|
|
|
|
|
|
Total
liabilities and stockholders' equity |
|
$ |
133,181,847 |
|
|
$ |
165,772,495 |
|
DIVERSIFIED RESTAURANT HOLDINGS, INC. AND
SUBSIDIARIES |
Reconciliation between Net Loss and Adjusted
Net Income (loss), Adjusted EBITDA, and Adjusted Restaurant-Level
EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended (unaudited) |
|
|
|
Fiscal Year
Ended (unaudited) |
|
December 25, 2016 |
|
|
|
December 27, 2015 |
|
|
|
December 25, 2016 |
|
|
|
December 27, 2015 |
Net loss |
(4,861,335 |
) |
|
|
|
(9,555,256 |
) |
|
|
|
(6,002,481 |
) |
|
|
|
(16,192,492 |
) |
+ Loss from
discontinued operations |
5,047,621 |
|
|
|
|
8,646,325 |
|
|
|
|
9,641,529 |
|
|
|
|
15,685,630 |
|
+ Income tax
benefit |
(1,030,816 |
) |
|
|
|
(149,762 |
) |
|
|
|
(2,270,792 |
) |
|
|
|
(83,514 |
) |
+ Interest
expense |
1,438,919 |
|
|
|
|
1,377,518 |
|
|
|
|
5,763,684 |
|
|
|
|
4,214,452 |
|
+ Other (income)
expense, net |
259,886 |
|
|
|
|
(39,408 |
) |
|
|
|
172,031 |
|
|
|
|
(785,591 |
) |
+ Loss on
disposal of property and equipment |
74,935 |
|
|
|
|
298,323 |
|
|
|
|
338,306 |
|
|
|
|
967,035 |
|
+ Depreciation
and amortization |
3,484,290 |
|
|
|
|
4,464,324 |
|
|
|
|
14,696,846 |
|
|
|
|
11,922,548 |
|
EBITDA |
4,413,500 |
|
|
|
|
5,042,064 |
|
|
|
|
22,339,123 |
|
|
|
|
15,728,068 |
|
+ Pre-opening
costs |
(54,758 |
) |
|
|
|
292,225 |
|
|
|
|
599,279 |
|
|
|
|
1,439,390 |
|
+ Non-recurring
expenses (Restaurant level) |
— |
|
|
|
|
767,235 |
|
|
|
|
71,184 |
|
|
|
|
1,128,805 |
|
+ Non-recurring
expenses (Corporate level) |
101,179 |
|
|
|
|
254,556 |
|
|
|
|
335,655 |
|
|
|
|
3,325,393 |
|
Adjusted EBITDA |
4,459,921 |
|
|
|
|
6,356,080 |
|
|
|
|
23,345,241 |
|
|
|
|
21,621,656 |
|
Adjusted EBITDA
margin (%) |
10.9 |
% |
|
|
|
15 |
% |
|
|
|
14 |
% |
|
|
|
14.9 |
% |
+ General and
administrative |
2,368,613 |
|
|
|
|
2,217,483 |
|
|
|
|
9,265,432 |
|
|
|
|
11,385,201 |
|
+
Non-recurring expenses |
(101,179 |
) |
|
|
|
(254,556 |
) |
|
|
|
(335,655 |
) |
|
|
|
(3,325,393 |
) |
Restaurant–Level EBITDA |
6,727,355 |
|
|
|
|
8,319,007 |
|
|
|
|
32,275,018 |
|
|
|
|
29,681,464 |
|
Restaurant–Level
EBITDA margin (%) |
16.5 |
% |
|
|
|
19.7 |
% |
|
|
|
19.4 |
% |
|
|
|
20.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Note: There were additional one-time expenses related
to the acquisition that were identified or reassigned after the
close of the Third Quarter 2015 that have an impact on each quarter
of 2015 and has been added to represent the true full year 2015
Adjusted Restaurant-Level EBITDA, Adjusted EBITDA, and Adjusted Net
Income.
(2) Adjusted Restaurant-Level EBITDA represents net income
(loss) attributable to DRH plus the sum of non-restaurant specific
general and administrative expenses, restaurant pre-opening costs,
loss on property and equipment disposals, the change in fair value
of derivative instruments, depreciation and amortization, other
income and expenses, interest, taxes, income attributable to
noncontrolling interest and non-recurring expenses related to
acquisitions, equity offerings or other non-recurring expenses.
Adjusted EBITDA represents net income (loss) attributable to DRH
plus the sum of restaurant pre-opening costs, loss on property and
equipment disposals, the change in fair value of derivative
instruments, depreciation and amortization, other income and
expenses, interest, taxes, income attributable to noncontrolling
interest, and non-recurring expenses. Adjusted Net Income
represents net income (loss) attributable to DRH plus the tax
adjusted sum of non-recurring expenses that exist in Adjusted
Restaurant-Level EBITDA, Adjusted EBITDA, non-recurring expenses
that occur outside of EBITDA, loss on property and equipment
disposals, and restaurant pre-opening costs. We are
presenting Adjusted Restaurant-Level EBITDA and Adjusted EBITDA,
and Adjusted Net Income, which are not presented in accordance with
GAAP, because we believe they provide an additional metric by which
to evaluate our operations. When considered together with our GAAP
results and the reconciliation to our net income, we believe they
provide a more complete understanding of our business than could be
obtained absent this disclosure. We use Adjusted Restaurant-Level
EBITDA, Adjusted EBITDA, and Adjusted Net Income together with
financial measures prepared in accordance with GAAP, such as
revenue, income from operations, net income, and cash flows from
operations, to assess our historical and prospective operating
performance and to enhance the understanding of our core operating
performance. Adjusted Restaurant-Level EBITDA, Adjusted EBITDA, and
Adjusted Net Income are presented because: (i) we believe they are
useful measures for investors to assess the operating performance
of our business without the effect of non-cash depreciation and
amortization expenses; (ii) we believe investors will find these
measures useful in assessing our ability to service or incur
indebtedness; and (iii) they are used internally as benchmarks to
evaluate our operating performance or compare our performance to
that of our competitors.
Additionally, we present Adjusted Restaurant-Level EBITDA
because it excludes the impact of general and administrative
expenses and restaurant pre-opening costs, which is non-recurring .
The use of Adjusted Restaurant-Level EBITDA thereby enables us and
our investors to compare our operating performance between periods
and to compare our operating performance to the performance of our
competitors. The measure is also widely used within the restaurant
industry to evaluate restaurant level productivity, efficiency, and
performance. The use of Adjusted Restaurant-Level EBITDA, Adjusted
EBITDA, and Adjusted Net Income as performance measures permits a
comparative assessment of our operating performance relative to our
performance based on GAAP results, while isolating the effects of
some items that vary from period to period without any correlation
to core operating performance or that vary widely among similar
companies. Companies within our industry exhibit significant
variations with respect to capital structure and cost of capital
(which affect interest expense and tax rates) and differences in
book depreciation of property and equipment (which affect relative
depreciation expense), including significant differences in the
depreciable lives of similar assets among various companies. Our
management team believes that Adjusted Restaurant-Level EBITDA and
Adjusted EBITDA facilitate company-to-company comparisons within
our industry by eliminating some of the foregoing
variations.
Adjusted Restaurant-Level EBITDA, Adjusted EBITDA, and Adjusted
Net Income are not determined in accordance with GAAP and should
not be considered in isolation or as an alternative to net income,
income from operations, net cash provided by operating, investing,
or financing activities, or other financial statement data
presented as indicators of financial performance or liquidity, each
as presented in accordance with GAAP. Neither Adjusted
Restaurant-Level EBITDA nor Adjusted EBITDA should be considered as
a measure of discretionary cash available to us to invest in the
growth of our business. Adjusted Restaurant-Level EBITDA and
Adjusted EBITDA as presented may not be comparable to other
similarly titled measures of other companies and our presentation
of Adjusted Restaurant-Level EBITDA and Adjusted EBITDA should not
be construed as an inference that our future results will be
unaffected by unusual items. Our management recognizes that
Adjusted Restaurant-Level EBITDA and Adjusted EBITDA have
limitations as analytical financial measures.
Investor and Media Contact:
Deborah K. Pawlowski
Kei Advisors LLC
716.843.3908
dpawlowski@keiadvisors.com
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