Same Store Sales Continue To Increase In
Final Quarter of 2017
Net Sales Increase 7% for the Fourth Quarter
of 2017
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner
and operator of the J. Alexander’s, Redlands Grill, Stoney River
Steakhouse and Grill and Lyndhurst Grill collection of restaurants,
today reported financial results for the fourth quarter and fiscal
year ended December 31, 2017.
Fourth Quarter 2017 Highlights Compared To The Fourth Quarter
Of 2016
- Net sales were $61,338,000, an increase
of 7% from $57,323,000 achieved in the fourth quarter of 2016.
- For the J. Alexander’s/Grill
restaurants, average weekly same store sales per restaurant (1)
were $117,200, an increase of 2.3% from $114,600 reported in the
fourth quarter of 2016, and for the Stoney River Steakhouse and
Grill restaurants, average weekly same store sales were $85,100, a
gain of 7.3% from $79,300 reported in the fourth quarter of
2016.
- Income from continuing operations
before income taxes was $4,340,000 for the fourth quarter of 2017
compared to income from continuing operations before income taxes
of $3,679,000 for the fourth quarter of 2016. Several factors
impacted income for the fourth quarter of 2017 including
non-recurring transaction and integration expenses related to the
Company’s proposed acquisition of the Ninety Nine Restaurant and
Pub concept of $1,094,000. Excluding the non-recurring transaction
and integration expenses, income from continuing operations before
income taxes would have totaled $5,434,000 for the fourth quarter
of 2017.
- During the fourth quarter of 2017, the
valuation of the Black Knight Advisory Services, LLC (“Black
Knight”) profits interest grant resulted in profits interest income
of $773,000. This compares to profits interest expense of $881,000
recognized in the fourth quarter of 2016. The Black Knight profits
interest grant, issued in October 2015, requires a quarterly
valuation. The non-cash expense (income) 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 most recent quarter. Primarily due to the $9.70 per
share closing price of the Company’s stock at the end of the most
recent quarter, the grant’s valuation decreased from $6,650,000 at
October 1, 2017 to $4,876,000 at December 31, 2017. Also during the
fourth quarter, the Company incurred consulting fees of $250,000
under its management agreement with Black Knight. This compares to
consulting fees of $249,000 in the final quarter of 2016.
- Net income for the fourth quarter of
2017 totaled $5,340,000, up 96.3% from net income of $2,721,000
achieved in the comparable quarter of 2016. Results include an
income tax benefit of $1,105,000 compared to an income tax
provision of $852,000 in the fourth quarter of 2016.
- Basic earnings per share totaled $0.36
for the fourth quarter of 2017 compared to $0.19 reported in the
fourth quarter of 2016. Diluted earnings per share totaled $0.36
for the fourth quarter of 2017 compared to $0.18 in the fourth
quarter of the previous year.
- Adjusted EBITDA(2) decreased 1.0% to
$8,177,000 in the fourth quarter of 2017 from $8,256,000 in the
fourth quarter of 2016.
- Restaurant Operating Profit Margin (3)
as a percent of net sales was 14.9% in the fourth quarter of 2017
compared to 16.6% for the final quarter of 2016.
- Cost of sales as a percentage of net
sales in the fourth quarter of 2017 was 32.1% compared to 30.7% in
the same quarter of the previous year.
- On February 1, 2018, the Company
announced that it did not receive the required number of
disinterested shareholder votes to approve the proposed Ninety Nine
Restaurants acquisition (originally announced in August 2017), and
the merger agreement was thereafter terminated.
(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 18 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 Operating Income.
Management uses Restaurant Operating Profit to measure operating
performance at the restaurant level.
For the fourth quarter of 2017, the Company’s restaurant labor
and related costs as a percentage of net sales were 29.5% as
compared to 29.7% of net sales in the fourth quarter of 2016. Other
restaurant operating expenses were 19.4% of net sales in the fourth
quarter of 2017 as compared to 19.1% of net sales in the last
quarter of 2016.
The Company’s consolidated operating income for the fourth
quarter of 2017 was $4,507,000 compared to consolidated operating
income of $3,794,000 recorded in the comparable quarter a year
earlier.
The average weekly guest counts within the same store base of
the Company’s J. Alexander’s/Grills collection were down 0.3% in
the fourth quarter of 2017 compared to the corresponding quarter a
year earlier. Guest counts within the same store base at the
Company’s Stoney River Steakhouse and Grill restaurants were up
8.7% for the fourth quarter of 2017 compared to the final 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 fourth
quarter of 2017 was $31.86, up 2.7% from $31.03 during the fourth
quarter of 2016. The average guest check within the same store base
of Stoney River Steakhouse and Grill restaurants totaled $44.32
during the fourth quarter of the most recent year, down 1.3% from
$44.90 recorded in the last quarter of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grills locations in the fourth quarter of
2017 were even with the fourth quarter of the prior year while
average weekly guest counts within the Company’s Stoney River
Steakhouse and Grill locations were up 7.2% for the final quarter
of 2017 compared to the final quarter of 2016. Average guest checks
for the combined J. Alexander’s/Grills concepts rose 2.6% from
$31.10 in the fourth quarter of 2016 to $31.90 for the fourth
quarter of 2017. Average guest checks for the Stoney River
Steakhouse and Grill restaurants decreased 1.8% from $44.90 in the
last quarter of 2016 to $44.09 in the final quarter of 2017.
The effect of menu pricing for the last quarter of 2017 was
estimated to be a 1.6% increase for the J. Alexander’s/Grills
restaurants and a 0.8% increase for the Stoney River Steakhouse and
Grill restaurants compared to the corresponding quarter of 2016.
Inflation in food costs for the fourth quarter of 2017 was
estimated to total 4.9% for the J. Alexander’s/Grills restaurants,
with beef costs increasing by an estimated 5.9% compared to the
fourth quarter of 2016. For the Stoney River Steakhouse and Grill
restaurants, inflation for the fourth quarter of 2017 was estimated
to total 5.9%, with beef costs up by approximately 6.9% over the
last quarter of 2016.
Chief Executive Officer’s Comments
“We were pleased with our sales performance in both restaurant
groups,” said Lonnie J. Stout II, President and Chief Executive
Officer of J. Alexander’s Holdings, Inc. “However we were under
considerable cost of sales pressure during the quarter, primarily
related to beef costs.”
“When you eliminate the impact of transaction costs, the
non-cash expense or income associated with the Black Knight profits
interest valuation and the pre-opening expense related to the
timing of our new restaurant openings on income from continuing
operations before income taxes, our results for the fourth quarter
of 2017 came in below the fourth quarter of 2016, primarily due to
the impact of higher cost of sales,” Stout continued.
“Looking ahead, we expect our cost of sales in the first quarter
of 2018 to be more in line with our expectations. We took a small
price increase in the fourth quarter of 2017 and our input costs
relative to our beef program, while still up compared to the first
quarter of 2017, which had unusually favorable beef input costs,
have returned to a more normalized level thus far.”
“We entered 2018 with overall positive momentum in most key
trends,” Stout said. “While we were encouraged with these
indicators, harsh winter weather in restaurants located in certain
Midwestern markets has impacted our sales during the first quarter
of 2018. Through Valentine’s Day 2018, we found it necessary to
close our restaurants for a total of 24 days, representing lost
revenue of approximately $370,000 during the first six weeks of
2018. For the same period of 2017, we were closed a total of two
days which accounted for estimated lost revenue of $33,000.”
“As mentioned in our recent news release, we were disappointed
that the proposed merger agreement with Ninety Nine Restaurant and
Pub was not approved,” Stout observed. “We were, however,
appreciative of the level of participation and support from many
shareholders in connection with this proposed transaction.”
“We continue to be firmly committed to providing our guests with
the finest dining experiences in our upscale restaurant segment.
This has been and will continue to be our mission since opening the
first J. Alexander’s restaurant in 1991. In the year ahead,”
Stout added, “we will remain sharply focused on building our
restaurant business organically and strengthening our competitive
position through the delivery of outstanding food and professional
service.”
Full Year Highlights For 2017
For fiscal 2017, the Company posted net sales of $233,255,000,
up 6.2% from $219,582,000 recorded in fiscal 2016. Within the J.
Alexander’s/Grill restaurants, average weekly same store sales per
restaurant were $114,500 for 2017, an increase of 3.0% from
$111,200 achieved in the previous year. For the Stoney River
Steakhouse and Grill restaurants, average weekly same store sales
reached $74,700, a gain of 3.8% from $72,000 reported in 2016.
Income from continuing operations before income taxes was
$6,426,000 in 2017, down 32.6% from $9,539,000 recorded in 2016.
The downturn for 2017 was due to a combination of several factors,
including non-recurring transaction and integration expenses from
the proposed acquisition of Ninety Nine Restaurant and Pub, and the
impact of Hurricane Irma, which forced the closing of our Florida
restaurants for a total of 36 days. The restaurant closings in the
third quarter resulted in lost revenue estimated at $650,000 and a
decrease to income from continuing operations of approximately
$400,000.
The Company had non-recurring transaction and integration
expenses of $3,529,000 related to the proposed acquisition of
Ninety Nine Restaurant and Pub concept in 2017. Excluding these
non-recurring transaction and integration expenses, income from
continuing operations before income taxes would have reached
$9,955,000 for 2017.
During 2017, the Black Knight profits interest grant resulted in
non-cash profits interest expense of $942,000, a decrease of
$1,097,000, or 53.8%, from profits interest expense of $2,039,000
in 2016. Also in 2017, the Company had consulting fees of $809,000
from its management agreement with Black Knight compared to
$700,000 of expense in 2016.
The Company recorded net income of $7,334,000 for 2017, up 4.1%
from $7,043,000 for 2016. The results for 2017 included an income
tax benefit of $1,347,000 compared to an income tax provision of
$2,062,000 in 2016. Adjusted EBITDA for 2017 totaled $24,969,000,
up from $24,303,000 recorded in 2016. Basic earnings per share
totaled $0.50 for 2017 and $0.48 for 2016, while diluted earnings
per share totaled $0.50 for 2017 and $0.47 for 2016. See attached
“Adjusted EBITDA Reconciliation” for a definition of Adjusted
EBITDA and a reconciliation to net income.
Guest counts within the same store base of restaurants increased
by 0.3% within the J. Alexander’s/Grill restaurants for 2017, and
increased 5.5% within the Stoney River Steakhouse and Grill
restaurants during the same period. The average guest check within
the same store base at the combined J. Alexander’s/Grill locations
increased by 2.6% from $30.35 for 2016 to $31.15 for 2017, while
the Stoney River average guest check decreased by 2.2%, from $44.13
in 2016 to $43.17 in 2017. The effect of menu price changes for
2017 was estimated to be a 1.9% increase at the J.
Alexander’s/Grill locations and even at the Stoney River
restaurants compared to 2016.
Cost of sales as a percentage of net sales for 2017 was 32.0%
compared to 31.6% for 2016. Inflation in food costs for the year
ended December 31, 2017 was estimated to total 1.6% for the J.
Alexander’s/Grill restaurants, with beef costs declining by
approximately 0.6% compared to 2016. For the Stoney River
Steakhouse and Grill restaurants, inflation for 2017 was an
estimated 2.0%, including an estimated increase of 1.5% in beef
costs on a comparative basis.
Restaurant Development
J. Alexander’s Holdings, Inc. opened a new Stoney River
Steakhouse and Grill in Chapel Hill, NC in February 2017 and a new
J. Alexander’s restaurant in Lexington, KY in March 2017.
The Company also announced plans and began construction on one
new J. Alexander’s restaurant in King of Prussia, PA near
Philadelphia during 2017. Additionally, plans were announced and
construction started on a new Stoney River Steakhouse and Grill
restaurant in Troy, MI. The new J. Alexander’s restaurant is
scheduled to open in the second quarter of 2018 while the new
Stoney River Steakhouse and Grill is expected to open in the fourth
quarter of 2018.
Guidance For 2018
The following performance outlook is based on current
information as of March 7, 2018. The Company does not expect to
update the guidance provided as follows before next quarter’s
earnings release. However, the information on which the outlook is
based is subject to change and the Company may update its full
business outlook or any portion thereof at any time for any
reason.
Based upon current information, the guidance for the 2018 fiscal
year is as follows:
Same Store Sales Increase:
J. Alexander’s/Grills 2.0% - 3.0% Stoney River Steakhouse
and Grill 3.5% - 4.5% Capital Expenditures $18MM ‐ $20MM
Total Revenue $245MM ‐ $247MM Net Income $7.7MM ‐
$8.7MM Adjusted EBITDA $26.6MM ‐ $27.6MM Effective
tax rate 10% - 16% Basic EPS Range $0.53 ‐ $0.60
Conference Call
The Company will hold a conference call on Thursday, March 8,
2018, at 10 a.m., Central time to discuss its financial results for
the fourth quarter and full fiscal year ending December 31, 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 J. Alexander’s website
at investor.jalexandersholdings.com or
http://public.viavid.com/index.php?id=128459. A replay of the
conference call will be available shortly following the conclusion
of the call at investor.jalexandersholdings.com and
http://public.viavid.com/index.php?id=128459, as well as by dialing
1‐844‐512‐2921 or 1‐412‐317‐6671 and providing the access code
13676685. The replay will be accessible through March 15, 2018 via
telephone and for 30 days on the internet.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants
that focus on providing high quality food, outstanding professional
service and an attractive ambiance. The Company presently operates
four complementary restaurant concepts: J. Alexander’s, Redlands
Grill, Lyndhurst Grill and Stoney River Steakhouse and Grill.
J. Alexander’s Holdings, Inc. presently operates 44 restaurants
in 15 states. The Company has its headquarters in Nashville, TN.
For additional information, visit www.jalexandersholdings.com.
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. 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 and the Company’s ability to operate them 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; 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 Year Ended December 31
January 1 December 31 January 1 2017
2017 2017 2017 Net sales
$
61,338 $ 57,323
$ 233,255 $ 219,582 Costs and
expenses: Cost of sales
19,670 17,625
74,548 69,320
Restaurant labor and related costs
18,085 17,015
71,541 67,102
Depreciation and amortization of
restaurant property and equipment
2,554 2,198
9,999 8,834 Other operating expenses
11,917 10,964
46,590 43,873 Total restaurant
operating expenses
52,226 47,802
202,678 189,129
Transaction and integration expenses
1,094 2
3,529 64
General and administrative expenses
3,407 4,889
18,886 18,852 Pre-opening expense
104
836
1,038 1,443
Total operating expenses
56,831 53,529
226,131 209,488 Operating
income
4,507 3,794
7,124 10,094 Other income
(expense): Interest expense
(191 ) (148 )
(816
) (662 ) Other, net
24 33
118 107 Total other expense
(167 ) (115 )
(698
) (555 )
Income from continuing operations before
income taxes
4,340 3,679
6,426 9,539 Income tax benefit (expense)
1,105 (852 )
1,347 (2,062 ) Loss from discontinued
operations, net
(105 ) (106 )
(439 ) (434 ) Net income
$ 5,340
$ 2,721
$ 7,334 $ 7,043
Basic earnings per share: Income from continuing operations,
net of tax
$ 0.37 $ 0.19
$ 0.53 $ 0.50
Loss from discontinued operations, net
(0.01 )
(0.01 )
(0.03 ) (0.03 ) Basic
earnings per share
$ 0.36 $ 0.19
$ 0.50 $ 0.48 Diluted earnings
per share: Income from continuing operations, net of tax
$
0.37 $ 0.19
$ 0.53 $ 0.50 Loss from
discontinued operations, net
(0.01 )
(0.01 )
(0.03 ) (0.03 ) Diluted
earnings per share
$ 0.36 $ 0.18
$ 0.50 $ 0.47 Weighted average
common shares outstanding: Basic
14,695 14,698
14,695
14,821 Diluted
14,695 14,751
14,768 14,840
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 Year
Ended December 31 January 1 December 31
January 1 2017 2017 2017 2017
Net sales
100.0
%
100.0
%
100.0
%
100.0
%
Costs and expenses: Cost of sales
32.1 30.7
32.0 31.6
Restaurant labor and related costs
29.5 29.7
30.7
30.6
Depreciation and amortization of
restaurant property and equipment
4.2 3.8
4.3 4.0 Other operating expenses
19.4 19.1
20.0
20.0 Total restaurant operating expenses
85.1
83.4
86.9 86.1 Transaction and integration expenses
1.8 0.0
1.5 0.0 General and administrative expenses
5.6 8.5
8.1 8.6 Pre-opening expense
0.2
1.5
0.4 0.7
Total operating expenses
92.7 93.4
96.9 95.4 Operating
income
7.3 6.6
3.1 4.6 Other income (expense):
Interest expense
(0.3 ) (0.3 )
(0.3 )
(0.3 ) Other, net
0.0 0.1
0.1 0.0 Total other expense
(0.3 ) (0.2 )
(0.3 )
(0.3 )
Income from continuing operations before
income taxes
7.1 6.4
2.8 4.3 Income tax benefit (expense)
1.8 (1.5 )
0.6 (0.9 ) Loss from discontinued
operations, net
(0.2 ) (0.2 )
(0.2 ) (0.2 ) Net income
8.7
%
4.7
%
3.1
%
3.2
%
Note: Certain percentage totals do not sum
due to rounding.
Other Financial and Performance Data: Adjusted
EBITDA(1)
$ 8,177 $ 8,256
$ 24,969 $
24,303 As a % of net sales
13.3
%
14.4
%
10.7
%
11.1
%
Average weekly sales per restaurant: J.
Alexander’s Restaurant/ Grills
$ 115,500 $ 112,800
$ 112,900 $ 109,800 Percent change
2.4
% 2.8 % Stoney River Steakhouse and
Grill
$ 83,400 $ 79,300
$ 75,400 $
74,200 Percent change
5.2 % 1.6 %
Average weekly same store sales per restaurant:
J. Alexander’s Restaurant/ Grills
$ 117,200 $
114,600
$ 114,500 $ 111,200 Percent change
2.3
% 3.0 % Stoney River Steakhouse and
Grill
$ 85,100 $ 79,300
$ 74,700 $
72,000 Percent change
7.3 %
3.8
%
(1) See definitions and reconciliation attached.
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited in
thousands) December 31 January 1 2017
2017 Assets Current assets: Cash and cash equivalents
$ 10,711 $ 6,632 Other current assets
8,019 7,741 Total current assets
18,730 14,373
Other assets
6,183 6,012 Property and equipment, net
103,615 101,470 Goodwill
15,737 15,737 Tradename and
other indefinite-lived intangibles
25,202 25,155 Deferred
Charges, net
184 291
$ 169,651 $
163,038
Liabilities and Stockholders' Equity
Current liabilities
$ 30,027 $ 27,704
Long-term debt, net of portion classified
as current and unamortized deferred loan costs
10,781 15,418 Deferred compensation obligations
6,451
6,010 Deferred income taxes
2,075 4,031 Other long-term
liabilities
6,456 5,555 Stockholders' equity
113,861 104,320
$ 169,651 $ 163,038
J. Alexander's Holdings, Inc. and
Subsidiaries Condensed Consolidated Statements of Cash
Flows (Unaudited in thousands) Year Ended
December 31 January 1 2017 2017
Cash flows from operating activities: Net income
$
7,334 $ 7,043 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization of property and equipment
10,287 9,110
Equity-based compensation expense
2,207 2,996 Other, net
(1,706 ) (304 ) Changes in assets and liabilities,
net
3,138 (2,428 ) Net cash provided by
operating activities
21,260 16,417 Cash flows from
investing activities: Purchase of property and equipment
(13,312 ) (20,777 ) Other investing activities
(256 ) (239 ) Net cash used in investing
activities
(13,568 ) (21,016 ) Cash flows from
financing activities: Proceeds from borrowing under debt agreement
- 4,000 Payments on long-term debt and obligations under
capital leases
(3,611 ) (1,667 ) Purchases of common
stock
- (3,203 ) Other financing activities
(2
) (1,323 ) Net cash used in financing activities
(3,613 ) (2,193 ) Increase (decrease)
in cash and cash equivalents
4,079 (6,792 ) Cash and cash
equivalents at beginning of year
6,632
13,424 Cash and cash equivalents at end of year
$
10,711 $ 6,632 Supplemental
disclosures: Property and equipment obligations accrued at
beginning of year
$ 2,587 $ 1,845 Property and
equipment obligations accrued at end of year
1,854 2,587
Cash paid for interest
797 691 Cash paid for income taxes
850 4,986
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 Year Ended December
31 January 1 December 31 January 1
2017 2017 2017 2017 Net income
$ 5,340 $ 2,721
$ 7,334 $ 7,043
Income tax expense (benefit)
(1,105 ) 852
(1,347 ) 2,062 Interest expense
191 148
816 662 Depreciation and amortization
2,638
2,281
10,339 9,170
EBITDA
7,064 6,002
17,142 18,937 Transaction
and integration expenses
1,094 2
3,529 64 Loss on
disposal of fixed assets
28 87
147 251
Asset impairment charges and restaurant
closing costs
(3 ) 1
132 3 Non-cash compensation
(215
) 1,222
2,542 3,171 Loss from discontinued
operations, net
105 106
439 434 Pre-opening expense
104 836
1,038
1,443 Adjusted EBITDA
$ 8,177 $
8,256
$ 24,969 $ 24,303 Note: For
purposes of computing Adjusted EBITDA, the $(773) and $881 for the
quarters ended December 31, 2017 and January 1, 2017, respectively,
and $942 and $2,039 for the years ended December 31, 2017 and
January 1, 2017, 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 $250 and $249
for the quarters ended December 31, 2017 and January 1, 2017,
respectively, and totaling $809 and $700 for the years ended
December 31, 2017 and January 1, 2017, 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 Year Ended December 31
January 1 December 31 January 1 2017
2017 2017 2017 Percent of Net
Percent of Net Percent of Net Percent of Net
Amount Sales Amount Sales
Amount Sales Amount Sales
Operating income
$ 4,507 7.3 % $
3,794 6.6 %
$ 7,124 3.1 % $ 10,094 4.6
% General and administrative expenses
3,407
5.6 % 4,889 8.5 %
18,886 8.1 %
18,852 8.6 % Transaction and integration expenses
1,094
1.8 % 2 0.0 %
3,529 1.5 % 64 0.0
% Pre-opening expense
104 0.2 %
836 1.5 %
1,038 0.4
% 1,443 0.7 % Restaurant Operating
Profit
$ 9,112 14.9 % $ 9,521
16.6 %
$ 30,577 13.1 % $
30,453 13.9 %
J. Alexander's
Holdings, Inc. and Subsidiaries Reconciliation of Guidance
Range for 2018 Adjusted EBITDA (Unaudited in thousands)
2018 Guidance Range Low High
Net income (estimated) $ 7,700 $ 8,700 Income tax
expense 1,520 1,570 Interest expense 725 725 Depreciation and
amortization 11,255 11,255 EBITDA
21,200 22,250 Loss on disposal of fixed assets 250 250
Transaction Costs 835 835 Non-cash compensation 2,500 2,500 Loss
from discontinued operations, net 430 430 Pre-opening expense
1,335 1,335 Adjusted EBITDA $ 26,550
$ 27,600
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180307006344/en/
J. Alexander’s Holdings, Inc.Mark A. Parkey, 615-269‐1900Chief
Financial Officer
J Alexanders (NYSE:JAX)
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