Announces Launch of Restaurant Portfolio
Optimization ProgramUpdates Guidance for its
Fiscal Year 2018
Bojangles’, Inc. (Bojangles’) (NASDAQ: BOJA) today announced
financial results for the 13-week second fiscal quarter ended July
1, 2018. Bojangles’ also announced the launch of a restaurant
portfolio optimization program and updated its annual guidance for
the 52-week fiscal year 2018 ending on December 30, 2018.
Highlights for the
Second Fiscal Quarter
2018 Compared to the
Second Fiscal Quarter
2017*
- Total revenues increased 2.7% to $140.5 million from $136.8
million in the prior year fiscal quarter;
- System-wide comparable restaurant sales decreased 0.2%, while
company-operated comparable restaurant sales decreased 0.8% and
franchised comparable restaurant sales increased 0.1%;
- Five system-wide restaurants were opened, consisting of two
company-operated restaurants and three franchised restaurants,
while one company-operated restaurant was closed due to a
relocation and two company-operated restaurants were
refranchised;
- Net Income was $2.4 million as compared to $8.4 million in the
prior year fiscal quarter;
- Diluted Net Income per Share was $0.06 as compared to $0.22 in
the prior year fiscal quarter;
- Adjusted Net Income** was $5.2 million as compared to $8.8
million in the prior year fiscal quarter;
- Adjusted Diluted Net Income per Share** was $0.13 (reflecting a
negative impact of $0.09 due to impairment expenses) as compared to
$0.23 (reflecting a negative impact of $0.01 due to impairment
expenses) in the prior year fiscal quarter; and
- Adjusted EBITDA** was $18.1 million as compared to $19.3
million in the prior year fiscal quarter.
* Certain amounts for the second fiscal quarter
of 2017 have been restated to reflect the adoption of the new
revenue recognition standard. See “Adoption of New Accounting
Standard” for further details. ** Descriptions of Adjusted Net
Income, Adjusted Diluted Net Income per Share, Adjusted EBITDA and
other non-GAAP financial measures are provided in this release
under “Use and Definition of Non-GAAP Measures,” and
reconciliations to GAAP figures are provided in the tables at the
end of this release.
“Our continued focus on well-run restaurants is
best reflected in the progress we are making on staffing and
training, improving speed, accuracy and quality, and promoting
signature menu items with value messaging. We are further
encouraged that system-wide comparable restaurant sales in the
second fiscal quarter of 2018 improved sequentially compared to the
first fiscal quarter of 2018 and that our core breakfast daypart
strengthened. Our hard work over the past several months is clearly
beginning to resonate with customers,” said Bojangles’ Interim
President and CEO Randy Kibler.
“We are also optimizing our restaurant portfolio
by closing some underperforming company-operated restaurants,
refranchising select company-operated restaurants, and slowing
system-wide expansion by limiting company development mainly to
core markets while franchise development continues in both the core
and adjacent markets. We believe these efforts will positively
impact our Adjusted EBITDA and Adjusted Net Income during the
remainder of fiscal year 2018 and beyond,” concluded Mr.
Kibler.
Second Fiscal Quarter 2018 Financial
Review
System-wide comparable restaurant sales
decreased 0.2%, consisting of a 0.8% decrease in company-operated
comparable restaurant sales and an increase of 0.1% in franchised
comparable restaurant sales. The comparable restaurant sales
decrease at company-operated restaurants was composed of a decrease
in transactions, partially offset by increases in price and mix.
Breakfast daypart comparable restaurant sales for company-operated
restaurants increased 0.9%.
Total revenues increased 2.7% to $140.5 million
in the second fiscal quarter of 2018 from $136.8 million in the
prior year fiscal quarter. The increase was primarily due to a net
additional 26 system-wide restaurants at July 1, 2018 compared to
June 25, 2017, partially offset by a comparable restaurant sales
decline at our company-operated restaurants.
Company-operated restaurant revenues increased
2.3% to $130.0 million in the second fiscal quarter of 2018 from
$127.1 million in the prior year fiscal quarter. Franchise royalty
revenues increased 2.3% to $7.1 million in the second fiscal
quarter of 2018 from $7.0 million in the prior year fiscal
quarter.
Operating income was $4.6 million in the second
fiscal quarter of 2018 as compared to $12.9 million in the prior
year fiscal quarter. Of the $8.3 million decline in operating
income during the second fiscal quarter of 2018, $4.1 million was
attributable to an increase in impairment expenses and an
additional $3.3 million was related to refranchising and related
asset write-downs primarily associated with the expected
refranchising of approximately 30 company-operated restaurants
during the second half of fiscal 2018.
Company-operated restaurant contribution, a
non-GAAP measure, was $19.4 million in the second fiscal quarter of
2018 as compared to $20.4 million in the prior year fiscal quarter.
As a percentage of company-operated restaurant revenues,
company-operated restaurant contribution margin, a non-GAAP
measure, decreased to 14.9% in the second fiscal quarter of 2018
from 16.0% in the prior year fiscal quarter.
General and administrative expenses were $9.9
million in the second fiscal quarter of 2018 as compared to $9.8
million in the prior year fiscal quarter.
Impairment expenses were $4.8 million in the
second fiscal quarter of 2018 as compared to $0.7 million in the
prior year fiscal quarter. The increase was due to more restaurants
being impaired in the second fiscal quarter of 2018 versus the
second fiscal quarter of 2017, including the building associated
with one ground lease.
Refranchising and related asset write-downs were
$3.3 million in the second fiscal quarter of 2018. In anticipation
of the refranchising of approximately 30 company-operated
restaurants expected to occur during the second half of fiscal
2018, we recorded an impairment charge of $3.4 million associated
with the write-down of the related assets to their estimated fair
value, which was partially offset by a $0.1 million gain recorded
in connection with the refranchise of two company-operated
restaurants in the second fiscal quarter of 2018.
Net Income was $2.4 million in the second fiscal
quarter of 2018 as compared to $8.4 million in the prior year
fiscal quarter. Diluted Net Income per Share was $0.06 in the
second fiscal quarter of 2018 as compared to $0.22 in the prior
year fiscal quarter. Diluted Net Income per Share during the second
fiscal quarter of 2018 was negatively impacted by $0.09 due to
impairment expenses and $0.07 due to refranchising and related
asset write-downs, while the second fiscal quarter of 2017 was
negatively impacted by $0.01 due to impairment expenses.
Adjusted Net Income, a non-GAAP measure, was
$5.2 million in the second fiscal quarter of 2018 as compared to
$8.8 million in the prior year fiscal quarter. Adjusted Diluted Net
Income per Share was $0.13 in the second fiscal quarter of 2018 as
compared to $0.23 in the prior year fiscal quarter. Adjusted
Diluted Net Income per Share during the second fiscal quarter of
2018 was negatively impacted by $0.09 due to impairment expenses
while the second fiscal quarter of 2017 was negatively impacted by
$0.01 due to impairment expenses.
Adjusted EBITDA, a non-GAAP measure, was $18.1
million in the second fiscal quarter of 2018 as compared to $19.3
million in the prior year fiscal quarter.
Restaurant Portfolio Optimization
Program
Bojangles’ has initiated a restaurant portfolio
optimization program pursuant to which it refranchised two
company-operated restaurants during the second fiscal quarter of
2018. In addition, we expect to take the following actions during
the remainder of fiscal 2018:
- Bojangles’ will close approximately 10 underperforming
company-operated restaurants during the third fiscal quarter of
2018. As a result, we expect to incur a pre-tax charge of $12.0
million to $15.0 million representing an estimate of the remaining
obligations pursuant to non-cancelable leases, net of estimated
sublease income. On a trailing twelve-month basis as of the end of
the second fiscal quarter of 2018, these restaurants generated
approximately $5.8 million in company-operated restaurant
revenues.
- Bojangles’ expects to refranchise approximately 30
company-operated restaurants in Tennessee and Georgia to one of its
largest franchisees. As a result, we expect to incur a pre-tax
charge of $4.0 million to $5.0 million representing an estimate of
the remaining obligations pursuant to non-cancelable leases, net of
estimated sublease income from the franchisee. The transaction,
which remains subject to final negotiation and execution of a
definitive sale and purchase agreement, due diligence and customary
closing conditions, is expected to close during the second half of
fiscal 2018. On a trailing twelve-month basis as of the end of the
second fiscal quarter of 2018, these restaurants generated
approximately $32.2 million in company-operated restaurant
revenues.
Fiscal Year
2018 Guidance
Bojangles’ has updated its annual outlook for
the 52-week period ending on December 30, 2018 to reflect its
year-to-date performance and expectations for the remainder of the
fiscal year, including the impact of the restaurant portfolio
optimization program:
- Total revenues of $542.0 million to $547.0 million (previously
$550.0 million to $560.0 million), including approximately $11.0
million of franchise marketing and co-op advertising contribution
revenues due to the adoption of the new accounting standard for
revenue recognition;
- System-wide comparable restaurant sales of negative low-single
digits to flat;
- The opening of 18 to 22 system-wide restaurants (previously 30
to 40), comprised of 6 to 8 (previously 6 to 10) company-operated
restaurants and 12 to 14 (previously 24 to 30) franchised
restaurants;
- The closure of approximately 10 company-operated
restaurants;
- The refranchising of approximately 30 company-operated
restaurants, including two company-operated restaurants that were
refranchised during the second fiscal quarter of 2018;
- Company-operated restaurant contribution margin of 14.5% to
15.0% (previously 14.0% to 14.5%);
- General and administrative expenses of $42.5 million to $43.0
million (previously $43.0 million to $43.5 million);
- Cash capital expenditures of $10.0 million to $11.0 million
(previously $11.5 million to $12.5 million);
- Adjusted Diluted Net Income per Share of $0.66 to $0.73
(previously $0.64 to $0.72); and
- Adjusted EBITDA of $66.0 million to $70.0 million (previously
$64.0 million to $68.0 million).
Changes in the assumptions in the restaurant
portfolio optimization program could impact guidance, and our
guidance does not include the potential impact of any additional
refranchising of company-operated restaurants and/or additional
restaurant closures not discussed above. In addition, we have not
reconciled guidance for Adjusted Diluted Net Income per Share or
Adjusted EBITDA to the corresponding GAAP financial measures
because we do not provide guidance for the various reconciling
items. We are unable to provide guidance for these reconciling
items because we cannot determine their probable significance, as
certain items are outside of our control and cannot be reasonably
predicted due to the fact that these items could vary significantly
from period to period. Accordingly, reconciliations to the
corresponding GAAP financial measures are not available without
unreasonable effort.
Adoption of New Accounting
Standard
In May 2014, the Financial Accounting Standards
Board issued new guidance for revenue recognition related to
contracts with customers, which supersedes nearly all existing
revenue recognition guidance. We adopted this new guidance in
fiscal year 2018 using the full retrospective transition method,
which resulted in restating each prior reporting period presented
in the year of adoption, including the second fiscal quarter of
2017. The adoption did not have a material impact on
Company-operated restaurant revenues or Franchise royalty revenues.
The new guidance requires Bojangles’ to recognize initial and
renewal franchisee fees on a straight-line basis over the life of
the franchise agreement, which impacts Other franchise revenues. In
addition, funds contributed by franchisees to the advertising funds
actively managed by Bojangles’, as well as the associated
advertising fund expenditures, are reported on a gross basis, and
the advertising fund revenues and expenses may be reported in
different periods. See tables at the end of this release for
details related to the impact of the adoption of the new revenue
recognition standard on our previously reported results.
Conference Call and Webcast
Today
Bojangles’ will host a conference call and
webcast to discuss the second fiscal quarter 2018 results, as well
as fiscal year 2018 guidance today at 5:00 p.m. Eastern Time. The
conference call dial-in number is 201-493-6725. A telephone replay
will be available through Sunday, September 2, 2018 and may be
accessed by dialing 412-317-6671. The conference ID is
13681397.
The conference call will also be webcast live
and later archived on the Investors section of our website at
www.bojangles.com.
About Bojangles’, Inc.
Bojangles’, Inc. is a highly differentiated and
growing restaurant operator and franchisor dedicated to serving
customers high-quality, craveable food made from our Southern
recipes, including breakfast served All Day, Every Day. Founded in
1977 in Charlotte, N.C., Bojangles’® serves menu items such as
made-from-scratch biscuit breakfast sandwiches, delicious
hand-breaded bone-in chicken, flavorful fixin’s (sides) and
Legendary Iced Tea®. At July 1, 2018, Bojangles’ had 766
system-wide restaurants, of which 325 were company-operated and 441
were franchised restaurants, primarily located in the Southeastern
United States. For more information, visit www.bojangles.com or
follow Bojangles’ on Facebook and Twitter.
Use and Definition of Non-GAAP
Measures
We utilize certain non-GAAP measures when
assessing the operational strength and the performance of our
business. We believe these non-GAAP measures assist our board of
directors, management and investors in comparing our operating
performance, on a consistent basis from period to period, by
isolating the effects of certain items that vary from period to
period without any correlation to core operating performance or
that vary significantly among similar companies. Bojangles’
cautions that non-GAAP measures should be considered in addition
to, but not as a substitute for, reported GAAP results.
Company-operated restaurant contribution
represents our operating income excluding the impact of franchise
royalty revenues, franchise marketing and co-op advertising fund
contribution revenues and associated costs, properties and
equipment rental revenues, other franchise revenues, general and
administrative expenses, costs associated with properties and
equipment rentals, depreciation and amortization, impairment,
refranchising and related asset write-downs and (gain) loss on
disposal of property and equipment and other, as identified by the
reconciliation table below. Company-operated restaurant
contribution margin is defined as company-operated restaurant
contribution as a percentage of company-operated restaurant
revenues. Company-operated restaurant contribution and
company-operated restaurant contribution margin are supplemental
measures of operating performance of our company-operated
restaurants and our calculations thereof may not be comparable to
those reported by other companies. Company-operated restaurant
contribution and company-operated restaurant contribution margin
have limitations as analytical tools and should not be considered
in isolation or as substitutes for analysis of our results as
reported under GAAP. Included with the reconciliations to GAAP
figures provided in the tables at the end of this release is a
reconciliation of our operating income to our company-operated
restaurant contribution.
Adjusted Net Income represents company net
income before items that we do not consider representative of our
ongoing operating performance as identified in the reconciliation
table below. Adjusted Diluted Net Income per Share represents
company diluted net income per share before items that we do not
consider representative of our ongoing operating performance as
identified in the reconciliation table below.
EBITDA represents company net income before
interest expense (net of interest income), provision for income
taxes and depreciation and amortization. Adjusted EBITDA represents
company net income before interest expense (net of interest
income), provision for income taxes, depreciation and amortization,
items that we do not consider representative of our ongoing
operating performance and certain non-cash items, as identified in
the reconciliation table below.
Adjusted Net Income, Adjusted Diluted Net Income
per Share, EBITDA and Adjusted EBITDA are supplemental measures of
our performance that are neither required by, nor presented in
accordance with, GAAP. Adjusted Net Income, Adjusted Diluted Net
Income per Share, EBITDA and Adjusted EBITDA are not measurements
of our financial performance under GAAP and should not be
considered as alternatives to net income, operating income or any
other performance measures derived in accordance with GAAP or as
alternatives to cash flow from operating activities as a measure of
our liquidity. Adjusted Net Income, Adjusted Diluted Net Income per
Share, EBITDA and Adjusted EBITDA have limitations as analytical
tools, and should not be considered in isolation, or as substitutes
for analysis of our results as reported under GAAP. In addition, in
evaluating Adjusted Net Income, Adjusted Diluted Net Income per
Share, EBITDA and Adjusted EBITDA, you should be aware that in the
future we will incur expenses or charges such as those added back
to calculate Adjusted Net Income, Adjusted Diluted Net Income per
Share, EBITDA and Adjusted EBITDA.
Forward-Looking Statements
This release contains forward-looking
statements. All statements other than statements of historical or
current facts included in this release are forward-looking
statements. Forward-looking statements discuss our current
expectations, projections and guidance relating to our financial
condition, results of operations, plans, objectives, future
performance and business. These statements may be preceded by,
followed by or include the words “aim,” “anticipate,” “believe,”
“estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,”
“potential,” “project,” “projection,” “seek,” “may,” “could,”
“would,” “will,” “should,” “can,” “can have,” “likely,” the
negatives thereof and other words and terms of similar meaning.
Forward-looking statements are inherently
subject to risks, uncertainties and assumptions; they are not
guarantees of performance. Actual results may differ materially
from these expectations due to risks relating to, among other
risks, our vulnerability to changes in consumer preferences and
economic conditions; our ability to open restaurants in new and
existing markets and expand our franchise system; our ability to
successfully effect our restaurant portfolio optimization program
on a timely basis; our ability to generate comparable restaurant
sales growth; financial or other difficulties, which could cause
our restaurants and our franchisees’ restaurants to close; our
ability to generate increased sales or profits from new menu items,
advertising campaigns, changes in discounting strategy, technology
initiatives or restaurant designs and remodels; cancellation of or
delay in anticipated future restaurant openings; our reliance on,
limited degree of control over and potential responsibility for,
our franchisees; increases in the cost of chicken, pork, dairy,
wheat, corn and other products; our ability to compete successfully
with other quick-service and fast-casual restaurants; our
vulnerability to conditions in the Southeastern United States;
negative publicity, whether or not valid; concerns about food
safety and quality and about food-borne illnesses, including
adverse public perception due to the occurrence of avian flu, swine
flu or other food-borne illnesses, such as salmonella, E. coli, or
others; changes in employment and labor laws; labor shortages and
increases in labor costs; the impact of litigation, including wage
and hour class action lawsuits; and our dependence upon frequent
and timely deliveries of restaurant food and other supplies. For
further details and discussion of these and other risks and
uncertainties, see our Annual Report on Form 10-K for the fiscal
year ended December 31, 2017, which was filed with the SEC on March
8, 2018, and which is available at www.sec.gov. You should not
place undue reliance on these statements. We have based these
forward-looking statements on our current expectations and
projections about future events. Although we believe that our
assumptions made in connection with the forward-looking statements
are reasonable, we cannot assure you that the assumptions and
expectations will prove to be correct.
All forward-looking statements are expressly
qualified in their entirety by the foregoing cautionary statements.
In addition, all forward-looking statements speak only as of the
date of this earnings release. We undertake no obligation to update
or revise publicly any forward-looking statements, whether as a
result of new information, future events or otherwise other than as
required under the federal securities laws.
|
BOJANGLES’, INC. AND SUBSIDIARIES |
Unaudited Condensed Consolidated Balance
Sheets |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
July 1,
2018 |
|
December 31,
2017 (a) |
Current
assets: |
|
|
|
|
|
Cash and cash
equivalents |
$ |
15,669 |
|
|
14,052 |
|
|
Accounts and vendor
receivables, net |
|
5,478 |
|
|
5,863 |
|
|
Accounts receivable,
related parties, net |
|
545 |
|
|
553 |
|
|
Inventories,
net |
|
2,787 |
|
|
3,619 |
|
|
Other current
assets |
|
6,275 |
|
|
2,408 |
|
|
Total
current assets |
|
30,754 |
|
|
26,495 |
|
|
Property and equipment,
net |
|
36,842 |
|
|
49,423 |
|
|
Goodwill |
|
161,140 |
|
|
161,140 |
|
|
Brand |
|
290,500 |
|
|
290,500 |
|
|
Franchise rights,
net |
|
20,505 |
|
|
23,146 |
|
|
Favorable leases,
net |
|
550 |
|
|
688 |
|
|
Other noncurrent
assets |
|
4,262 |
|
|
4,076 |
|
|
Total
assets |
$ |
544,553 |
|
|
555,468 |
|
Liabilities and Stockholders’
Equity |
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
10,068 |
|
|
12,956 |
|
|
Accrued expenses |
|
23,154 |
|
|
17,797 |
|
|
Current maturities of
capital lease obligations |
|
8,580 |
|
|
8,502 |
|
|
Other current
liabilities |
|
2,021 |
|
|
934 |
|
|
Total
current liabilities |
|
43,823 |
|
|
40,189 |
|
|
Long-term debt, less
current maturities and deferred debt issuance costs, net |
|
106,680 |
|
|
123,376 |
|
|
Deferred income
taxes |
|
68,000 |
|
|
70,210 |
|
|
Capital lease
obligations, less current maturities |
|
19,585 |
|
|
22,434 |
|
|
Other noncurrent
liabilities |
|
17,610 |
|
|
17,232 |
|
|
Total
liabilities |
|
255,698 |
|
|
273,441 |
|
Stockholders’ equity: |
|
|
|
|
|
Preferred stock |
|
— |
|
|
— |
|
|
Common stock |
|
373 |
|
|
370 |
|
|
Treasury stock |
|
(4,859 |
) |
|
(2,000 |
) |
|
Additional paid-in
capital |
|
131,320 |
|
|
128,895 |
|
|
Retained earnings |
|
161,337 |
|
|
154,306 |
|
|
Accumulated other
comprehensive income |
|
684 |
|
|
456 |
|
|
Total
stockholders’ equity |
|
288,855 |
|
|
282,027 |
|
|
Total
liabilities and stockholders’ equity |
$ |
544,553 |
|
|
555,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Adjusted to reflect the retrospective adoption of Accounting
Standards No. 2014-09, Revenue from Contracts with Customers. |
|
|
|
BOJANGLES’, INC. AND
SUBSIDIARIES |
Unaudited Condensed Consolidated Statements of
Operations |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
|
|
July 1, 2018 |
|
June
25, 2017
(a) |
|
July 1,2018 |
|
June 25,2017
(a) |
Revenues: |
|
|
|
|
|
|
|
|
Company-operated restaurant revenues |
$ |
129,956 |
|
|
127,058 |
|
|
257,108 |
|
|
251,841 |
|
Franchise
royalty revenues |
|
7,138 |
|
|
6,978 |
|
|
14,003 |
|
|
13,491 |
|
Franchise
marketing and co-op advertising contribution revenues |
|
2,792 |
|
|
2,725 |
|
|
5,455 |
|
|
5,257 |
|
Properties and equipment rental revenues |
|
547 |
|
|
— |
|
|
1,086 |
|
|
— |
|
Other
franchise revenues |
|
71 |
|
|
64 |
|
|
343 |
|
|
125 |
|
Total
revenues |
|
140,504 |
|
|
136,825 |
|
|
277,995 |
|
|
270,714 |
|
Restaurant operating
expenses: |
|
|
|
|
|
|
|
|
Company-operated restaurant food and supplies costs |
|
40,719 |
|
|
39,998 |
|
|
80,706 |
|
|
78,683 |
|
Company-operated restaurant labor costs |
|
38,529 |
|
|
36,937 |
|
|
75,994 |
|
|
73,284 |
|
Company-operated restaurant operating costs |
|
31,343 |
|
|
29,741 |
|
|
62,881 |
|
|
59,432 |
|
Company-operated restaurant depreciation and amortization |
|
3,464 |
|
|
3,374 |
|
|
6,928 |
|
|
6,581 |
|
Franchise
marketing and co-op advertising costs |
|
2,792 |
|
|
2,725 |
|
|
5,455 |
|
|
5,257 |
|
Costs
associated with properties and equipment rentals |
|
295 |
|
|
— |
|
|
716 |
|
|
— |
|
Total
restaurant operating expenses |
|
117,142 |
|
|
112,775 |
|
|
232,680 |
|
|
223,237 |
|
Operating
income before other operating expenses |
|
23,362 |
|
|
24,050 |
|
|
45,315 |
|
|
47,477 |
|
Other operating
expenses: |
|
|
|
|
|
|
|
|
General
and administrative |
|
9,946 |
|
|
9,817 |
|
|
21,503 |
|
|
18,770 |
|
Depreciation and amortization |
|
665 |
|
|
753 |
|
|
1,330 |
|
|
1,478 |
|
Impairment |
|
4,832 |
|
|
700 |
|
|
5,685 |
|
|
996 |
|
Refranchising and related asset write-downs |
|
3,346 |
|
|
— |
|
|
3,346 |
|
|
— |
|
Gain on
disposal of property and equipment and other |
|
(65 |
) |
|
(125 |
) |
|
(92 |
) |
|
(104 |
) |
Total
other operating expenses |
|
18,724 |
|
|
11,145 |
|
|
31,772 |
|
|
21,140 |
|
Operating
income |
|
4,638 |
|
|
12,905 |
|
|
13,543 |
|
|
26,337 |
|
Amortization of
deferred debt issuance costs |
|
(188 |
) |
|
(176 |
) |
|
(304 |
) |
|
(294 |
) |
Interest income |
|
— |
|
|
12 |
|
|
1 |
|
|
13 |
|
Interest expense |
|
(1,581 |
) |
|
(1,614 |
) |
|
(3,229 |
) |
|
(3,281 |
) |
Income
before income taxes |
|
2,869 |
|
|
11,127 |
|
|
10,011 |
|
|
22,775 |
|
Income tax expense |
|
(434 |
) |
|
(2,681 |
) |
|
(2,882 |
) |
|
(6,799 |
) |
Net
income |
$ |
2,435 |
|
|
8,446 |
|
|
7,129 |
|
|
15,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.07 |
|
|
0.23 |
|
|
0.19 |
|
|
0.44 |
|
Diluted |
$ |
0.06 |
|
|
0.22 |
|
|
0.19 |
|
|
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
used in computing net income per share: |
|
|
|
|
|
|
|
|
Basic |
|
36,750 |
|
|
36,701 |
|
|
36,743 |
|
|
36,634 |
|
Diluted |
|
38,236 |
|
|
38,588 |
|
|
38,186 |
|
|
38,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Adjusted to reflect the retrospective adoption of
Accounting Standards No. 2014-09, Revenue from Contracts with
Customers. |
|
|
|
|
|
|
|
|
|
|
BOJANGLES’, INC. AND SUBSIDIARIES |
Unaudited Condensed Consolidated Statements of
Cash Flows |
(in thousands) |
|
|
|
|
|
|
|
Twenty-Six Weeks Ended |
|
|
July 1,2018 |
|
June 25,2017
(a) |
Cash flows from
operating activities: |
|
|
|
|
Net
income |
$ |
7,129 |
|
|
15,976 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Deferred
income tax benefit |
|
(2,251 |
) |
|
(280 |
) |
Depreciation and amortization |
|
8,258 |
|
|
8,059 |
|
Amortization of deferred debt issuance costs |
|
304 |
|
|
294 |
|
Impairment |
|
5,685 |
|
|
996 |
|
Gain on
disposal of property and equipment and other |
|
(92 |
) |
|
(104 |
) |
Provision
for doubtful accounts |
|
410 |
|
|
16 |
|
Benefit
for inventory spoilage |
|
(30 |
) |
|
(2 |
) |
Asset
write-downs related to refranchising |
|
3,318 |
|
|
— |
|
Stock-based compensation |
|
1,397 |
|
|
681 |
|
Changes
in operating assets and liabilities |
|
3,194 |
|
|
(1,551 |
) |
Net cash
provided by operating activities |
|
27,322 |
|
|
24,085 |
|
Cash flows from
investing activities: |
|
|
|
|
Purchases
of property and equipment |
|
(2,882 |
) |
|
(6,472 |
) |
Proceeds
from disposition of property and equipment |
|
40 |
|
|
41 |
|
Proceeds
from capital lease subleases |
|
116 |
|
|
— |
|
Net cash
used in investing activities |
|
(2,726 |
) |
|
(6,431 |
) |
Cash flows from
financing activities: |
|
|
|
|
Principal
payments on long-term debt |
|
(17,000 |
) |
|
(14,132 |
) |
Stock
option exercises |
|
1,256 |
|
|
1,035 |
|
Vesting
of restricted stock units |
|
(225 |
) |
|
(103 |
) |
Purchases
of treasury stock |
|
(2,859 |
) |
|
— |
|
Principal
payments on capital lease obligations |
|
(4,151 |
) |
|
(3,587 |
) |
Net cash
used in financing activities |
|
(22,979 |
) |
|
(16,787 |
) |
Net
increase in cash and cash equivalents |
|
1,617 |
|
|
867 |
|
Cash and cash
equivalents balance, beginning of fiscal period |
|
14,052 |
|
|
13,898 |
|
Cash and cash
equivalents balance, end of fiscal period |
$ |
15,669 |
|
|
14,765 |
|
|
|
|
|
|
|
|
|
|
|
(a) Adjusted to reflect the retrospective adoption
of Accounting Standards No. 2014-09, Revenue from Contracts with
Customers. |
|
BOJANGLES’, INC. AND
SUBSIDIARIES |
Unaudited Reconciliation of Net Income to
Adjusted Net Income |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
|
|
|
July 1,2018 |
|
June 25,2017
(a) |
|
July 1,2018 |
|
June 25,2017
(a) |
Net
income |
$ |
2,435 |
|
|
8,446 |
|
|
7,129 |
|
|
15,976 |
|
|
|
|
|
|
|
|
|
|
|
Certain
professional, transaction and other costs (b) |
|
253 |
|
|
— |
|
|
253 |
|
|
3 |
|
Payroll
taxes associated with stock option exercises (c) |
|
25 |
|
|
71 |
|
|
30 |
|
|
97 |
|
Executive
separation expenses (d) |
|
— |
|
|
546 |
|
|
1,034 |
|
|
551 |
|
Modification of equity awards in connection with executive
separation (e) |
|
— |
|
|
— |
|
|
551 |
|
|
— |
|
Refranchising and related asset write-downs (f) |
|
3,346 |
|
|
— |
|
|
3,346 |
|
|
— |
|
Adjustments
to deferred tax assets associated with executive compensation
(g) |
|
(23 |
) |
|
— |
|
|
779 |
|
|
— |
|
Tax impact
of adjustments (h) |
|
(881 |
) |
|
(233 |
) |
|
(1,268 |
) |
|
(244 |
) |
Total adjustments |
|
2,720 |
|
|
384 |
|
|
4,725 |
|
|
407 |
|
Adjusted Net Income |
$ |
5,155 |
|
|
8,830 |
|
|
11,854 |
|
|
16,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BOJANGLES’, INC. AND
SUBSIDIARIES |
Unaudited Reconciliation of Diluted Net Income
Per Share to Adjusted Diluted Net Income Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
|
|
|
July 1,2018 |
|
June 25,2017
(a) |
|
July 1, 2018 |
|
June 25,2017
(a) |
Diluted net income per share |
$ |
0.06 |
|
|
0.22 |
|
|
0.19 |
|
|
0.41 |
|
|
|
|
|
|
|
|
|
|
|
Certain
professional, transaction and other costs (b) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Payroll
taxes associated with stock option exercises (c) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Executive
separation expenses (d) |
|
— |
|
|
0.02 |
|
|
0.03 |
|
|
0.02 |
|
Modification of equity awards in connection with executive
separation (e) |
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
Refranchising and related asset write-downs (f) |
|
0.09 |
|
|
— |
|
|
0.09 |
|
|
— |
|
Adjustments
to deferred tax assets associated with executive compensation
(g) |
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
Tax impact
of adjustments (h) |
|
(0.02 |
) |
|
(0.01 |
) |
|
(0.04 |
) |
|
(0.01 |
) |
Total adjustments |
|
0.07 |
|
|
0.01 |
|
|
0.12 |
|
|
0.01 |
|
Adjusted Diluted Net Income per Share |
$ |
0.13 |
|
|
0.23 |
|
|
0.31 |
|
|
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Adjusted to reflect the retrospective adoption of Accounting
Standards No. 2014-09, Revenue from Contracts with Customers. |
|
(b) |
Includes costs associated with third-party consultants for
special projects and public offering expenses. We could incur
similar expenses in future periods if we commence additional public
offerings, financing transactions or other special
projects. |
(c) |
Represents payroll taxes associated with stock option
exercises related to stock options that were outstanding prior to
our initial public offering. We expect to incur similar expenses in
future periods when stock options that were outstanding prior to
our initial public offering are exercised. |
(d) |
Represents severance and legal fees associated with former
executives departing the Company. |
(e) |
Represents net non-cash, stock-based compensation recorded in
connection with the modification of certain equity awards
associated with a former executive departing the Company. |
(f) |
Primarily represents impairment related to the write-down of
assets associated with company-operated restaurants we expect to
refranchise and the gain on the refranchise of company-operated
restaurants, as well as accretion of the present value of our rent
obligations and ongoing maintenance and utilities costs related to
company-operated restaurants we have previously closed. We expect
to continue to incur similar expenses in future periods as we
record closed store reserves, the accretion of the present value of
our rent obligations and ongoing maintenance and utilities costs
related to closed company-operated restaurants, and could incur
additional costs in future periods if we identify other
company-operated restaurants that will be closed or
refranchised. |
(g) |
In connection with a former executive departing the Company
and the associated modification of equity awards, certain
compensation costs related to the executive are no longer expected
to be deductible for income tax purposes. Accordingly, we recorded
adjustments to previously recorded deferred tax assets. We could
record similar adjustments in future periods if any of the
compensation costs are ultimately deductible for income tax
purposes. |
(h) |
Represents the income tax expense associated with the
adjustments in (b) through (g) that are deductible for income tax
purposes. |
|
|
|
BOJANGLES’, INC. AND
SUBSIDIARIES |
Unaudited Reconciliation of Net Income to
EBITDA and Adjusted EBITDA |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
|
|
|
July 1,2018 |
|
June 25,2017
(a) |
|
July 1,2018 |
|
June 25,2017
(a) |
Net
income |
$ |
2,435 |
|
8,446 |
|
7,129 |
|
15,976 |
Income
taxes |
|
434 |
|
2,681 |
|
2,882 |
|
6,799 |
Interest
expense, net |
|
1,581 |
|
1,602 |
|
3,228 |
|
3,268 |
Depreciation and amortization (b) |
|
4,317 |
|
4,303 |
|
8,562 |
|
8,353 |
EBITDA |
|
8,767 |
|
17,032 |
|
21,801 |
|
34,396 |
Non-cash
rent (c) |
|
375 |
|
363 |
|
710 |
|
768 |
Stock-based
compensation (d) |
|
381 |
|
307 |
|
1,397 |
|
681 |
Payroll
taxes associated with stock option exercises (e) |
|
25 |
|
71 |
|
30 |
|
97 |
Preopening
expenses (f) |
|
136 |
|
350 |
|
237 |
|
724 |
Certain
professional, transaction and other costs (g) |
|
253 |
|
— |
|
253 |
|
3 |
Executive
separation expenses (h) |
|
— |
|
546 |
|
1,034 |
|
551 |
Impairment
and dispositions (i) |
|
4,807 |
|
601 |
|
5,633 |
|
933 |
Refranchising and related asset write-downs (j) |
|
3,346 |
|
— |
|
3,346 |
|
— |
Adjusted EBITDA |
$ |
18,090 |
|
19,270 |
|
34,441 |
|
38,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Adjusted to reflect the retrospective adoption of Accounting
Standards No. 2014-09, Revenue from Contracts with Customers. |
(b) |
Includes amortization of deferred debt issuance costs. |
(c) |
Includes deferred rent, which represents the extent to which
our rent expense has been above or below our cash rent payments and
amortization of favorable (unfavorable) leases. We expect to
continue to incur similar expenses in future periods as we record
rent expense in accordance with GAAP and continue to amortize
favorable (unfavorable) leases. |
(d) |
Represents non-cash, stock-based compensation. We expect to
incur similar expenses in future periods as we record stock-based
compensation related to existing grants (and any potential future
grants) in accordance with GAAP. |
(e) |
Represents payroll taxes associated with stock option exercises
related to stock options that were outstanding prior to our initial
public offering. We expect to incur similar expenses in future
periods when stock options that were outstanding prior to our
initial public offering are exercised. |
(f) |
Includes expenses directly associated with the opening of
company-operated restaurants and incurred prior to the opening of a
company-operated restaurant. We expect to continue to incur similar
expenses as we open company-operated restaurants. |
(g) |
Includes costs associated with third-party consultants for
special projects and public offering expenses. We could incur
similar expenses in future periods if we commence additional public
offerings, financing transactions or other special projects. |
(h) |
Represents severance and legal fees associated with former
executives departing the Company. |
(i) |
Includes net gain on disposal of property and equipment and
other, impairment and cash proceeds on disposals from disposition
of property and equipment. We could continue to record impairment
expense in future periods if performance of company-operated
restaurants is not sufficient to recover the carrying amount of the
related long-lived assets. We may incur future (gains) losses and
receive cash proceeds on disposal of property and equipment
associated with retirement, replacement or write-off of fixed
assets. |
(j) |
Primarily represents impairment related to the write-down of
assets associated with company-operated restaurants we expect to
refranchise and the gain on the refranchise of company-operated
restaurants, as well as accretion of the present value of our rent
obligations and ongoing maintenance and utilities costs related to
company-operated restaurants we have previously closed. We expect
to continue to incur similar expenses in future periods as we
record closed store reserves, the accretion of the present value of
our rent obligations and ongoing maintenance and utilities costs
related to closed company-operated restaurants, and could incur
additional costs in future periods if we identify other
company-operated restaurants that will be closed or
refranchised. |
|
|
|
|
|
|
|
|
|
|
|
BOJANGLES’, INC. AND
SUBSIDIARIES |
Unaudited Reconciliation of Operating Income
to Company-Operated Restaurant Contribution |
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended |
|
Twenty-Six Weeks Ended |
|
|
|
July 1,2018 |
|
June 25,2017
(a) |
|
July 1,2018 |
|
June 25,2017
(a) |
Operating
income |
$ |
4,638 |
|
|
12,905 |
|
|
13,543 |
|
|
26,337 |
|
Less: |
Franchise royalty
revenues |
|
(7,138 |
) |
|
(6,978 |
) |
|
(14,003 |
) |
|
(13,491 |
) |
|
Franchise marketing and
co-op advertising contribution revenues |
|
(2,792 |
) |
|
(2,725 |
) |
|
(5,455 |
) |
|
(5,257 |
) |
|
Properties and
equipment rental revenues |
|
(547 |
) |
|
— |
|
|
(1,086 |
) |
|
— |
|
|
Other franchise
revenues |
|
(71 |
) |
|
(64 |
) |
|
(343 |
) |
|
(125 |
) |
Plus: |
General and
administrative |
|
9,946 |
|
|
9,817 |
|
|
21,503 |
|
|
18,770 |
|
|
Franchise marketing and
co-op advertising costs |
|
2,792 |
|
|
2,725 |
|
|
5,455 |
|
|
5,257 |
|
|
Costs associated with
properties and equipment rentals |
|
295 |
|
|
— |
|
|
716 |
|
|
— |
|
|
Depreciation and
amortization |
|
4,129 |
|
|
4,127 |
|
|
8,258 |
|
|
8,059 |
|
|
Impairment |
|
4,832 |
|
|
700 |
|
|
5,685 |
|
|
996 |
|
|
Refranchising and
related asset write-downs |
|
3,346 |
|
|
— |
|
|
3,346 |
|
|
— |
|
|
Gain on disposal of
property and equipment and other |
|
(65 |
) |
|
(125 |
) |
|
(92 |
) |
|
(104 |
) |
Company-operated restaurant contribution |
$ |
19,365 |
|
|
20,382 |
|
|
37,527 |
|
|
40,442 |
|
|
|
|
|
|
|
|
|
|
|
Company-operated restaurant revenues |
$ |
129,956 |
|
|
127,058 |
|
|
257,108 |
|
|
251,841 |
|
Company-operated restaurant contribution
margin |
|
14.9 |
% |
|
16.0 |
% |
|
14.6 |
% |
|
16.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Adjusted to reflect the retrospective adoption of Accounting
Standards No. 2014-09, Revenue from Contracts with Customers. |
|
|
|
|
|
|
|
|
|
|
|
|
BOJANGLES’, INC. AND
SUBSIDIARIES |
Unaudited Impact of Adoption of New Revenue
Recognition Standard on Previously Reported Results |
(in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended June 25,
2017 |
|
Twenty-Six Weeks Ended June 25,
2017 |
|
|
AsReported |
|
Adjustments |
|
AsAdjusted |
|
AsReported |
|
Adjustments |
|
AsAdjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise marketing and
co-op advertising contribution revenues |
$ |
— |
|
|
2,725 |
|
|
2,725 |
|
|
— |
|
|
5,257 |
|
|
5,257 |
|
Other franchise
revenues |
|
338 |
|
|
(274 |
) |
|
64 |
|
|
538 |
|
|
(413 |
) |
|
125 |
|
Franchise marketing and
co-op advertising costs |
|
— |
|
|
2,725 |
|
|
2,725 |
|
|
— |
|
|
5,257 |
|
|
5,257 |
|
Income tax benefit
(expense) |
|
(2,784 |
) |
|
103 |
|
|
(2,681 |
) |
|
(6,954 |
) |
|
155 |
|
|
(6,799 |
) |
Net income |
|
8,617 |
|
|
(171 |
) |
|
8,446 |
|
|
16,234 |
|
|
(258 |
) |
|
15,976 |
|
Net income per diluted
share |
|
0.22 |
|
|
- |
|
|
0.22 |
|
|
0.42 |
|
|
(0.01 |
) |
|
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017 |
|
|
|
|
|
|
|
|
AsReported |
|
Adjustments |
|
AsAdjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current
liabilities |
|
|
|
|
|
|
$ |
651 |
|
|
283 |
|
|
934 |
|
Deferred income
taxes |
|
|
|
|
|
|
|
71,190 |
|
|
(980 |
) |
|
70,210 |
|
Other noncurrent
liabilities |
|
|
|
|
|
|
|
13,458 |
|
|
3,774 |
|
|
17,232 |
|
Retained earnings |
|
|
|
|
|
|
|
157,383 |
|
|
(3,077 |
) |
|
154,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For Investor Relations Inquiries:Raphael Gross of
ICR203.682.8253
For Media Inquiries:Brian Little of Bojangles’
Restaurants, Inc.704.519.2118
BOJANGLES', INC. (NASDAQ:BOJA)
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From Aug 2024 to Sep 2024
BOJANGLES', INC. (NASDAQ:BOJA)
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From Sep 2023 to Sep 2024