Higher Same Store Sales Posted By Both Concepts
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner
and operator of a collection of restaurants which includes J.
Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and
selected other restaurants, today reported financial results for
the third quarter ended September 30, 2018.
Third Quarter 2018 Highlights Compared to the Third Quarter
of 2017
- Net sales were $56,730,000, an increase
of 5.3% from $53,879,000 recorded in the third quarter of
2017.
- For the J. Alexander’s/Grill
restaurants, average weekly same store sales per restaurant(1) were
$108,700, an increase of 2.6% from $105,900 reported in the third
quarter of 2017. For the Stoney River Steakhouse and Grill
restaurants, average weekly same store sales per restaurant were
$71,800, up 5.6% from $68,000 recorded in the third quarter of
2017.
- The Company recorded a loss from
continuing operations before income taxes of $713,000 for the third
quarter of 2018 compared to a loss from continuing operations
before income taxes of $1,597,000 in the same quarter of the prior
year. The loss for the third quarter of 2017 included non-recurring
transaction and integration expenses of $1,975,000.
- During the third quarter of 2018, the
valuation of the Black Knight profits interest grant resulted in
profits interest expense of $1,240,000. This compares to profits
interest expense of $40,000 in the third quarter of 2017. The Black
Knight profits interest grant, issued in October 2015, included a
quarterly valuation requirement. The non-cash expense associated
with this grant was required to be recognized over a three-year
vesting period and was 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
$11.90 per share closing price of the Company’s stock at the end of
the most recent quarter, the grant’s valuation increased from
$6,018,000 at July 1, 2018 to $6,761,000 at September 30, 2018. The
Company also incurred consulting fees of $139,000 under its
management agreement with Black Knight in the most recent quarter
compared to consulting fees of $120,000 in the third quarter of
2017. The final valuation of the Black Knight profits interest
grant was calculated at the completion of the vesting period on
October 6, 2018 and resulted in a non-cash credit of approximately
$450,000 that will be recognized in the fourth quarter of
2018.
- The Company posted a net loss of
$633,000 for the third quarter of 2018 compared to a net loss of
$876,000 in the comparable quarter of 2017. Results included an
income tax benefit of $198,000 in the third quarter of 2018
compared to an income tax benefit of $832,000 in the corresponding
quarter of the previous year.
- The basic and diluted loss per share
was $0.04 for the third quarter of 2018 compared to $0.06 for the
third quarter of 2017.
- Adjusted EBITDA(2) rose 10.1% from
$3,725,000 in the third quarter of 2017 to $4,100,000 in the third
quarter 2018.
- Restaurant Operating Profit Margin (3)
as a percent of net sales was 9.7% in the most recent quarter
compared to 9.2% for the same quarter of 2017.
- Cost of sales as a percentage of net
sales in the third quarter of 2018 was 31.5% compared to 32.0% in
the corresponding quarter of 2017.
(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 is recognized in proportion to
guest redemptions based on historical redemption rates and commonly
referred to as gift card breakage, is not included in the
calculation of average weekly same store sales per restaurant.
Average weekly same store sales are 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 (loss) 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 third quarter of 2018, the Company’s restaurant labor
and related costs as a percentage of net sales were 32.8% compared
to 32.6% of net sales in the third quarter of 2017. Other
restaurant operating expenses were 21.1% of net sales in the third
quarter of 2018 and 21.5% of net sales in the third quarter of
2017.
The Company’s operating loss for the third quarter of 2018 was
$542,000 compared to an operating loss of $1,392,000 for the third
quarter of 2017.
The average weekly guest counts within the same store base of
the Company’s J. Alexander’s/Grills collection were down 0.6% in
the third quarter of 2018 compared to the third quarter of the
prior year. Guest counts within the same store base at the
Company’s Stoney River Steakhouse and Grill restaurants were up
4.5% for the third quarter of 2018 over the third quarter of 2017.
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 third
quarter of 2018 was $31.84, up 3.1% from $30.87 during the third
quarter of 2017. The average guest check within the same store base
of Stoney River Steakhouse and Grill restaurants was $42.67 during
the third quarter of 2018, up 0.9% from $42.29 posted in the
corresponding quarter of 2017.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grills locations in the third quarter of
2018 were down 2.4% from the third quarter of 2017, while average
weekly guest counts within the Company’s Stoney River Steakhouse
and Grill locations increased 5.2% for the third quarter of 2018
compared to the third quarter of 2017. Average guest checks for the
combined J. Alexander’s/Grills concepts increased 3.4% from $30.90
in the third quarter of 2017 to $31.95 for the third quarter of
2018. Average guest checks for the Stoney River Steakhouse and
Grill restaurants increased 0.5% from $42.19 in the third quarter
of 2017 to $42.41 in the third quarter of 2018.
The effect of menu pricing for the third quarter of 2018 was
estimated to be a 2.3% increase for the J. Alexander’s/Grills
restaurants and a 2.4% increase for the Stoney River Steakhouse and
Grill restaurants compared to the corresponding quarter of 2017.
Inflation in food costs for the third quarter of 2018 was estimated
to total 0.9% for the J. Alexander’s/Grills restaurants, with beef
costs increasing by an estimated 1.3% compared to the third quarter
of 2017. For the Stoney River Steakhouse and Grill restaurants,
inflation for the third quarter of 2018 was estimated to total
0.2%, with beef costs up by 0.5% from the comparable quarter of
2017.
During the third quarter of 2017, six of the Company’s
restaurants in Florida were closed for a total of 36 days due to
the impact of Hurricane Irma. Management estimates the impact of
such closures was approximately $650,000 in lost revenue, and a
decrease to income from continuing operations before income taxes
of approximately $400,000, consisting of approximately $300,000 of
lost restaurant operating profit and approximately $100,000 of food
spoilage losses, cleanup costs and expenses associated with
reopening the restaurants. During the third quarter of 2018, the
Company closed its restaurants in North Carolina for a total of
three days due to the impact of Hurricane Florence. Management
estimates lost revenue of approximately $30,000 in the third
quarter of 2018 related to these closed days.
Board Approves Stock Repurchase Program
The Company’s board of directors has authorized a share
repurchase program, replacing the program that has been in place
since October 29, 2015. The board authorized the Company to
purchase up to $15,000,000 of its common stock in the aggregate
over a three-year period ending November 1, 2021. Under the prior
program, the Company repurchased 305,059 shares of common stock
over three years for an aggregate purchase price of $3,203,000,
using cash on hand and operating cash flow to fund such purchases.
Share repurchases under the newly authorized program are expected
to be made solely from cash on hand and available operating cash
flow. Repurchases will be made in accordance with applicable
securities laws and may be made from time to time in the open
market. The timing, prices and amount of repurchases will depend
upon prevailing market prices, general economic and market
conditions and other considerations. The repurchase program does
not obligate the Company to acquire any particular amount of
stock.
Chief Executive Officer’s Comments
“We were pleased with our results in virtually all areas,” said
Lonnie J. Stout II, President and Chief Executive Officer of J.
Alexander’s Holdings, Inc. “Historically, the third quarter of our
fiscal year is the most challenging, so we were encouraged by
higher same store sales in both restaurant groups, which has
provided both concepts momentum in the final quarter of 2018.”
Stout cited several highlights of the third quarter, including a
decrease in cost of sales which resulted in a corresponding
increase in Restaurant Operating Profit Margin.
“We were pleased with our overall sales performance, but need to
ramp up sales at some of our newer locations,” Stout said. “We are
aggressively implementing various strategies to heighten guest
awareness as we enter the 2018 holiday season in order to drive
sales and generate more guest trial.” He added that the Company
took a menu price increase of approximately one percent in June
2018 which has been met with no discernible guest resistance.
“By almost all metrics, we recorded a good third quarter in our
J. Alexander’s/Grills group,” Stout observed.
The Company’s Stoney River Steakhouse and Grill collection
turned in another strong quarter with respect to both increased
guest counts and sales. Stout pointed out that, consistent with
trends discussed in prior quarters of 2018, most of the increase
generated during the most recent quarter within the Stoney River
Steakhouse and Grill same store base of restaurants was
organic.
“Overall, we had a strong quarter at Stoney River,” Stout said.
“As a result of a more normalized beef market in 2018, coupled with
the continued strong momentum we’re experiencing across most of our
Stoney River locations, we are encouraged about our prospects for
the fourth quarter and into 2019.”
Stout said the Company remains “guardedly optimistic” that the
beef market will continue to perform as anticipated in the near
term. “We do expect that there will be some upward pressure on
demand and are not expecting any windfalls in pricing during the
final quarter of 2018, but we anticipate our beef costs will remain
within acceptable price points as we wrap up 2018.”
“We are pleased with our momentum heading into the final quarter
of the year. We continue to be committed to driving sales growth,”
Stout concluded.
Highlights for the First Nine Months of 2018
For the nine months ended September 30, 2018, the Company
recorded net sales of $179,059,000, up 4.2% from $171,917,000
recorded in the first nine months of 2017. Within the J.
Alexander’s/Grill restaurants, average weekly same store sales per
restaurant were $114,900 for the nine months ended September 30,
2018, an increase of 1.5% from $113,200 achieved in the same three
quarters of 2017. For the Stoney River Steakhouse and Grill
restaurants, average weekly same store sales per restaurant
advanced 6.0% from $73,700 in the first nine months of 2017 to
$78,100 in the first nine months of 2018.
Income from continuing operations before income taxes for the
nine months ended September 30, 2018 was $3,332,000, up 59.7% from
$2,086,000 reported for the same three quarters a year ago. These
balances reflect the impact of $933,000 in transaction expenses for
the first nine months of 2018 compared to $2,435,000 in transaction
expenses for the corresponding nine months of 2017.
During the first nine months of 2018, the Black Knight profits
interest grant resulted in noncash profits interest expense of
$3,094,000, an increase of 80.4% from profits interest expense of
$1,715,000 reported in the same nine months of 2017. For the first
three quarters of 2018, the Company accrued consulting fees of
$587,000 from its management agreement with Black Knight compared
to $559,000 of expense in the first nine months of 2017.
The Company posted net income of $3,065,000 in the first nine
months of 2018, up 53.7% from $1,994,000 for the same three
quarters of 2017. Adjusted EBITDA for the first three quarters of
2018 totaled $18,258,000, up 8.7% from $16,792,000 recorded in the
first nine months of 2017. Basic earnings per share and diluted
earnings per share totaled $0.21 in the first nine months of 2018.
In the comparable three quarters of 2017, basic earnings per share
totaled $0.14 while diluted earnings per share totaled $0.13. See
attached “Adjusted EBITDA Reconciliation” for the Company’s
definition of Adjusted EBITDA and a reconciliation to net
income.
Guest counts within the same store base of restaurants decreased
by 1.1% within the J. Alexander’s/Grill restaurants for the first
three quarters of 2018 and increased 6.3% within the Stoney River
Steakhouse and Grill restaurants during the same three quarters.
The average guest check within the same store base at the combined
J. Alexander’s/Grill restaurants increased 2.7% from $30.92 for the
first nine months of 2017 to $31.76 for the first three quarters of
2018, while the average guest check within the Stoney River
Steakhouse and Grill same store base of restaurants decreased by
0.3% from $42.73 in the first three quarters of 2017 to $42.60 for
the first nine months of 2018. The effect of menu price changes for
the first three quarters of 2018 was estimated to be a 2.0%
increase at the J. Alexander’s/Grill locations and a 1.9% increase
at the Stoney River Steakhouse and Grill restaurants compared to
the first nine months of 2017.
Cost of sales as a percentage of net sales for the first three
quarters of 2018 was 31.6% compared to 31.9% for the first nine
months of 2017. The estimated effect of inflation in food costs for
the first three quarters of 2018 was 1.0% for the J.
Alexander’s/Grill restaurants, with beef costs declining by
approximately 0.4% compared to the same nine months a year earlier.
For the Stoney River Steakhouse and Grill restaurants, deflation
was estimated to be 0.4% during the first nine months of 2018,
including an estimated decrease of 1.8% in beef costs compared to
the first three quarters of 2017.
Restaurant Development
During the third quarter of 2018, the Company continued
construction on a new Stoney River Steakhouse and Grill in Troy,
MI. This restaurant, located near one of the Company’s highest
volume J. Alexander’s locations, opened on October 29, 2018. The
Company anticipates opening three new restaurants in 2019 and will
announce details once leases related to such sites have been
executed.
Outlook for 2018/Guidance
Our performance outlook is based on current information as of
November 7, 2018. The Company does not expect to update its 2018
guidance as set forth below before the fourth 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: Prior Guidance
Revised Full Year 2018
Same Store Sales: J. Alexander’s/Grills +2.0% - 3.0% +1.5% - 2.0%
Stoney River Steakhouse and Grill +3.5% - 4.5% +4.5% - 5.0% Revenue
$ 245.0 - $247.0 MM $ 243.5 - $244.5 MM Net Income $ 7.7 – $8.7 MM
$ 7.0 - $7.5 MM Adjusted EBITDA $ 26.6 - $27.6 MM $ 25.5 - $26.0 MM
Effective tax rate 1.0% - 7.0% (6.0%) – (2.0%) Basic earnings per
share $ 0.53 - $0.60 $ 0.48 - $0.51
With respect to anticipated capital expenditures, the guidance
for the 2018 fiscal year is the same as reported on August 8,
2018.
Conference Call
The Company will hold a conference call on Thursday, November 8,
2018, at 10 a.m., Central time, to discuss its financial results
for the third quarter ended September 30, 2018. 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
http://investor.jalexandersholdings.com or http://public.viavid.com/index.php?id=131834. A
replay of the conference call will be available shortly following
the conclusion of the call (beginning at 1 p.m. Central Time) at
http://investor.jalexandersholdings.com and http://public.viavid.com/index.php?id=131834, as
well as by dialing 1‐844‐512‐2921 or 1‐412‐317‐6671 and providing
the access code 13684200. The replay will be accessible through
November 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
46 restaurants in 16 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 15, 2018 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
Operations (Unaudited in thousands, except per share
amounts) Quarter
Ended Nine Months Ended September
30 October 1 September 30
October 1 2018 2017 2018
2017 Net sales
$ 56,730 $ 53,879
$ 179,059 $ 171,917 Costs and expenses: Cost of sales
17,876 17,250
56,570 54,878 Restaurant labor and
related costs
18,603 17,552
55,610 53,456
Depreciation and amortization of
restaurant property and equipment
2,758 2,567
8,023 7,445 Other operating expenses
11,965 11,564
35,926 34,673 Total restaurant
operating expenses
51,202 48,933
156,129 150,452
Transaction and integration expenses
- 1,975
933
2,435 General and administrative expenses
5,876 4,315
17,123 15,479 Pre-opening expense
194
48
1,024 934 Total
operating expenses
57,272 55,271
175,209 169,300 Operating (loss)
income
(542 ) (1,392 )
3,850 2,617 Other
income (expense): Interest expense
(177 ) (227 )
(537 ) (625 ) Other, net
6
22
19 94 Total
other expense
(171 ) (205 )
(518 ) (531 )
(Loss) income from continuing operations
before income taxes
(713 ) (1,597 )
3,332 2,086 Income tax benefit
198 832
72 242 Loss from discontinued operations, net
(118 ) (111 )
(339
) (334 ) Net (loss) income
$ (633
) $ (876 )
$ 3,065 $ 1,994
Basic (loss) earnings per share: (Loss) income from
continuing operations, net of tax
$ (0.04 ) $
(0.05 )
$ 0.23 $ 0.16 Loss from discontinued
operations, net
(0.01 ) (0.01 )
(0.02 ) (0.02 ) Basic (loss) earnings per
share
$ (0.04 ) $ (0.06 )
$ 0.21
$ 0.14 Diluted (loss) earnings per share:
(Loss) income from continuing operations, net of tax
$
(0.04 ) $ (0.05 )
$ 0.23 $ 0.16 Loss
from discontinued operations, net
(0.01 )
(0.01 )
(0.02 ) (0.02 ) Diluted
(loss) earnings per share
$ (0.04 ) $ (0.06 )
$ 0.21 $ 0.13 Weighted average
common shares outstanding: Basic
14,695 14,695
14,695
14,695 Diluted
14,695 14,695
14,919 14,792
J. Alexander's Holdings, Inc.
and Subsidiaries Condensed Consolidated Statements of
Operations Data as a Percentage of Net Sales and Other
Financial and Performance Data (Unaudited)
Quarter Ended Nine Months Ended
September 30 October 1 September
30 October 1 2018 2017
2018 2017 Net sales
100.0 % 100.0 %
100.0 % 100.0 % Costs and expenses: Cost of sales
31.5 32.0
31.6 31.9 Restaurant labor and related
costs
32.8 32.6
31.1 31.1
Depreciation and amortization of
restaurant property and equipment
4.9 4.8
4.5 4.3 Other operating expenses
21.1 21.5
20.1
20.2 Total restaurant operating expenses
90.3
90.8
87.2 87.5 Transaction and integration expenses
-
3.7
0.5 1.4 General and administrative expenses
10.4
8.0
9.6 9.0 Pre-opening expense
0.3
0.1
0.6 0.5 Total
operating expenses
101.0 102.6
97.8 98.5 Operating (loss)
income
(1.0 ) (2.6 )
2.2 1.5 Other income
(expense): Interest expense
(0.3 ) (0.4 )
(0.3
) (0.4 ) Other, net
0.0 0.0
0.0 0.1 Total other
expense
(0.3 ) (0.4 )
(0.3 ) (0.3 )
(Loss) income from continuing operations
before income taxes
(1.3 ) (3.0 )
1.9 1.2 Income tax benefit
0.3 1.5
0.0 0.1 Loss from discontinued operations,
net
(0.2 ) (0.2 )
(0.2
) (0.2 ) Net (loss) income
(1.1
)% (1.6 )%
1.7 % 1.2 %
Note: Certain percentage totals do not sum due to rounding.
Other Financial and Performance Data:
(Dollars in thousands)
Adjusted EBITDA(1)
$ 4,100 $ 3,725
$
18,258 $ 16,792 As a % of net sales
7.2 % 6.9
%
10.2 % 9.8 %
Average weekly sales per
restaurant: J. Alexander’s Restaurant/ Grills
$
106,300 $ 105,500
$ 112,500 $ 112,100 Percent
change
0.8 % 0.4 % Stoney River
Steakhouse and Grill
$ 71,600 $ 67,600
$
77,500 $ 72,700 Percent change
5.9 %
6.6 % Average weekly same store sales per
restaurant: J. Alexander’s Restaurant/ Grills
$
108,700 $ 105,900
$ 114,900 $ 113,200 Percent
change
2.6 % 1.5 % Stoney River
Steakhouse and Grill
$ 71,800 $ 68,000
$
78,100 $ 73,700 Percent change
5.6 %
6.0 % (1) See definitions and reconciliation
attached.
J.
Alexander's Holdings, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (Unaudited in thousands)
September 30
December 31 2018 2017 Assets Current
assets: Cash and cash equivalents
$ 6,043 $ 10,711
Other current assets
6,014 8,019 Total current
assets
12,057 18,730 Other assets
5,719 6,183
Property and equipment, net
110,282 103,615 Goodwill
15,737 15,737 Tradename and other indefinite-lived
intangibles
25,631 25,202 Deferred Charges, net
157 184
$ 169,583 $ 169,651
Liabilities and Stockholders' Equity Current
liabilities
$ 26,899 $ 30,027
Long term debt, net of portion classified
as current and unamortized deferred loan costs
7,093 10,781 Deferred compensation obligations
6,612
6,451 Deferred income taxes
1,187 2,075 Other long-term
liabilities
6,913 6,456 Stockholders' equity
120,879 113,861
$ 169,583 $ 169,651
J. Alexander's
Holdings, Inc. and Subsidiaries Condensed Consolidated
Statements of Cash Flows
(Unaudited in thousands) Nine Months Ended
September 30 October 1 2018
2017 Cash flows from operating activities: Net income
$ 3,065 $ 1,994 Adjustments to reconcile net income
to net cash provided by operating activities: Depreciation and
amortization of property and equipment
8,244 7,661
Equity-based compensation expense
3,919 2,664 Other, net
(225 ) 19 Changes in assets and liabilities, net
(198 ) 599 Net cash provided by
operating activities
14,805 12,937 Cash flows from
investing activities: Purchase of property and equipment
(15,230 ) (8,657 ) Other investing activities
(493 ) (264 ) Net cash used in investing
activities
(15,723 ) (8,921 ) Cash flows from
financing activities: Payments on long-term debt and obligations
under capital leases
(3,750 ) (2,361 ) Other
financing activities
- (2 ) Net cash
used in financing activities
(3,750 )
(2,363 ) (Decrease) Increase in cash and cash equivalents
(4,668 ) 1,653 Cash and cash equivalents at beginning
of period
10,711 6,632 Cash and
cash equivalents at end of period
$ 6,043 $
8,285 Supplemental disclosures: Property and
equipment obligations accrued at beginning of period
$
1,854 $ 2,587 Property and equipment obligations accrued at
end of period
1,656 2,153 Cash paid for interest
606
605 Cash paid for income taxes
644 579
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 Nine
Months Ended September 30 October 1 September
30 October 1 2018 2017 2018
2017 Net (loss) income
$ (633 )
$ (876 )
$ 3,065 $ 1,994 Income tax benefit
(198 ) (832 )
(72 ) (242 ) Interest
expense
177 227
537 625 Depreciation and amortization
2,842 2,653
8,275
7,701 EBITDA
2,188 1,172
11,805 10,078 Transaction and integration expenses
- 1,975
933 2,435 Loss on disposal of fixed assets
26 30
122 119
Asset impairment charges and restaurant
closing costs
4 2
14 135 Non-cash compensation
1,570 387
4,021 2,757 Loss from discontinued operations, net
118 111
339 334 Pre-opening expense
194
48
1,024 934
Adjusted EBITDA
$ 4,100 $ 3,725
$ 18,258 $ 16,792 Note:
For purposes of computing Adjusted EBITDA, the $1,240 and $40 for
the quarters ended September 30, 2018 and October 1, 2017,
respectively, and $3,094 and $1,715 for the nine months ended
September 30, 2018 and October 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 $139 and $120 for the quarters ended September 30, 2018
and October 1, 2017, respectively, and totaling $587 and $559 for
the nine months ended September 30, 2018 and October 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 Nine Months Ended September
30 October 1 September 30
October 1 2018 2017 2018
2017 Amount
Percent of
Net Sales
Amount
Percent of
Net Sales
Amount
Percent of
Net Sales
Amount
Percent of
Net Sales
Operating
(loss) income
$ (542 ) -1.0 % $
(1,392 ) -2.6 %
$ 3,850 2.2 % $ 2,617
1.5 % General and administrative expenses
5,876
10.4 % 4,315 8.0 %
17,123 9.6 %
15,479 9.0 % Transaction and integration expenses
-
0.0 % 1,975 3.7 %
933 0.5 %
2,435 1.4 % Pre-opening expense
194
0.3 % 48 0.1 %
1,024 0.6 % 934
0.5 % Restaurant Operating Profit
$
5,528 9.7 % $ 4,946
9.2 %
$ 22,930
12.8 % $ 21,465 12.5 %
J. Alexander's Holdings, Inc. and
Subsidiaries Reconciliation of Updated Guidance Range for
2018 Adjusted EBITDA (Unaudited in thousands)
Prior Guidance
Updated Guidance Low
High Low
High Net income (estimated) $
7,700 $ 8,700 $ 7,000 $ 7,500 Income tax expense (benefit)
1,520 1,570 (300 ) (300 ) Interest expense 725 725 715 715
Depreciation and amortization 11,255
11,255 11,200
11,200 EBITDA 21,200 22,250 18,615 19,115
Loss on disposal of fixed assets 250 250 180 180 Transaction
costs 835
835
933 933 Non-cash compensation 2,500 2,500 3,900 3,900 Loss from
discontinued operations, net 430 430 452 452 Pre-opening expense
1,335 1,335
1,420 1,420 Adjusted
EBITDA $ 26,550 $ 27,600 $
25,500 $ 26,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181107005910/en/
J. Alexander’s Holdings, Inc.Mark A. Parkey, 615-269‐1900Chief
Financial Officer
J Alexanders (NYSE:JAX)
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