Same Store Sales Up In Both Concepts
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner
and operator of the J. Alexander’s Restaurants, Redlands Grill,
Stoney River Steakhouse and Grill and Lyndhurst Grill collection of
restaurants, today reported financial results for the third quarter
and first nine months ended October 1, 2017.
Third Quarter 2017 Highlights Compared To The Third Quarter
Of 2016
- Net sales increased 4.7% to $53,879,000
in the most recent quarter from $51,459,000 in the third quarter of
2016.
- For the J. Alexander’s/Grill
restaurants, average weekly same store sales per restaurant(1) were
$107,000, up 1.4% from $105,500 in the third quarter of 2016. For
the Stoney River Steakhouse and Grill restaurants, average weekly
same store sales increased 3.7% to $67,300 from $64,900 recorded in
the comparable quarter of 2016.
- The Company recorded a loss from
continuing operations of $1,597,000 in the third quarter of 2017
compared to income from continuing operations before taxes of
$1,177,000 achieved in the third quarter of 2016. The most recent
results were primarily due to the combination of several factors,
including non-recurring transaction and integration expenses of
$1,975,000 related to the Company’s planned acquisition of the
Ninety Nine Restaurant and Pub concept discussed elsewhere in this
release. Additionally in the third quarter of 2017, the Company’s
restaurants in Florida were closed for 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 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 re-opening the restaurants.
Finally, the opening of three new restaurants during the previous
ten months, and anticipated inefficiencies in cost of sales, labor
and selected other expense categories associated with supporting
these new locations, had an unfavorable impact of the quarter ended
October 1, 2017 as well.
- During the third quarter of 2017, the
Company’s profits interest grant with Black Knight Advisory
Services, LLC (“Black Knight”) resulted in a profits interest
expense of $40,000, down from an expense of $246,000 in the third
quarter a year ago. The agreement with Black Knight is based on a
quarterly valuation of a profits interest grant issued in October
2015. The non-cash expense associated with this grant is required
to be recognized over the three-year vesting period of the grant
and is calculated each quarter based upon the most recent valuation
performed using the Black-Scholes valuation model, with any
cumulative change associated with the most recent valuation
impacting the current quarter. Primarily due to the $11.60 per
share closing price of the Company’s stock at the end of the most
recent quarter, the grant’s valuation decreased from $7,533,000 at
July 2, 2017 to $6,650,000 at October 1, 2017. Also during the
third quarter of 2017, the Company incurred consulting fees of
$120,000 under its management agreement with Black Knight. This
compares to consulting fees of $133,000 in the third quarter of the
prior year.
- On August 4, 2017, the Company and
Fidelity National Financial, Inc. (“FNF”) announced that J.
Alexander’s, Fidelity Newport Holdings, LLC (“FNH”) and Fidelity
National Financial Ventures, LLC (“FNFV”), a direct wholly‐owned
subsidiary of FNF, had entered into a definitive agreement under
which the Company will acquire 99 Restaurants, LLC (“99
Restaurants”) in an all‐stock transaction valued at approximately
$199 million, including the assumption of approximately $20 million
in net debt. A preliminary proxy statement related to the
acquisition was filed with the Securities and Exchange Commission
(“SEC”) on October 11, 2017 and the SEC has notified the Company
that this document will be subjected to their standard review
process.
- For the third quarter of 2017, J.
Alexander’s Holdings, Inc. had a loss of $876,000 compared to net
income of $945,000 posted in the comparable quarter a year ago. The
Company had a tax benefit of $832,000 for the most recent quarter
compared to a tax provision of $121,000 in the third quarter of
2016.
- The Company’s basic and diluted loss
per share was $0.06 for the third quarter of 2017 compared to basic
and diluted earnings per share of $0.06 for the third quarter of
2016.
- Adjusted EBITDA(2) for the third
quarter of 2017 was $3,725,000, a decrease of 15.3% from $4,397,000
for the third quarter of 2016.
- Restaurant Operating Profit Margin(3)
was 9.2% for the third quarter of 2017 compared to 10.9% in the
third quarter of 2016.
- Cost of sales as a percentage of net
sales in the third quarter of 2017 was 32.0% compared to 31.6% in
the corresponding quarter of 2016.
(1) Average weekly same store sales per restaurant is computed
by dividing total restaurant same store sales for the period by the
total number of days all same store restaurants were open for the
period to obtain a daily sales average. The daily same store sales
average is then multiplied by seven to arrive at average weekly
same store sales per restaurant. Days on which restaurants are
closed for business for any reason other than scheduled closures on
Thanksgiving and Christmas are excluded from this calculation.
Sales and sales days used in this calculation and amounts of other
“same store” figures in this release include only those for
restaurants in operation at the end of the period which have been
open for more than eighteen months. Revenue associated with
reduction in liabilities for gift cards which are considered to be
only remotely likely to be redeemed (based on historical redemption
rates) is not included in the calculation of average weekly same
store sales per restaurant. Average weekly same store sales is
computed from sales amounts that have been determined in accordance
with U.S. generally accepted accounting principles (GAAP).
(2) Please refer to the financial information accompanying this
release for our definition of and a reconciliation of the non‐GAAP
financial measure Adjusted EBITDA to net income. Management uses
Adjusted EBITDA to evaluate operating performance and the
effectiveness of its business strategies.
(3) “Restaurant Operating Profit Margin” is the ratio of
Restaurant Operating Profit, a non‐GAAP financial measure, to net
sales. Please refer to the financial information accompanying this
release for our definition of and a reconciliation of the non‐GAAP
financial measure Restaurant Operating Profit to net income.
Management uses Restaurant Operating Profit and Restaurant
Operating Profit Margin to measure operating performance at the
restaurant level.
For the third quarter of 2017, the Company’s consolidated
operating loss totaled $1,392,000 compared to operating income of
$1,306,000 recorded in the corresponding quarter a year
earlier.
The Company’s restaurant labor and related costs as a percentage
of net sales were 32.6% compared to 32.1% of net sales in the third
quarter a year ago. Other restaurant operating expenses were 21.5%
of net sales in the third quarter of 2017 compared to 21.1% of net
sales in the third quarter of 2016.
The average weekly guest counts within the same store base of
the Company’s J. Alexander’s/Grills collection decreased 1.2% for
the third quarter of 2017 compared to the corresponding quarter of
2016. Guest counts within the same store base at the Company’s
Stoney River Steakhouse and Grill restaurants were up 6.0% for the
third quarter of 2017 compared to the same quarter of 2016. With
respect to average guest checks, which include alcoholic beverage
sales, the average guest check within the J. Alexander’s/Grills
same store base of restaurants during the third quarter of 2017
totaled $30.85, up 2.7% from $30.04 during the third quarter of
2016. The average guest check within the same store base of Stoney
River Steakhouse and Grill restaurants totaled $42.32, down 2.6%
from $43.44 for the third quarter of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations decreased 1.3% for the
third quarter of 2017 compared to the third quarter of the prior
year. On a consolidated basis, average weekly guest counts within
the Company’s Stoney River Steakhouse Grill locations increased
5.0% for the third quarter of 2017 compared to the third quarter of
2016. Average guest checks for the combined J. Alexander’s/Grills
concepts rose 2.6% from $30.11 in the third quarter of 2016 to
$30.90 in the most recent quarter. The average guest check for the
Stoney River Steakhouse and Grill restaurants decreased 2.9% to
$42.19 in the third quarter of 2017 from $43.44 in the third
quarter of 2016.
The effect of menu pricing for the quarter just ended was
estimated to be a 1.5% increase for the J. Alexander’s/Grills
restaurants and a 0.2% decrease for the Stoney River Steakhouse and
Grill restaurants compared to the same quarter of 2016. Inflation
in food costs for the third quarter of 2017 was estimated to total
0.8% for the J. Alexander’s/Grill restaurants, with beef costs
decreasing by an estimated 3.3% compared to the third quarter of
2016. For the Stoney River Steakhouse and Grill restaurants,
inflation for the third quarter of 2017 was an estimated to total
0.4%, with beef costs down approximately 1.8%.
Chief Executive Officer’s Review/Third Quarter
“We were confronted by a combination of unforeseen and adverse
factors negatively impacting our results in the third quarter ended
October 1, 2017,” said Lonnie J. Stout II, President and Chief
Executive Officer. “Among these were forced restaurant closings in
six Florida markets during Hurricane Irma, along with incremental
operating expenses in our three new restaurants opened during the
past 10 months, which we typically experience post-opening. These
incremental expenses primarily relate to higher than average cost
of sales as our kitchens become accustomed to operating at volume,
extra labor staffing to ensure that our guests have an outstanding
experience and, in certain situations, we will provide higher than
average complimentary meals as a means of marketing the restaurant
to the local community. These challenges were in addition to the
non-recurring transaction and integration expenses associated with
the planned acquisition of the Ninety Nine Restaurant and Pub.”
“We are never satisfied with guest count declines,” Stout
continued, “but we are not overly concerned about the guest traffic
at our J. Alexander’s/Grill locations, as we started to see
positive guest counts during September and that trend has continued
into the early part of the fourth quarter. As we’ve shared in the
past, our third quarter is always the most challenging quarter of
the year due to mix shift, vacations and the loss of business
guests during the summer. It is always our lowest sales average
quarter of the year.”
Restaurant Development
During the third quarter of 2017, the Company began construction
on one new J. Alexander’s Restaurant in King of Prussia, PA, and
one new Stoney River Steakhouse and Grill in Troy, MI. Each of
these new restaurants is expected to open in 2018.
First Nine Months Highlights For 2017
For the nine months ended October 1, 2017, J. Alexander’s
Holdings, Inc. recorded net sales of $171,917,000, up from
$162,259,000 posted during the comparable nine months of 2016.
Within the J. Alexander’s/Grill restaurants, average weekly same
store sales per restaurant were $113,600 for the first nine months
of 2017, up 3.2% from $110,100 reported in the same nine months of
the prior year. For the Stoney River Steakhouse and Grill
restaurants, average weekly same store sales totaled $70,900, an
increase of 2.2% from $69,400 recorded in the comparable nine
months of 2016. Income from continuing operations before income
taxes was $2,086,000, down from $5,860,000 achieved in the same
nine months of 2016.
The Company recorded net income of $1,994,000 for the first nine
months of 2017 compared to $4,322,000 achieved in the first nine
months of the previous year. Adjusted EBITDA for the first nine
months of 2017 totaled $16,792,000, an increase of 4.6% from
$16,047,000 recorded in the first nine months of 2016. Basic and
diluted earnings per share were $0.14 and $0.13, respectively, for
the first nine months of 2017 and $0.29 for the comparable nine
months of 2016.
The Company’s consolidated operating income for the most recent
nine months was $2,617,000 compared to $6,300,000 recorded in the
corresponding nine months of 2016.
For the nine months ended October 1, 2017, the Company’s cost of
sales, as a percent of net sales, were 31.9%, consistent with 31.9%
in the first nine months of 2016. Restaurant labor and related
costs were 31.1% of net sales in the first nine months of 2017
compared to 30.9% of net sales in the corresponding period of 2016.
Other restaurant operating expenses were 20.2% of net sales in the
first nine months of 2017 compared to 20.3% of net sales in the
first nine months of 2016.
The average weekly guest counts within the same store base for
the Company’s J. Alexander’s/Grills collection increased 0.5% for
the first nine months of 2017 compared to the corresponding nine
months of 2016. Guest counts within the same store base at the
Company’s Stoney River Steakhouse and Grill restaurants increased
4.3% for the first nine months of 2017 compared to the same nine
months of 2016. With respect to average guest checks, the average
guest check within the J. Alexander’s/Grills same store base of
restaurants during the first nine months of 2017 totaled $30.91, up
2.6% from $30.12 during the same nine months of the prior year. The
average guest check within the same store base of Stoney River
Steakhouse and Grill restaurants totaled $42.74, a 2.6% decrease
from $43.86 for the first nine months of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations increased 0.4% for the
first nine months of 2017 compared to the comparable nine months of
2016. With respect to the Stoney River Steakhouse and Grill
locations, consolidated average weekly guest counts increased 3.2%
for the first nine months of 2017 compared to the same nine months
of 2016. Average guest checks for the combined J.
Alexander’s/Grills concepts increased 2.7% from $30.17 in the first
nine months of 2016 to $30.97 in the first recent nine months of
2017. The average guest check for the Stoney River Steakhouse and
Grill restaurants decreased 2.7% to $42.66 in the first nine months
of 2017 from $43.86 in the same nine months of 2016.
The effect of menu pricing for the first nine months of 2017 was
estimated to be a 2.1% increase for the J. Alexander’s/Grills
restaurants and a 0.4% decrease for the Stoney River Steakhouse and
Grill restaurants compared to the first nine months a year ago.
Inflation in food costs for the first nine months of 2017 was
estimated to total 0.4% for the J. Alexander’s/Grills restaurants,
with beef costs down by an estimated 2.7% compared to the same nine
months of the previous year. For the Stoney River Steakhouse and
Grill restaurants, inflation for the first nine months of 2017 was
also estimated at 0.4%, with beef costs down approximately 0.8%
compared to the corresponding period of 2016.
Outlook For 2017/Guidance
Same Store Sales:
Prior
Guidance
Full Year
2017
Stoney River Steakhouse and Grill +1.0% ‐ 2.0% +2.0% - 3.0%
The Company’s Adjusted EBITDA guidance range included in the
March 2, 2017 release is unchanged. However, due in large part to
the impact of Hurricane Irma during the third quarter of 2017, the
Company anticipates that Adjusted EBITDA for the full year 2017
will approximate the lower end of the targeted guidance. The
Company’s guidance range relative to capital expenditures included
in the May 2, 2017 release is unchanged, as is the Company’s
guidance range included in the August 10, 2017 release relative to
consolidated revenue and same store sales for the J.
Alexander’s/Grills restaurants for 2017. As a result of the
Company’s planned acquisition of 99 Restaurants discussed above,
and the uncertainty of transaction costs and changes to the
Company’s financial statements that may result from the
transaction, the Company is not presenting other items of guidance,
and previous disclosures of those items should not be relied
upon.
Conference Call
The Company will hold a conference call on Thursday, November 9,
2017 at 10 a.m. Central time to discuss its financial results for
the third quarter ended October 1, 2017. The conference call can be
accessed live over the phone by dialing 1-877-407-0789 (Toll‐Free)
or 1-201-689-8562 (Toll/International). To access the call via the
internet, go to the J. Alexander’s website at
http://investor.jalexandersholdings.com or
http://public.viavid.com/index.php?id=126981.
A replay of the conference call will be available shortly
following the conclusion of the call at
http://investor.jalexandersholdings.com and
http://public.viavid.com/index.php?id=126981, as well as dialing
1-844-512-2921 or 1-412-317-6671 and providing the access code
13672732. The replay will be accessible through November 16, 2017
via telephone and for 30 days on the internet.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of boutique
restaurants that focus on providing high quality food, outstanding
professional service and an attractive ambiance. On October 1,
2017, the Company owned and operated the following restaurant
concepts: J. Alexander’s, Redlands Grill, Stoney River Steakhouse
and Grill and Lyndhurst Grill.
The Company has its headquarters in Nashville, TN.
Forward‐Looking Statements
This press release issued by J. Alexander’s Holdings, Inc.
contains forward‐looking statements, which include all statements
that do not relate solely to historical or current facts, such as
statements regarding our expectations, intentions or strategies
regarding the future, and in particular, our statements concerning
and the agreement to acquire 99 Restaurants, LLC and the
termination of the Black Knight consulting agreement the impact of
such termination on the Black Knight profits interest grant, as
well as our guidance disclosure. These forward‐looking statements
are based on management's beliefs, as well as assumptions made by,
and information currently available to, management. Because such
statements are based on expectations as to future financial and
operating results and are not statements of fact, actual results
may differ materially from those projected and are subject to a
number of known and unknown risks and uncertainties, including the
Company’s ability to maintain satisfactory guest count levels and
maintain or increase sales and operating margins in its restaurants
under varying economic conditions; the effect of higher commodity
prices, unemployment and other economic factors on consumer demand;
increases in food input costs or product shortages and the
Company’s response to them; the number and timing of new restaurant
openings, associated costs and the Company’s ability to operate new
restaurants profitably; competition within the casual dining
industry and within the markets in which our restaurants are
located; adverse weather conditions in regions in which the
Company’s restaurants are located; factors that are under the
control of third parties, including government agencies;
uncertainties concerning the recently announced 99 Restaurants
transactions, including the following: uncertainties as to whether
the requisite approvals of the J. Alexander’s shareholders will be
obtained; the risk of shareholder litigation in connection with the
transaction and any related significant costs of defense,
indemnification and liability; the possibility that competing
offers will be made; the possibility that various closing
conditions for the transaction may not be satisfied or waived; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement, including
circumstances that may give rise to the payment of a termination
fee by J. Alexander’s; the effects of disruptions to respective
business operations of J. Alexander’s or Ninety Nine resulting from
the transactions, including the ability of the combined company to
retain and hire key personnel and maintain relationships with
suppliers and other business partners; the risks associated with
the future performance of the Ninety Nine business; the risks of
integration of the Ninety Nine business and the possibility that
costs or difficulties related to such integration of the Ninety
Nine business and J. Alexander’s will be greater than expected; the
possibility that the anticipated benefits and synergies from the
proposed transaction cannot be fully realized or may take longer to
realize than expected; as well as other risks and uncertainties
described under the headings "Forward‐Looking Statements," "Risk
Factors" and other sections of the Company’s Annual Report on Form
10‐K filed with the Securities and Exchange Commission on March 16,
2017 and subsequent filings. The Company undertakes no obligation
to update any forward‐looking statements, whether as a result of
new information, future events or otherwise.
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited in thousands, except per share amounts)
Quarter Ended Nine Months
Ended October 1 October 2
October 1 October 2 2017
2016 2017 2016 Net sales
$
53,879 $ 51,459
$ 171,917 $ 162,259 Costs and
expenses: Cost of sales
17,250 16,252
54,878 51,695
Restaurant labor and related costs
17,552 16,540
53,456 50,087
Depreciation and amortization of
restaurant property and equipment
2,567 2,232
7,445 6,636 Other operating expenses
11,564 10,833
34,673 32,909 Total restaurant
operating expenses
48,933 45,857
150,452 141,327
Transaction and integration expenses
1,975 -
2,435 62
General and administrative expenses
4,315 4,104
15,479 13,963 Pre-opening expense
48
192
934 607 Total
operating expenses
55,271 50,153
169,300 155,959 Operating income
(loss)
(1,392 ) 1,306
2,617 6,300 Other income
(expense): Interest expense
(227 ) (147 )
(625
) (514 ) Other, net
22 18
94 74 Total other expense
(205 ) (129 )
(531 )
(440 )
Income (loss) from continuing operations
before income taxes
(1,597 ) 1,177
2,086 5,860 Income tax benefit
(expense)
832 (121 )
242 (1,210 ) Loss from
discontinued operations, net
(111 )
(111 )
(334 ) (328 ) Net income (loss)
$ (876 ) $ 945
$ 1,994
$ 4,322 Basic earnings (loss) per share:
Income (loss) from continuing operations, net of tax
$
(0.05 ) $ 0.07
$ 0.16 $ 0.31 Loss from
discontinued operations, net
(0.01 )
(0.01 )
(0.02 ) (0.02 ) Basic earnings
(loss) per share
$ (0.06 ) $ 0.06
$ 0.14 $ 0.29 Diluted earnings
(loss) per share: Income (loss) from continuing operations, net of
tax
$ (0.05 ) $ 0.07
$ 0.16 $
0.31 Loss from discontinued operations, net
(0.01
) (0.01 )
(0.02 ) (0.02 )
Diluted earnings (loss) per share
$ (0.06 ) $
0.06
$ 0.13 $ 0.29
Weighted average common shares outstanding: Basic
14,695
14,700
14,695 14,862 Diluted
14,695 14,700
14,792 14,869 Note: Per share amounts may not sum due
to rounding.
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
October 1 October 2 October 1 October 2
2017 2016 2017 2016 Net sales
100.0 % 100.0 %
100.0 % 100.0 % Costs
and expenses: Cost of sales
32.0 31.6
31.9 31.9
Restaurant labor and related costs
32.6 32.1
31.1
30.9
Depreciation and amortization of
restaurant property and equipment
4.8 4.3
4.3 4.1 Other operating expenses
21.5 21.1
20.2
20.3 Total restaurant operating expenses
90.8
89.1
87.5 87.1 Transaction and integration expenses
3.7 -
1.4 0.0 General and administrative expenses
8.0 8.0
9.0 8.6 Pre-opening expense
0.1
0.4
0.5 0.4
Total operating expenses
102.6 97.5
98.5 96.1 Operating
income (loss)
(2.6 ) 2.5
1.5 3.9 Other income
(expense): Interest expense
(0.4 ) (0.3 )
(0.4
) (0.3 ) Other, net
0.0 0.0
0.1 0.0 Total other
expense
(0.4 ) (0.3 )
(0.3 ) (0.3 )
Income (loss) from continuing operations
before income taxes
(3.0 ) 2.3
1.2 3.6 Income tax benefit
(expense)
1.5 (0.2 )
0.1 (0.7 ) Loss from
discontinued operations, net
(0.2 )
(0.2 )
(0.2 ) (0.2 ) Net income (loss)
(1.6 )% 1.8 %
1.2
% 2.7 % Note: Certain percentage totals do not
sum due to rounding.
Other Financial and Performance
Data: Adjusted EBITDA(1)
$ 3,725 $ 4,397
$ 16,792 $ 16,047 As a % of net sales
6.9
% 8.5 %
9.8 % 9.9 %
Average weekly
sales per restaurant: J. Alexander’s Restaurant/ Grills
$ 105,500 $ 104,200
$ 112,100 $ 108,800
Percent change
1.2 % 3.0 %
Stoney River Steakhouse and Grill
$ 67,600 $ 66,300
$ 72,700 $ 72,500 Percent change
2.0 %
0.3 % Average weekly same store sales per
restaurant: J. Alexander’s Restaurant/ Grills
$
107,000 $ 105,500
$ 113,600 $ 110,100 Percent
change
1.4 % 3.2 % Stoney River
Steakhouse and Grill
$ 67,300 $ 64,900
$
70,900 $ 69,400 Percent change
3.7 %
2.2 % (1) See definitions and reconciliation
attached.
J. Alexander's
Holdings, Inc. and Subsidiaries Condensed Consolidated
Balance Sheets (Unaudited in thousands) October 1
January 1 2017 2017 Assets Current
assets: Cash and cash equivalents
$ 8,285 $ 6,632
Other current assets
6,287 7,741 Total current
assets
14,572 14,373 Other assets
5,895 6,012
Property and equipment, net
101,915 101,470 Goodwill
15,737 15,737 Tradename and other indefinite-lived
intangibles
25,160 25,155 Deferred charges, net
196 291
$ 163,475 $ 163,038
Liabilities and Stockholders' Equity Current
liabilities
$ 26,187 $ 27,704
Long-term debt, net of portion classified
as current and unamortized deferred loan costs
12,007 15,418 Deferred compensation obligations
6,213
6,010 Deferred income taxes
3,532 4,031 Other long-term
liabilities
6,558 5,555 Stockholders' equity
108,978 104,320
$ 163,475 $ 163,038
J. Alexander's Holdings, Inc.
and Subsidiaries Condensed Consolidated Statements of Cash
Flows (Unaudited in thousands) Nine Months Ended
October 1 October 2 2017 2016
Cash flows from operating activities: Net income
$
1,994 $ 4,322 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation and
amortization of property and equipment
7,661 6,842
Equity-based compensation expense
2,664 1,834 Other, net
19 (403 ) Changes in assets and liabilities, net
599 (4,386 ) Net cash provided by operating
activities
12,937 8,209 Cash flows from investing
activities: Purchase of property and equipment
(8,657
) (12,153 ) Other investing activities
(264
) (244 ) Net cash used in investing activities
(8,921 ) (12,397 ) Cash flows from financing
activities: Proceeds from borrowing under debt agreement
-
4,000 Payments on long-term debt and obligations under capital
leases
(2,361 ) (1,250 ) Purchases of common stock
- (3,153 ) Other financing activities
(2
) (1,319 ) Net cash used in financing activities
(2,363 ) (1,722 ) Increase (decrease)
in cash and cash equivalents
1,653 (5,910 ) Cash and cash
equivalents at beginning of period
6,632
13,424 Cash and cash equivalents at end of period
$ 8,285 $ 7,514 Supplemental
disclosures: Property and equipment obligations accrued at
beginning of period
$ 2,587 $ 1,845 Property and
equipment obligations accrued at end of period
2,153 2,011
Cash paid for interest
605 503 Cash paid for income taxes
579 4,730
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 October 1
October 2 October 1
October 2 2017 2016 2017 2016
Net income (loss)
$ (876 ) $ 945
$ 1,994 $ 4,322 Income tax expense (benefit)
(832 ) 121
(242 ) 1,210 Interest
expense
227 147
625 514 Depreciation and amortization
2,653 2,319
7,701
6,889 EBITDA
1,172 3,532
10,078 12,935
Transaction and integration expenses
1,975 -
2,435 62 Loss on disposal of fixed assets
30 54
119 164
Asset impairment charges and restaurant
closing costs
2 1
135 3 Non-cash compensation
387 507
2,757 1,948 Loss from discontinued operations, net
111 111
334 328 Pre-opening expense
48
192
934 607
Adjusted EBITDA
$ 3,725 $ 4,397
$
16,792 $ 16,047
Note: For purposes of computing Adjusted
EBITDA, the $40 and $246 for the quarters ended October 1, 2017 and
October 2, 2016, respectively, and $1,715 and $1,158 for the nine
months ended October 1, 2017 and October 2, 2016, respectively, in
non-cash compensation associated with a profits interest grant
issued to Black Knight Advisory Services, LLC ("BKAS") on October
6, 2015 has been included in "Non-cash compensation" above.
Additional expenses associated with the Company's management
agreement with BKAS totaling $120 and $133 for the quarters ended
October 1, 2017 and October 2, 2016, respectively, and totaling
$559 and $451 for the nine months ended October 1, 2017 and October
2, 2016, respectively, are included in general and administrative
expenses and have not been included in the reconciliation set forth
above.
J.
Alexander's Holdings, Inc. and Subsidiaries Non-GAAP
Financial Measures and Reconciliations (Unaudited in
thousands) Quarter Ended Nine Months
Ended October 1 October 2 October 1
October 2 2017 2016 2017 2016
Amount
Percent ofNet Sales
Amount
Percent ofNet Sales
Amount
Percent ofNet Sales
Amount
Percent ofNet Sales
Operating
income (loss)
$ (1,392 ) -2.6 %
$ 1,306 2.5 %
$ 2,617 1.5 % $ 6,300 3.9
% General and administrative expenses
4,315
8.0 % 4,104 8.0 %
15,479 9.0 %
13,963 8.6 % Transaction and integration expenses
1,975
3.7 % - 0.0 %
2,435 1.4 % 62 0.0
% Pre-opening expense
48
0.1 % 192 0.4 %
934 0.5 % 607
0.4 % Restaurant Operating Profit
$
4,946 9.2 % $ 5,602
10.9 %
$ 21,465
12.5 % $ 20,932 12.9 %
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version on businesswire.com: http://www.businesswire.com/news/home/20171109005808/en/
J. Alexander’s Holdings, Inc.Mark A. Parkey, 615-269-1900Chief
Financial Officer
J Alexanders (NYSE:JAX)
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