The Habit Restaurants, Inc. Announces Third Quarter 2016 Financial Results
Highlights for the third quarter ended
- Total revenue increased 22.6% to
$71.9 millioncompared to $58.6 millionin the third quarter of 2015.
- Company-operated comparable restaurant sales increased 0.2% as compared to the third quarter of 2015.
- Net income was $0.8 million, or
$0.04per diluted weighted average share compared to $0.9 million, or $0.07per diluted weighted average share in the third quarter of 2015.
- Adjusted fully distributed pro forma net income(1) was $1.4 million, or $0.05 per fully distributed weighted average share compared with
$1.7 million, or $0.06per fully distributed weighted average share for the third quarter of 2015.
- Adjusted EBITDA(1) was $7.4 million compared to
$6.8 millionfor the third quarter of 2015.
- The Company opened six new company-operated restaurants and two franchised restaurants during the third quarter and, as of
September 27, 2016, had 152 company-operated locations and eight franchised/licensed locations (excluding the five licensed locations in Santa Barbara County, California) for a system-wide total of 160 locations.
(1) Adjusted fully distributed pro forma net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See also “Non-GAAP Financial Measures,” included herein.
“We are pleased with our results this quarter, which included our 51st consecutive quarter of positive comparable restaurant sales. We feel that this is a significant accomplishment in light of a challenging quarter for the industry, in addition to lapping a two year stacked same store comparison of over 19% which consists of 2.9% and 16.2% comparable restaurant sales growth in the third quarter of 2015 and the third quarter of 2014, respectively. We believe our success is attributable to our long-standing strategy of providing a differentiated high-quality fast-casual experience at a tremendous every day value. While our underlying operating discipline is the foundation of our continued success, the third quarter also included several successful marketing and culinary initiatives,” said
Third Quarter 2016 Financial Results Compared to Third Quarter 2015
Total revenue was
Company-operated comparable restaurant sales increased 0.2% for the quarter ended
Net income for the third quarter of 2016 was $0.8 million, or
Adjusted fully distributed pro forma net income in the third quarter of 2016 was
The Company currently anticipates the following for its fiscal year 2016:
- Total revenue between
$283 million to $284 million;
- Company-operated comparable restaurant sales growth of approximately 2.0%;
- The opening of 26 to 28 company-operated restaurants and five to seven franchised/licensed restaurants;
- Restaurant contribution margin of 20.6% to 20.9%;
- General and administrative expenses of
$28.8 million to $29.1 million;
- Depreciation and amortization expense of approximately
- Capital expenditures of
$33.0 million to $35.0 million; and
- An effective pro forma tax rate of approximately 42.0%, which assumes the conversion of all common units of
The Habit Restaurants, LLCfor shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock), which would eliminate the non-controlling interests.
The Company currently expects to open 31 to 33 company-operated restaurants in fiscal year 2017.
The Company will host a conference call to discuss financial results for the third quarter 2016 today at
The conference call can be accessed live over the phone by dialing (855) 327-6837 or for international callers by dialing (778) 327-3988. A replay will be available after the call and can be accessed by dialing (877) 870-5176 or for international callers by dialing (858) 384-5517; the passcode is 10001943. The replay will be available until
The following definitions apply to these terms as used in this release:
Comparable restaurant sales reflect the change in year-over-year sales in our comparable restaurant base. A restaurant enters our comparable restaurant base in the accounting period following its 18th full period of operations.
Average Unit Volumes (AUVs) are calculated by dividing revenue for the trailing 52-week period for all company-operated restaurants that have operated for 12 full periods by the total number of restaurants open for such period.
Adjusted fully distributed pro forma net income includes net income attributable to The Habit (i) excluding income tax expense, (ii) excluding the effect of non-recurring items, (iii) assuming the exchange of all common units of
Adjusted fully distributed pro forma net income per fully distributed weighted average share is calculated using adjusted fully distributed pro forma net income as defined above and assumes the exchange of all common units of
EBITDA, a non-GAAP measure, represents net income before interest expense, net, provision for income taxes, and depreciation and amortization.
Adjusted EBITDA, a non-GAAP measure, represents EBITDA plus pre-opening costs, stock-based compensation, loss on disposal of assets, and offering and exchange related expenses.
This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected.
While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our annual report on Form 10-K for the year ended
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures, including those discussed above. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. We use non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that they provide useful information about operating results, enhance understanding of past performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. However, when analyzing the Company’s operating performance, investors should not consider adjusted earnings per fully distributed weighted average share or adjusted fully distributed pro forma net income in isolation or as substitutes for net income (loss), cash flows from operating activities or other operation statement or cash flow statement data prepared in accordance with U.S. GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies.
Consolidated Statement of Operations Data (unaudited):
Our operating results are presented as a percentage of total revenue, with the exception of restaurant operating costs, depreciation and amortization expense, pre-opening costs and loss on disposal of assets, which are presented as a percentage of restaurant revenue.
|13 Weeks Ended||39 Weeks Ended|
|(amounts in thousands except share and per
|September 27, 2016||September 29, 2015||September 27, 2016||September 29, 2015|
|Restaurant operating costs (excluding depreciation and amortization)|
|Food and paper costs||21,788||30.4||%||18,725||32.0||%||63,040||30.1||%||54,754||32.2||%|
|Labor and related expenses||23,727||33.1||%||18,292||31.3||%||68,040||32.5||%||51,666||30.4||%|
|Occupancy and other operating expenses||11,994||16.7||%||9,117||15.6||%||33,822||16.2||%||25,722||15.1||%|
|General and administrative expenses||7,429||10.3||%||6,104||10.4||%||21,555||10.3||%||17,026||10.0||%|
|Offering and exchange related expenses||61||0.1||%||83||0.1||%||421||0.2||%||1,217||0.7||%|
|Depreciation and amortization expense||3,788||5.3||%||2,836||4.8||%||10,779||5.1||%||8,163||4.8||%|
|Loss on disposal of assets||35||0.0||%||25||0.0||%||110||0.1||%||58||0.0||%|
|Total operating expenses||69,391||96.5||%||55,817||95.2||%||199,128||94.8||%||159,948||94.1||%|
|Income from operations||2,494||3.5||%||2,831||4.8||%||10,830||5.2||%||10,013||5.9||%|
|Interest expense, net||179||0.2||%||110||0.2||%||456||0.2||%||342||0.2||%|
|Income before income taxes||2,315||3.2||%||2,721||4.6||%||10,374||4.9||%||9,671||5.7||%|
|Provision for income taxes||869||1.2||%||522||0.9||%||3,038||1.4||%||2,089||1.2||%|
|Less: net income attributable to non-controlling interests||(677||)||-0.9||%||(1,281||)||-2.2||%||(3,996||)||-1.9||%||(5,304||)||-3.1||%|
|Net income attributable to The Habit Restaurants, Inc.||$||769||1.1||%||$||918||1.6||%||$||3,340||1.6||%||$||2,278||1.3||%|
Net income attributable to The Habit Restaurants, Inc. per share Class A common stock:
|Weighted average shares of Class A common stock outstanding:|
Selected Balance Sheet and Selected Operating Data (unaudited):
|Balance Sheet Data||September 27, 2016||December 29, 2015|
|(dollar amounts in thousands)|
|Balance Sheet Data-Consolidated (at period end):|
|Cash and cash equivalents||$||50,374||$||46,991|
|Property and equipment, net(a)||97,973||81,524|
|Total stockholders' equity||141,933||131,932|
(a) Property and equipment, net consists of property owned or leased, net of accumulated depreciation and amortization.
(b) Total debt consists of deemed landlord financing.
|13 Weeks Ended|
|Selected Operating Data||September 27, 2016||September 29, 2015|
|Other Operating Data:|
|Total restaurants at end of period||160||128|
|Company-operated restaurants at end of period||152||124|
|Company-operated comparable restaurant sales growth(a)||0.2||%||2.9||%|
|Company-operated average unit volumes||$||1,911||$||1,924|
|39 Weeks Ended|
|Selected Operating Data||September 27, 2016||September 29, 2015|
|Other Operating Data:|
|Company-operated comparable restaurant sales growth(a)||2.0||%||7.6||%|
(a) Company-operated comparable restaurant sales growth reflects the change in year-over-year sales for the company-operated comparable restaurant base. A restaurant enters our comparable restaurant base in the accounting period following its 18th full period of operations.
The following table includes a reconciliation of net income to adjusted EBITDA:
|13 Weeks Ended||39 Weeks Ended|
|Adjusted EBITDA Reconciliation||September 27,
|(amounts in thousands)|
|Provision for income taxes||869||522||3,038||2,089|
|Interest expense, net||179||110||456||342|
|Depreciation and amortization||3,788||2,836||10,779||8,163|
|Stock-based compensation expense(a)||499||342||1,366||852|
|Loss on disposal of assets(b)||35||25||110||58|
|Offering and exchange related expenses(d)||61||83||421||1,217|
(a) Includes non-cash, stock-based compensation.
(b) Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacements or write-off of leasehold improvements or equipment.
(c) Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs and other related pre-opening costs. These are generally incurred over the three to five months prior to opening. Pre-opening costs also include net occupancy costs incurred between the date of possession and opening date of our restaurants.
(d) Beginning in 2016, this category includes costs associated with the exchange of LLC Units into shares of Class A common stock by members of
The following is a reconciliation of GAAP net income and net income per share to adjusted fully distributed pro forma net income and adjusted fully distributed pro forma net income per share:
|13 Weeks Ended||39 Weeks Ended|
|(dollar amounts in thousands)||September 27,
|Offering and exchange related expenses(a)||61||83||421||1,217|
|Income tax expense as reported||869||522||3,038||2,089|
|Fully distributed pro forma net income before income taxes||2,376||2,804||10,795||10,888|
|Income tax expense on fully distributed pro forma
income before income taxes(b)
|Adjusted fully distributed pro forma net income||$||1,364||$||1,651||$||6,261||$||6,225|
|Adjusted fully distributed pro forma net income per share
of Class A common stock:
|Weighted average shares of Class A common stock
outstanding used in computing adjusted fully distributed
pro forma net income(c):
(a) Beginning in 2016, this category includes costs associated with the exchange of LLC Units to Class A common stock by the Continuing LLC Owners pursuant to the LLC Agreement. There were no such exchanges or costs incurred in the comparable 2015 periods.
(b) Reflects income tax expense at an effective rate of 42.0% and 42.8% for the 39 weeks ended
(c) For all periods presented, represents the total number of shares of Class A common stock outstanding including all outstanding LLC Units of The Habit Restaurants, LLC as if they were exchanged on a one-for-one basis for the Company’s Class A common stock (with a corresponding cancellation of shares of our Class B common stock). Diluted earnings per share gives effect during the reporting period to all dilutive potential shares outstanding resulting from employee stock-based awards using the treasury method.
Contacts Investors: (949) 943-8692 HabitIR@habitburger.com Media: (949) 943-8691 Media@habitburger.com