Form 8-K Bojangles', Inc. For: Nov 03
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): November 3, 2016
BOJANGLES’, INC.
(Exact Name of Issuer as Specified in Charter)
| Delaware | 001-37374 | 45-2988924 | ||
| State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
9432 Southern Pine Boulevard,
Charlotte, NC 28273
(Address of Principal Executive Offices)
(704) 527-2675
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
| Item 2.02. | Results of Operations and Financial Condition. |
On November 3, 2016, Bojangles’, Inc. issued a press release announcing its financial results for the fiscal third quarter ended September 25, 2016. A copy of the press release is filed as Exhibit 99.1 hereto, and is incorporated herein by reference.
| Item 7.01 | Regulation FD Disclosure. |
The disclosure under Item 2.02 of this Current Report on Form 8-K is incorporated herein by reference.
The information under Items 2.02 and 7.01 and in Exhibit 99.1 in this Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
99.1 Press Release of Bojangles’, Inc. dated November 3, 2016.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Bojangles’, Inc. | ||||||
| November 3, 2016 | By: | /s/ M. John Jordan | ||||
| M. John Jordan | ||||||
| Senior Vice President of Finance, Chief Financial Officer and Treasurer | ||||||
3
EXHBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release of Bojangles’, Inc. dated November 3, 2016. | |
4
Exhibit 99.1
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 1 of 11
For Investor Relations Inquiries:
Raphael Gross of ICR
203.682.8253
For Media Inquiries:
Brian Little of Bojangles’ Restaurants, Inc.
704.519.2118
Bojangles’, Inc. Reports Financial Results for its Third Fiscal Quarter 2016
Updates Annual Guidance for its Fiscal Year 2016
CHARLOTTE, N.C. — (Globe Newswire) — November 3, 2016 — Bojangles’, Inc. (Bojangles’) (NASDAQ: BOJA) today announced financial results for the 13-week third fiscal quarter ended September 25, 2016. Bojangles’ also updated its annual guidance for its fiscal year 2016, which is a 52-week period ending on December 25, 2016.
Financial Highlights for Third Fiscal Quarter 2016
| ◾ | System-wide comparable restaurant sales increased 0.8% while company-operated comparable restaurant sales decreased 0.2% and franchised comparable restaurant sales increased 1.4%; |
| ◾ | Total revenues increased 7.2% to $133.2 million from $124.3 million; |
| ◾ | 10 system-wide restaurants were opened – 6 company-operated restaurants and 4 franchised restaurants; |
| ◾ | Net Income increased 12.4% to $10.0 million from $8.9 million; |
| ◾ | Diluted Net Income per Share increased 12.5% to $0.27 from $0.24; |
| ◾ | Adjusted Net Income* increased 9.0% to $9.3 million from $8.5 million; |
| ◾ | Adjusted Diluted Net Income per Share* increased 8.7% to $0.25 from $0.23; and |
| ◾ | Adjusted EBITDA* increased 8.4% to $22.2 million from $20.5 million. |
* Descriptions of Adjusted Net Income, Adjusted Diluted Net Income per Share, Adjusted EBITDA and other non-GAAP financial measures are provided in “Use and Definition of Non-GAAP Measures,” and reconciliations to GAAP figures are provided in the tables at the end of this release.
“We were pleased with our overall performance amid a challenging quarter for the industry as our total revenues rose 7.2% while Adjusted EBITDA and Adjusted Net Income expanded at slightly higher rates of 8.4% and 9.0%, respectively. The Bojangles’® system has now generated 26 consecutive quarters of positive comparable restaurant sales including a 0.8% increase during the third fiscal quarter, 4.8% growth on a two-year stacked basis and 10.1% growth on a three-year stacked basis,” said Bojangles’ President and CEO Clifton Rutledge.
“We have completed the research phase of our ‘Bojangles’ of the Future’ project and have begun the testing phase having already broken ground on our first location in Greenville, South Carolina. This new prototype will set the direction and standard for Bojangles’ restaurant design and remodels well into the future, ensuring that our ambiance complements our freshly-made, high quality food and restaurant hospitality. Creating the best experience possible at all Bojangles’ restaurants will also be accomplished through greater use of technology such as implementing mobile payment, large online ordering, and a loyalty program that can be leveraged across our system. We are making the necessary investments now to build these capabilities and expect to launch these initiatives over the next 18-24 months,” he added.
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 2 of 11
“We are excited to be creating more Bo Fanatics and loyal customers across the southeast who appreciate our unique southern-inspired menu items and exceptional value. Our Bojangles’ system net unit count is poised to expand by approximately 8% during this fiscal year, making us among the fastest growing brands in the limited service restaurant category. Through balanced development between company-operated and franchised restaurants, we are adding to our presence in core North and South Carolina markets as well as in adjacent states,” he concluded.
Third Fiscal Quarter 2016 Financial Review
System-wide comparable restaurant sales increased 0.8%, consisting of a 0.2% decrease in company-operated comparable restaurant sales and a 1.4% increase in franchised comparable restaurant sales. The comparable restaurant sales decline at company-operated restaurants was composed of a decrease in transactions, partially offset by increases in price.
Total revenues increased 7.2% to $133.2 million in the third fiscal quarter of 2016 from $124.3 million in the prior year fiscal quarter. The increase was primarily due to a net additional 42 system-wide restaurants at September 25, 2016 compared to September 27, 2015.
Company restaurant revenues increased 7.5% to $126.4 million in the third fiscal quarter of 2016 from $117.5 million in the prior year fiscal quarter. Franchise royalty revenues increased 4.7% to $6.7 million in the third fiscal quarter of 2016 from $6.4 million in the prior year fiscal quarter.
Restaurant contribution, a non-GAAP measure, increased 6.1% to $23.3 million in the third fiscal quarter of 2016 from $21.9 million in the prior year fiscal quarter. As a percentage of company restaurant revenues, restaurant contribution margin, a non-GAAP measure, decreased to 18.4% in the third fiscal quarter of 2016 from 18.7% in the prior year fiscal quarter.
General and administrative expenses decreased 7.8% to $9.3 million in the third fiscal quarter of 2016 from $10.1 million in the prior year fiscal quarter. The decline was primarily due to lower incentive compensation and lower executive separation expenses, partially offset by headcount added to support our growing restaurant system.
Net Income increased 12.4% to $10.0 million in the third fiscal quarter of 2016 compared to $8.9 million in the prior year fiscal quarter. Diluted Net Income per Share increased 12.5% to $0.27 in the third fiscal quarter of 2016 compared to $0.24 in the prior year fiscal quarter.
Adjusted EBITDA, a non-GAAP measure, increased 8.4% to $22.2 million in the third fiscal quarter of 2016 from $20.5 million in the prior year fiscal quarter.
Adjusted Net Income, a non-GAAP measure, increased 9.0% to $9.3 million in the third fiscal quarter of 2016 compared to $8.5 million in the prior year fiscal quarter. Adjusted Diluted Net Income per Share increased 8.7% to $0.25 in the third fiscal quarter of 2016 compared to $0.23 in the prior year fiscal quarter.
Fiscal Year 2016 Guidance
Bojangles’ has updated its annual outlook for the 52-week period ending on December 25, 2016:
| ◾ | Total revenues of $530.5 million to $533.5 million (previously $530.0 million to $533.0 million); |
| ◾ | System-wide comparable restaurant sales growth of flat to low-single digits (unchanged); |
| ◾ | The opening of 56 to 59 system-wide restaurants (previously 60 to 65); |
| ○ | 28 to 29 company-operated restaurants (unchanged); |
| ○ | 28 to 30 franchised restaurants (previously 32 to 36); |
| ◾ | Net increase of 50 to 53 system-wide restaurants (previously 53 to 58); |
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 3 of 11
| ○ | Net increase of 26 to 27 company-operated restaurants (unchanged); |
| ○ | Net increase of 24 to 26 franchised restaurants (previously 27 to 31); |
| • | Restaurant contribution margin of 18.0% to 18.2% (previously 17.7% to 18.1%) |
| • | General and administrative expenses of $38.5 million to $39.5 million (previously $39.0 million to $39.5 million); |
| • | Adjusted Diluted Net Income per Share of $0.92 to $0.95 (previously $0.88 to $0.92); and |
| • | Adjusted EBITDA of $84.5 million to $86.5 million (previously $83.5 million to $85.5 million). |
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.
Conference Call and Webcast Today
Bojangles’ will host a conference call and webcast to discuss the third fiscal quarter 2016 results and fiscal year 2016 guidance today at 5:00 p.m. Eastern Daylight Time. The conference call dial-in number is 1-201-493-6725. A telephone replay will be available through Saturday, December 3, 2016 and may be accessed by dialing 1-858-384-5517. The conference ID is 13645534.
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. Founded in 1977 in Charlotte, N.C., Bojangles’ serves menu items such as delicious, famous chicken, made-from-scratch buttermilk biscuits, flavorful fixin’s and Legendary Iced Tea®. At September 25, 2016, Bojangles’ had 699 system-wide restaurants, of which 301 were company-operated and 398 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 some 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.
Comparable restaurant sales reflects the change in year-over-year sales for the comparable restaurant base (as applicable, system-wide, franchised or company-operated restaurants). A restaurant enters our comparable restaurant base the first full day of the month after being open for 15 months using a mid-month convention.
Restaurant contribution is defined as company restaurant revenues less food and supplies costs, restaurant labor costs and operating costs, as identified by the reconciliation table below. Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant revenues. Restaurant contribution and 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. Restaurant contribution and 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.
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 4 of 11
Adjusted Net Income represents company net income before items that we do not consider representative of our ongoing operating performance, as well as an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, both 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 well as an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, both 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. 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.
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 5 of 11
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 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 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 and restaurant designs and remodels; cancellation 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; changes in employment and labor laws; labor shortages and increases in labor costs; 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 27, 2015 filed with the Securities and Exchange Commission on March 11, 2016, as updated by our Quarterly Report on Form 10-Q for the fiscal quarter ended September 25, 2016 to be filed with the Securities and Exchange Commission. Each of the documents referred to in the preceding sentence are 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 obligations 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. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 6 of 11
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
| Assets | September 25, 2016 |
December 27, 2015 |
||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 19,479 | 14,263 | |||||
| Accounts and vendor receivables, net |
3,889 | 4,736 | ||||||
| Accounts receivable, related parties, net |
428 | 403 | ||||||
| Inventories, net |
3,080 | 3,080 | ||||||
| Other current assets |
3,504 | 5,639 | ||||||
|
|
|
|
|
|||||
| Total current assets |
30,380 | 28,121 | ||||||
| Property and equipment, net |
51,907 | 48,137 | ||||||
| Goodwill |
161,140 | 161,140 | ||||||
| Brand |
290,500 | 290,500 | ||||||
| Franchise rights, net |
24,518 | 25,341 | ||||||
| Favorable leases, net |
1,073 | 1,394 | ||||||
| Other noncurrent assets |
3,734 | 3,673 | ||||||
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|
|
|
|
|||||
| Total assets |
$ | 563,252 | 558,306 | |||||
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|
|
|
|||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 14,058 | 17,893 | |||||
| Accrued expenses |
23,850 | 19,086 | ||||||
| Current maturities of long-term debt |
— | — | ||||||
| Current maturities of capital lease obligations |
6,568 | 5,968 | ||||||
| Other current liabilities |
5,795 | 2,155 | ||||||
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|
|
|
|||||
| Total current liabilities |
50,271 | 45,102 | ||||||
| Long-term debt, less current maturities and deferred debt issuance costs, net |
168,566 | 197,735 | ||||||
| Deferred income taxes |
110,818 | 115,028 | ||||||
| Capital lease obligations, less current maturities |
21,906 | 21,483 | ||||||
| Other noncurrent liabilities |
13,571 | 11,834 | ||||||
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|
|
|||||
| Total liabilities |
365,132 | 391,182 | ||||||
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|||||
| Stockholders’ equity: |
||||||||
| Preferred stock |
— | — | ||||||
| Common stock |
364 | 360 | ||||||
| Additional paid-in capital |
122,660 | 119,084 | ||||||
| Retained earnings |
75,555 | 47,661 | ||||||
| Accumulated other comprehensive (loss) income |
(459 | ) | 19 | |||||
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|
|||||
| Total stockholders’ equity |
198,120 | 167,124 | ||||||
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|||||
| Total liabilities and stockholders’ equity |
$ | 563,252 | 558,306 | |||||
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Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 7 of 11
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| September 25, 2016 |
September 27, 2015 |
September 25, 2016 |
September 27, 2015 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Company restaurant revenues |
$ | 126,358 | 117,536 | 372,446 | 339,914 | |||||||||||
| Franchise royalty revenues |
6,739 | 6,436 | 19,532 | 18,740 | ||||||||||||
| Other franchise revenues |
100 | 287 | 470 | 768 | ||||||||||||
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|||||||||
| Total revenues |
133,197 | 124,259 | 392,448 | 359,422 | ||||||||||||
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| Company restaurant operating expenses: |
||||||||||||||||
| Food and supplies costs |
39,331 | 37,223 | 116,872 | 110,508 | ||||||||||||
| Restaurant labor costs |
35,115 | 32,429 | 102,976 | 94,075 | ||||||||||||
| Operating costs |
28,625 | 25,936 | 83,645 | 74,120 | ||||||||||||
| Depreciation and amortization |
3,225 | 2,990 | 9,432 | 8,378 | ||||||||||||
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|||||||||
| Total Company restaurant operating expenses |
106,296 | 98,578 | 312,925 | 287,081 | ||||||||||||
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|||||||||
| Operating income before other operating expenses |
26,901 | 25,681 | 79,523 | 72,341 | ||||||||||||
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|||||||||
| Other operating expenses: |
||||||||||||||||
| General and administrative |
9,276 | 10,064 | 28,189 | 32,694 | ||||||||||||
| Depreciation and amortization |
745 | 725 | 2,178 | 2,075 | ||||||||||||
| Impairment |
592 | 193 | 981 | 208 | ||||||||||||
| Loss (gain) on disposal of property and equipment |
138 | 220 | (51 | ) | 232 | |||||||||||
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|||||||||
| Total other operating expenses |
10,751 | 11,202 | 31,297 | 35,209 | ||||||||||||
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|
|||||||||
| Operating income |
16,150 | 14,479 | 48,226 | 37,132 | ||||||||||||
| Amortization of deferred debt issuance costs |
(199 | ) | (208 | ) | (567 | ) | (622 | ) | ||||||||
| Interest income |
— | — | 4 | 6 | ||||||||||||
| Interest expense |
(1,819 | ) | (2,001 | ) | (5,782 | ) | (6,394 | ) | ||||||||
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|
|
|||||||||
| Income before income taxes |
14,132 | 12,270 | 41,881 | 30,122 | ||||||||||||
| Income taxes |
4,113 | 3,360 | 13,987 | 11,440 | ||||||||||||
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|||||||||
| Net income |
$ | 10,019 | 8,910 | 27,894 | 18,682 | |||||||||||
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| Net income per share: |
||||||||||||||||
| Basic |
$ | 0.28 | 0.25 | 0.77 | 0.99 | |||||||||||
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| Diluted |
$ | 0.27 | 0.24 | 0.74 | 0.50 | |||||||||||
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|||||||||
| Weighted average shares used in computing net income per share: |
||||||||||||||||
| Basic |
36,355 | 35,951 | 36,195 | 18,830 | ||||||||||||
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|||||||||
| Diluted |
37,650 | 37,526 | 37,561 | 37,471 | ||||||||||||
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Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 8 of 11
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
| Thirty-Nine Weeks Ended | ||||||||
| September 25, 2016 |
September 27, 2015 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 27,894 | 18,682 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Deferred income tax benefit |
(2,244 | ) | (3,356 | ) | ||||
| Depreciation and amortization |
11,610 | 10,453 | ||||||
| Amortization of deferred debt issuance costs |
567 | 622 | ||||||
| Impairment |
981 | 208 | ||||||
| (Gain) loss on disposal of property and equipment |
(51 | ) | 232 | |||||
| (Benefit) provision for doubtful accounts |
(65 | ) | 53 | |||||
| Provision for inventory spoilage |
7 | 9 | ||||||
| Benefit for closed stores |
(51 | ) | (50 | ) | ||||
| Stock-based compensation |
953 | 1,711 | ||||||
| Excess tax benefit from stock-based compensation |
(1,770 | ) | (421 | ) | ||||
| Changes in operating assets and liabilities |
4,950 | 4,945 | ||||||
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|||||
| Net cash provided by operating activities |
42,781 | 33,088 | ||||||
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| Cash flows from investing activities: |
||||||||
| Purchases of franchisee’s assets |
(100 | ) | (186 | ) | ||||
| Purchases of property and equipment |
(5,950 | ) | (8,591 | ) | ||||
| Proceeds from disposition of property and equipment |
49 | 36 | ||||||
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| Net cash used in investing activities |
(6,001 | ) | (8,741 | ) | ||||
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| Cash flows from financing activities: |
||||||||
| Principal payments on long-term debt |
(29,736 | ) | (19,055 | ) | ||||
| Debt issuance costs |
— | (555 | ) | |||||
| Stock option exercises |
857 | 96 | ||||||
| Excess tax benefit from stock-based compensation |
1,770 | 421 | ||||||
| Principal payments on capital lease obligations |
(4,455 | ) | (3,405 | ) | ||||
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|||||
| Net cash used in financing activities |
(31,564 | ) | (22,498 | ) | ||||
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|||||
| Net increase in cash and cash equivalents |
5,216 | 1,849 | ||||||
| Cash and cash equivalents balance, beginning of fiscal period |
14,263 | 13,201 | ||||||
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| Cash and cash equivalents balance, end of fiscal period |
$ | 19,479 | 15,050 | |||||
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Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 9 of 11
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| September 25, 2016 |
September 27, 2015 |
September 25, 2016 |
September 27, 2015 |
|||||||||||||
| Net income |
$ | 10,019 | 8,910 | 27,894 | 18,682 | |||||||||||
| Income taxes |
4,113 | 3,360 | 13,987 | 11,440 | ||||||||||||
| Interest expense, net |
1,819 | 2,001 | 5,778 | 6,388 | ||||||||||||
| Depreciation and amortization (a) |
4,169 | 3,923 | 12,177 | 11,075 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EBITDA |
20,120 | 18,194 | 59,836 | 47,585 | ||||||||||||
| Non-cash rent (b) |
414 | 389 | 1,185 | 1,168 | ||||||||||||
| Stock-based compensation (c) |
404 | 309 | 953 | 1,711 | ||||||||||||
| Payroll taxes associated with stock option exercises (d) |
8 | — | 79 | 17 | ||||||||||||
| Preopening expenses (e) |
346 | 326 | 942 | 1,064 | ||||||||||||
| Sponsor and board member fees and expenses (f) |
— | — | — | 166 | ||||||||||||
| Certain professional, transaction and other costs (g) |
24 | 160 | 66 | 5,041 | ||||||||||||
| Distributor transition costs (h) |
— | 217 | 81 | 217 | ||||||||||||
| Executive separation expenses (i) |
197 | 507 | 197 | 507 | ||||||||||||
| Impairment and dispositions (j) |
730 | 421 | 979 | 476 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted EBITDA |
$ | 22,243 | 20,523 | 64,318 | 57,952 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Includes amortization of deferred debt issuance costs. |
| (b) | Includes deferred rent, which represents the extent to which our rent expense has been above or below our cash rent payments, amortization of favorable (unfavorable) leases and closed store reserves for rent net of cash payments. We expect to continue to incur similar expenses in future periods as we record rent expense in accordance with GAAP, as well as continue to amortize favorable (unfavorable) leases and record closed store reserves. |
| (c) | 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. |
| (d) | 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 our directors or employees exercise stock options that were outstanding prior to our initial public offering. |
| (e) | 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. |
| (f) | Includes reimbursement of expenses to our sponsor prior to our initial public offering and compensation and expense reimbursement to members of our board prior to our initial public offering. |
| (g) | Includes costs associated with third-party consultants for one-time projects, public offering expenses and certain professional fees and transaction costs related to financing transactions. We could incur similar expenses in future periods if we commence additional public offerings, financing transactions or other one-time projects. |
| (h) | Includes expenses incurred in connection with the transition to our new distributor. |
| (i) | Represents severance and legal fees associated with a former executive’s departure from the Company. Subsequent to September 25, 2016, we finalized the separation agreement with this former executive and incurred approximately $0.1 million of additional legal fees and other related expenses during the thirteen weeks ending December 25, 2016. |
| (j) | Includes loss (gain) on disposal of property and equipment, 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 expect to incur future losses (gains) and to receive cash proceeds on disposal of property and equipment associated with retirement, replacement or write-off of fixed assets. |
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 10 of 11
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to Adjusted Net Income
(in thousands)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| September 25, 2016 |
September 27, 2015 |
September 25, 2016 |
September 27, 2015 |
|||||||||||||
| Net income |
$ | 10,019 | 8,910 | 27,894 | 18,682 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Certain professional and transaction costs (a) |
24 | 160 | 66 | 5,041 | ||||||||||||
| Incremental public company costs (b) |
— | (104 | ) | — | (898 | ) | ||||||||||
| Vesting of performance-based stock options (c) |
— | — | — | 707 | ||||||||||||
| Payroll taxes associated with stock option exercises (d) |
8 | — | 79 | 17 | ||||||||||||
| Distributor transition costs (e) |
— | 217 | 81 | 217 | ||||||||||||
| Executive separation expenses (f) |
197 | 507 | 197 | 507 | ||||||||||||
| State income tax rate change (g) |
(908 | ) | (903 | ) | (908 | ) | (903 | ) | ||||||||
| Tax impact of adjustments (h) |
(82 | ) | (296 | ) | (156 | ) | (469 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total adjustments |
(761 | ) | (419 | ) | (641 | ) | 4,219 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Net Income |
$ | 9,258 | 8,491 | 27,253 | 22,901 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Diluted Net Income Per Share to Adjusted Diluted Net Income Per Share
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| September 25, 2016 |
September 27, 2015 |
September 25, 2016 |
September 27, 2015 |
|||||||||||||
| Diluted net income per share |
$ | 0.27 | 0.24 | 0.74 | 0.50 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Certain professional and transaction costs (a) |
— | — | — | 0.13 | ||||||||||||
| Incremental public company costs (b) |
— | — | — | (0.02 | ) | |||||||||||
| Vesting of performance-based stock options (c) |
— | — | — | 0.02 | ||||||||||||
| Payroll taxes associated with stock option exercises (d) |
— | — | — | — | ||||||||||||
| Distributor transition costs (e) |
— | 0.01 | — | 0.01 | ||||||||||||
| Executive separation expenses (f) |
— | 0.01 | 0.01 | 0.01 | ||||||||||||
| State income tax rate change (g) |
(0.02 | ) | (0.02 | ) | (0.02 | ) | (0.02 | ) | ||||||||
| Tax impact of adjustments (h) |
— | (0.01 | ) | — | (0.02 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total adjustments |
(0.02 | ) | (0.01 | ) | (0.01 | ) | 0.11 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Adjusted Diluted Net Income per Share |
$ | 0.25 | 0.23 | 0.73 | 0.61 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (a) | Includes costs associated with third-party consultants for one-time projects, public offering expenses and certain professional fees and transaction costs related to financing transactions. We could incur similar expenses in future periods if we commence additional public offerings, financing transactions or other one-time projects. |
| (b) | Reflects an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company in addition to actual amounts incurred. By its nature, this adjustment involves risks and uncertainties, and the actual costs incurred could be different than this adjustment. No adjustments will be made beyond the second fiscal quarter 2016 since the one year anniversary of our initial public offering occurred during the thirteen weeks ended June 26, 2016. |
| (c) | Includes non-cash, stock-based compensation related to the vesting of certain performance based stock option awards. We could incur similar expenses in future periods upon the achievement of the performance metrics indicated in the stock option grants. |
| (d) | 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 our directors or employees exercise stock options that were outstanding prior to our initial public offering. |
| (e) | Includes expenses incurred in connection with the transition to our new distributor. |
| (f) | Represents severance and legal fees associated with a former executive’s departure from the Company. Subsequent to September 25, 2016, we finalized the separation agreement with this former executive and incurred approximately $0.1 million of additional legal fees and other related expenses during the thirteen weeks ending December 25, 2016. |
| (g) | As a result of the enacted reductions to the North Carolina corporate income tax rate, we adjusted our deferred income taxes by applying the lower rate, which resulted in a corresponding decrease to income tax expense. |
| (h) | Represents the income tax expense associated with the adjustments in (a) through (g) that are deductible for income tax purposes. |
Bojangles’, Inc. – Fiscal Year 2016
Third Fiscal Quarter Results
Page 11 of 11
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Company Restaurant Revenues to Restaurant Contribution
(in thousands)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||
| September 25, 2016 |
September 27, 2015 |
September 25, 2016 |
September 27, 2015 |
|||||||||||||
| Company restaurant revenues |
$ | 126,358 | 117,536 | 372,446 | 339,914 | |||||||||||
| Food and supplies costs |
(39,331 | ) | (37,223 | ) | (116,872 | ) | (110,508 | ) | ||||||||
| Restaurant labor costs |
(35,115 | ) | (32,429 | ) | (102,976 | ) | (94,075 | ) | ||||||||
| Operating costs |
(28,625 | ) | (25,936 | ) | (83,645 | ) | (74,120 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Restaurant contribution |
$ | 23,287 | 21,948 | 68,953 | 61,211 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Restaurant contribution margin |
18.4 | % | 18.7 | % | 18.5 | % | 18.0 | % | ||||||||
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