| |
| |
One moment, please... we are searching the news archive.
|
|
|
Hotel Industry News |
Tuesday December 2nd, 2008 |
 |
AFC Reports Financial Performance For Third Quarter 2006 |
|
AFC Enterprises, Inc. (NASDAQ:AFCE) , the franchisor and operator of Popeyes(R) Chicken & Biscuits, reported results for its fiscal third quarter which ended October 1, 2006. |
Click here for financial tables
Third quarter 2006 highlights included:
• Net income was $5.9 million, or $0.20 per diluted share, compared to $0.00 per diluted share for the third quarter of 2005. This improvement in net income was primarily driven by a net decrease in general and administrative and other expenses and an increase in franchise revenues.
• Total system-wide sales increased by 4.6 percent. This increase was primarily driven by sales from new franchised restaurants. The Company's year-to-date system-wide sales were up 5.5 percent compared to the same period in 2005.
• Popeyes total domestic same-store sales increased 0.2 percent for the third quarter and 3.1 percent year-to-date.
• Popeyes opened 26 restaurants, increasing year-to-date new openings to 92 restaurants, 15 percent higher than the same period in 2005.
• The Company repurchased 184,800 shares of common stock for $2.8 million and reduced the term loan of the Company's 2005 Credit Facility by $20.3 million. Year-to-date, the Company has repurchased approximately 1.5 million shares of common stock for approximately $20.4 million and reduced the term loan by $53.6 million to $135.9 million.
AFC Chief Executive Officer Kenneth Keymer stated, "Solid income from operations, reduction in general and administrative expenses, and a strong pace of restaurant development all contributed to a very satisfactory quarter. During the quarter, we saw gains in system-wide sales, operating profit and earnings driven by the acceleration of new restaurant openings, strong performance in re-opened company restaurants in New Orleans, and significant reductions in general and administrative expenses compared to prior year. Third quarter total domestic same-store sales softened due to the lingering effects of high gasoline prices in July and August, and the impact of rolling over strong comparable store sales in markets affected by Hurricane Katrina during the same period of 2005. Although there will continue to be a hurricane effect going forward, we were pleased to see some strengthening in our domestic same-store sales as we entered the fourth quarter, with the introduction of our national cable advertising featuring Buffalo Nuggets at $2.99. Based on our performance year-to-date, we remain confident in meeting our previously issued operational guidance."
Hurricane Effects on Performance
During the third quarter of 2005, the Company's operations in the Gulf Coast region were heavily impacted by the effects of Hurricane Katrina. Initially, the Company and its franchisees closed approximately 100 restaurants for periods ranging from a few days to many months.
However, the most significant impact to the Company's total domestic same- store sales performance was the movement of residents away from areas that suffered long-term damage into surrounding areas in Louisiana, Texas, and Mississippi, an area that contains approximately 16 markets and 330 restaurants, and comprising more than 20 percent of Popeyes' total domestic system. Due to this significant shift of traditional customers, the relocation markets mentioned above demonstrated strong same-store sales growth throughout the balance of 2005 and into 2006. Additionally, restaurants re- opening in the hurricane-impacted markets have demonstrated high levels of comparable sales performance, which make same-store sales comparisons in future quarters more challenging.
Based on the above, same-store sales in the relocation markets are projected to negatively impact total domestic same-store sales by 2-3 percentage points in the fourth quarter of 2006. This effect is projected to continue into the first quarter of 2007, negatively impacting total domestic same-store sales for that quarter by 1-2 percentage points. This effect will diminish in relocation markets as 2007 unfolds. Similarly, the Company anticipates the negative impact on company-operated same-store sales will be approximately 6-8 percentage points during the fourth quarter of 2006 and the first quarter of 2007.
Third Quarter Performance Review compared to Third Quarter Last Year
Total system-wide sales increased by 4.6 percent. This growth included a 3.5 percent increase, to $377.5 million, in global franchisee sales.
Total domestic same-store sales increased 0.2 percent. Same-store sales for the quarter were impacted by a decrease of 2.1 percent in period 10, which was primarily a result of the hurricane effect described above. Adjusting for the hurricane effect by excluding the hurricane relocation markets, same-store sales for period 10 would have been slightly positive 0.3 percent and for the third quarter would have been positive 1.0 percent. Year-to-date total domestic same-store sales for the Company increased 3.1 percent.
Total revenues were $36.0 million, a $4.8 million increase. This increase was comprised of approximately $3.8 million from the 13 franchised restaurants the Company acquired in the Memphis and Nashville, Tennessee markets in the second quarter of 2006 and a $0.9 million increase in franchise revenues, primarily driven by sales from new franchised restaurants.
General and administrative expenses were $9.6 million, a $4.5 million decrease. The decrease was principally associated with the reduction in costs associated with the transition of the AFC corporate center. General and administrative expenses for the third quarter of 2006 included $0.8 million for stock option expenses and restricted stock awards to existing employees, $0.7 million for spice royalty expense, and $0.6 million for rental expense.
Operating profit was $11.9 million, compared to an operating profit of $4.3 million last year. This improvement was primarily due to a decrease in general and administrative expenses and other expenses totaling $5.9 million. The Company also benefited from a $0.9 million increase in franchise revenue and the remaining $0.8 million increase was primarily related to improvements in company operations.
Net income was $5.9 million, or $0.20 per diluted share, a $5.8 million increase. This increase was due primarily to the factors mentioned above.
The term loan component of the Company's 2005 Credit Facility was reduced by $20.3 million to $135.9 million, and the Company repurchased 184,800 shares of its common stock for approximately $2.8 million. As of October 27, 2006, there were approximately 29.3 million shares of the Company's common stock outstanding.
The Company has approximately $47 million remaining under its current stock repurchase program authorization. As previously stated, this expanded multi-year program is subject to limitations contained in the Company's credit facility. Although there can be no assurance as to the number of shares the Company will repurchase, under those limitations, the Company would have the ability to repurchase up to approximately $7.5 million of additional shares during the remainder of fiscal year 2006.
During the quarter, Popeyes opened 26 restaurants, compared to 29 openings last year. New openings for the third quarter included 22 restaurants domestically and 4 restaurants internationally. Year-to-date, Popeyes has opened 92 restaurants compared to 80 openings during the same period in 2005. Popeyes had 23 restaurant closures in the third quarter, consisting of 7 units domestically and 16 units internationally (of which 12 were in Korea).
On a system-wide basis, Popeyes had 1,845 units operating at the end of the third quarter of 2006. Total unit count was comprised of 1,522 domestic units and 323 units in two territories and 24 foreign countries. This total unit count included 1,794 franchised and 51 company-operated restaurants.
As of November 1, 2006, the Company had 17 company-operated restaurants open and operating in New Orleans. The Company continues to expect a total of approximately 20 company-operated restaurants to be open and operating in New Orleans by year end 2006.
2006 Full Year Guidance
The Company anticipates new openings to be approximately 140 restaurants, with domestic openings comprising more than 60 percent of the total, and estimates full year 2006 restaurant closures to be approximately 90 restaurants. Same-stores sales are expected to be at the lower end of the range of 2.0-3.0 percent. As previously projected, total general and administrative expenses for the full year are expected to be at the upper end of the range of $46-$48 million.
Mr. Keymer concluded, "We are encouraged by the continued acceptance of our new menu offerings, and believe that our upcoming promotions in November and December, featuring our Cajun Fried Crawfish, Crawfish Etouffee and our new Cajun Burrito will strengthen our restaurant sales. Momentum from these programs and a strong development pipeline will position the Company effectively to compete in 2007."
|
|
|
 |
|
 |
|
|
| Last: |
3.34 |
| Time: |
12/1/2008
4:00pm |
| Change: |
0.00 |
| Opened: |
N/A |
| Day: |
N/A - N/A |
| Volume: | 0
|
|
|
|
Post Release
Get Content
Email News Brief
Saved Articles
Advertising
Handheld
XML/RSS
Post News