Revenue, Same-Store Sales Down at Sbarro
Sbarro Inc. announces results of operations for the third quarter and nine months ended September 27, 2009.
-- Chain Leader, 11/17/2009 8:34:00 AM
PRESS RELEASE: MELVILLE, N.Y.--(BUSINESS WIRE)--Sbarro, Inc. (the "Company") announced today results of operations for the third quarter and nine months ended September 27, 2009. The Company's detailed results are included in its Quarterly Report on Form 10-Q, which was filed with the SEC on November 12, 2009.
Third Quarter Financial Results
Revenues were $85.5 million for the quarter ended September 27, 2009 as compared to revenues of $91.9 million for the quarter ended September 28, 2008. The decrease in revenues was due to a 5.2% decrease in Company-owned comparable-unit sales and lost sales from stores strategically closed, partially offset by sales generated by new Company-owned stores opened in 2009 and 2008. The decrease in comparable-unit sales primarily reflects continued reduced mall traffic throughout the United States as a result of the current economic environment. Domestic franchise comparable-unit sales declined 7.1% while international franchise comparable-unit sales declined 27.3%, primarily due to the strengthening of the U.S. Dollar relative to virtually all foreign currencies. Without consideration for foreign currency fluctuations, the international franchise comparable-unit sales decline would have been 13%.
EBITDA, as calculated in accordance with the terms of the Company's bank credit agreements, was $10.2 million for the quarter ended September 27, 2009 as compared to $11.6 million for the quarter ended September 28, 2008. The decline was primarily the result of the decline in Company-owned comparable-unit sales and royalties on franchise sales, partially offset by cost savings initiatives and reduced commodity costs during the quarter.
Net loss attributable to Sbarro, Inc. for the quarter ended September 27, 2009 was $24.5 million as compared to a net loss of $1.2 million for the quarter ended September 28, 2008. Included in the third quarter of 2009 net loss was goodwill and other intangible asset impairments of $31.5 million offset by an income tax benefit of $9.8 million. Without consideration for impairment charges and taxes, net loss attributable to Sbarro, Inc. increased approximately $1.5 million. This increase in net loss was primarily the result of increased interest expense, a decrease in comparable unit sales and royalties on franchise sales, partially offset by cost savings initiatives and reduced commodity costs.
As discussed in Exhibit A, EBITDA is a non-GAAP financial measure that management believes is an important metric for us to report to our investors, as we consider it a helpful additional indicator of our ability to meet future debt obligations and to comply with certain covenants in our borrowing agreements which are tied to this metric. Exhibit A includes a reconciliation of EBITDA to net loss, which is the most directly comparable financial measure under United States Generally Accepted Accounting Principles ("GAAP"). Exhibit A also identifies adjustments to EBITDA that are provided for under the Company's bank credit agreements.
Year to Date Financial Results
Revenues were $245.2 million for the nine months ended September 27, 2009 as compared to revenues of $260.5 million for the nine months ended September 28, 2008. The decrease in revenues was primarily due to a 5.0% decrease in Company-owned comparable-unit sales and lost sales from stores strategically closed, offset by revenues generated by new Company-owned stores opened in 2008 and 2009. The decrease in comparable-unit sales primarily reflects the reduced mall traffic throughout the United States as a result of the current economic environment. Domestic franchise comparable-unit sales declined 5.4% while international franchise comparable-unit sales declined 25.9%, primarily due to the strengthening of the U.S. Dollar. Without consideration for foreign currency fluctuations, the international franchise comparable-unit sales decline would have been 9%.
EBITDA, as calculated in accordance with the terms of the Company's bank credit agreements, was $27.7 million for the nine months ended September 27, 2009 as compared to $25.4 million for the nine months ended September 28, 2008. The improvement was primarily the result of cost savings initiatives and reduced commodity costs, partially offset by the decline in Company-owned comparable-unit sales and royalties on franchise sales during the first three quarters of 2009.
Net loss attributable to Sbarro, Inc. was $36.7 million for the first nine months of 2009 as compared to a net loss of $8.9 million for the first nine months of 2008. Included in the first nine months of 2009 net loss was goodwill and other intangible asset impairments of $31.5 million offset by an income tax benefit of $9.5 million. Without consideration for impairment charges and taxes, the net loss attributable to Sbarro, Inc. increased approximately $900 thousand. This increase in net loss was primarily the result of a decrease in comparable unit sales and royalties on franchise sales, partially offset by cost savings initiatives and reduced commodity costs.
The Company was in compliance with all covenants as calculated in accordance with the terms of the Company's bank credit agreements for the nine months ended September 27, 2009.
Peter Beaudrault, Chairman of the Board, President and CEO of Sbarro, commented, "Our results for the first nine months of 2009 continue to be impacted by the current economic environment and the strengthening of the U.S. Dollar; however, as a result of aggressive cost controls and lower commodity costs, we were able to produce higher year over year EBITDA for 2009 in line with expectations as set forth in our amended credit agreement."
Conference Call Scheduled
Sbarro, Inc. will host a conference call on November 19, 2009 at 10 A.M. Eastern Standard Time to discuss results of operations for the quarter ended September 27, 2009. There are two ways to participate in the conference call-via conference call or webcast. Domestic callers may dial in at 1-888-846-5003. International callers may dial in at 1-480-629-9856. Request to be connected to the Sbarro, Inc. Third Quarter 2009 Earnings Conference Call, confirmation number 4183986. Callers should dial in five to ten minutes before the scheduled start time. You may also access the conference call via webcast by visiting Sbarro Inc.'s website (http://www.sbarro.com), selecting Investors, and going to Investor Presentations.
An archived copy of the call will be available for a week to replay beginning at 1:00 PM (EST) on November 19, 2009. Domestic callers may dial 1-800-406-7325 and International callers may dial 1-303-590-3030. The replay PIN number is 4183986. An archived copy of the call will also be available by accessing Sbarro, Inc.'s homepage.
About the Company
Based in Melville, New York, we are the world's leading Italian quick service restaurant concept and the largest shopping mall-focused restaurant concept in the world. We have 1,056 restaurants in 42 countries. Sbarro restaurants feature a menu of popular Italian food, including pizza, a selection of pasta dishes and other hot and cold Italian entrees, salads, sandwiches, drinks and desserts. Additional information is available at http://www.sbarro.com/.
Forward-Looking Statement Disclosure
This press release contains "forward-looking statements," as such term is used in the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements about non-historical matters and often are identified by the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "should," "will," "would" and similar expressions. These forward-looking statements include statements about anticipated future store openings and growth and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, achievements or transactions of Sbarro and its affiliates to be materially different from any future results, performance, achievements or transactions expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include: (1) general economic, inflation, national security, weather and business conditions; (2) decrease in mall traffic, and other events arising from the downturn in the economy; (3) the availability of suitable restaurant sites in appropriate regional shopping malls and other locations on reasonable rental terms; (4) changes in consumer tastes; (5) changes in population and traffic patterns, including the effects that military action and terrorism or other events may have on the willingness of consumers to frequent malls, airports or downtown areas which are the predominant areas in which our restaurants are located; (6) our ability to continue to attract franchisees; (7) the success of our present, and any future, joint ventures and other expansion opportunities; (8) changes in commodity and commodity related prices (particularly cheese and flour), beverage and paper products; (9) our ability to pass along cost increases to our customers; (10) increases in the Federal minimum wage; (11) the continuity of services of members of our senior management team; (12) our ability to attract and retain competent restaurant and executive managerial personnel; (13) competition; (14) the level of, and our ability to comply with, government regulations; (15) our ability to generate sufficient cash flow to make interest payments under our borrowing agreements; (16) our ability to comply with financial covenants and ratios and the effects the restrictions imposed by those financial covenants and ratios may have on our ability to operate our business; (17) our ability to repurchase and/or repay amounts under our borrowing agreements to the extent required in the event of certain circumstances as defined in our borrowing agreements; and (18) other factors discussed in our filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
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