Revenue, Same-Store Sales Down at Perkins, Marie Callender's
Perkins & Marie Callender's Inc. reports results for the quarter ended April 19, 2009.
-- Chain Leader, 6/4/2009 5:29:00 PM
PRESS RELEASE: MEMPHIS, Tenn., June 4 /PRNewswire/ -- Perkins & Marie Callender's Inc. (together with its consolidated subsidiaries, the "Company" or "we") is reporting today the financial results for its quarter ended April 19, 2009.
Highlights for the first quarter of 2009 as compared to the first quarter of 2008 were:
* Restaurant segment income increased by $0.9 million, or 10.8%, due to lower commodity costs, menu price increases and operational efficiencies. Foxtail segment income increased by $0.2 million due to higher sales prices and lower commodity costs. Overall, adjusted EBITDA, as defined below, increased by $1.0 million.
* Total revenues were down 7.2% to $169.3 million in the first quarter of 2009, primarily due to decreases in comparable sales at Perkins and Marie Callender's restaurants, resulting from decreased comparable guest counts due to unfavorable economic conditions. Comparable sales for the first quarter of 2009 decreased by 4.9% at Perkins Company-operated restaurants and 6.9% at Marie Callender's Company-operated restaurants.
* Since the first quarter of 2008, the Company has opened one new Perkins restaurant and closed one Perkins restaurant. One Company-operated Marie Callender's restaurant has closed since the first quarter of 2008. One Perkins franchised restaurant opened since the first quarter of 2008, and four Perkins franchised restaurants were closed.
J. Trungale, President and Chief Executive Officer of Perkins & Marie Callender's Inc., commented, "We are satisfied that both Perkins and Marie Callender's have reacted appropriately in response to the economic pressures facing our segment. Our restaurants continue to deliver quality service and products at a strong price/value ratio, and are working continually to gain the long-term loyalty of our guests. We have been able to manage our restaurant operations well, particularly in terms of operational efficiency and cost controls, and will continue to be vigilant in our review of administrative costs, streamlining and seeking efficiencies whenever possible without impacting our guests' experience."
First Quarter of 2009 Financial Results
Revenues in the first quarter of 2009 decreased 7.2% to $169.3 million from $182.4 million in the first quarter of 2008. The decrease resulted from a $9.8 million decrease in sales in the restaurant segment, a $0.5 million decrease in revenues in the franchise segment and a $2.8 million decrease in sales in the Foxtail segment.
Food cost for the first quarter of 2009 decreased to 26.7% of food sales from 29.1% in the first quarter of 2008. Restaurant segment food cost was down by 1.1% to 26.0% of food sales in the first quarter of 2009 due to menu price increases and decreased commodity costs, particularly eggs, dairy products and oils. In the Foxtail segment, food cost decreased to 57.7% of food sales in the first quarter of 2009 from 63.8% in the first quarter of 2008, due to higher sales prices and lower commodity costs, particularly eggs and dairy products.
Labor and benefits costs, as a percentage of total revenues, increased by 0.1% to 32.7% in the first quarter of 2009 compared to the first quarter of 2008. In the first quarter of 2009, a 0.3% decrease in the restaurant segment resulting from more efficient hourly labor management was offset by increases resulting from decreased food sales in the Foxtail segment.
Operating expenses for the first quarter of 2009 were $45.7 million, or 27.0% of total revenues, compared to $47.0 million, or 25.7% of total revenues in the first quarter of 2008. Restaurant segment operating expenses increased by 0.6% to 28.8% of restaurant sales in the first quarter of 2009 due primarily to the decrease in revenues relative to fixed costs and increases in advertising expense for increased regional marketing efforts, partially offset by lower utilities costs. Operating expenses in the Foxtail segment increased by $0.7 million to 12.7% of segment food sales due primarily to higher custodial service costs and higher plant supervision wages.
General and administrative expenses were 8.3% of total revenues, an increase of 0.1% from the first quarter of 2008.
Depreciation and amortization was 4.3% and 4.2% of revenues in the first quarters of 2009 and 2008, respectively.
Interest, net was 8.0% of revenues in the first quarter of 2009, compared to 5.6% in the prior year's first quarter. The 240 basis point increase resulted mainly from an increase in the average effective interest rate on the Company's debt to 11.6% following the refinancing in the third quarter of 2008 from 9.9% during the first quarter of 2008 and an approximate $14.3 million increase in the average debt outstanding during the first quarter of 2009 compared to the first quarter of 2008.
Adjusted EBITDA
The Company defines adjusted EBITDA as net income or loss before income taxes or benefits, interest expense (net), depreciation and amortization, asset impairments and closed store expenses and other income and expense items unrelated to operating performance. The Company considers adjusted EBITDA to be an important measure of performance from core operations because adjusted EBITDA excludes various income and expense items that are not indicative of the Company's operating performance. The Company believes that adjusted EBITDA is useful to investors in evaluating the Company's ability to incur and service debt, make capital expenditures and meet working capital requirements. The Company also believes that adjusted EBITDA is useful to investors in evaluating the Company's operating performance compared to that of other companies in the same industry, as the calculation of adjusted EBITDA eliminates the effects of financing, income taxes and the accounting effects of capital spending, all of which may vary from one company to another for reasons unrelated to overall operating performance. The Company's calculation of adjusted EBITDA is not necessarily comparable to that of other similarly titled measures reported by other companies. Adjusted EBITDA is not a presentation made in accordance with U.S. generally accepted accounting principles and accordingly should not be considered as an alternative to, or more meaningful than, earnings from operations, cash flows from operations or other traditional indications of a company's operating performance or liquidity. The following table provides a reconciliation of net loss to adjusted EBITDA:
Quarter Quarter
Ended Ended
(unaudited; in thousands) April 19, 2009 April 20, 2008
Net loss attributable to Perkins &
Marie Callender's Inc. $(9,754) (7,588)
Provision for income taxes - 181
Interest, net 13,615 10,277
Depreciation and amortization 7,356 7,606
Asset impairments and closed store
expenses 862 76
Pre-opening expenses - 161
Management fees 1,216 1,101
Other items - 512
Adjusted EBITDA $13,295 12,326
About the Company
Perkins & Marie Callender's Inc. operates two restaurant concepts: (1) full-service family dining restaurants, which serve a wide variety of high quality, moderately-priced breakfast, lunch and dinner entrees, under the name Perkins Restaurant and Bakery, and (2) mid-priced, casual-dining restaurants specializing in the sale of pie and other bakery items under the name Marie Callender's Restaurant and Bakery. As of April 19, 2009, the Company owned and operated 163 Perkins restaurants and franchised 316 Perkins restaurants. The Company also owned and operated 76 Marie Callender's restaurants, two Callender's Grill restaurants, an East Side Mario's restaurant and 12 Marie Callender's restaurants under partnership agreements. Franchisees owned and operated 41 Marie Callender's restaurants and one Marie Callender's Grill.
Conference Call
Perkins & Marie Callender's Inc. has scheduled a conference call for Thursday, June 11, 2009, at 10:00 a.m. (CDT) to review the first quarter 2009 earnings. The dial-in number for the conference call is (866) 207-2203 and the access code number is 11614546. A taped playback of this call will be available two hours following the call on Thursday, June 11, 2009, through midnight (CDT) on Wednesday, June 17, 2009. The taped playback can be accessed by dialing (800) 642-1687 and by using access code number 11614546.
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements, written, oral or otherwise made, may be identified by the use of forward-looking terminology such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "potential," "predict," "should" or "will," or the negative thereof or other variations thereon or comparable terminology.
We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors affecting these forward-looking statements include, among others, the following:
* general economic conditions, consumer preferences and demographic patterns, either nationally or in particular regions in which we operate;
* our substantial indebtedness;
* our liquidity and capital resources;
* competitive pressures and trends in the restaurant industry;
* prevailing prices and availability of energy, raw materials, food, supplies and labor;
* a failure to obtain timely deliveries from our suppliers or other supplier issues;
* our ability to successfully implement our business strategy;
* relationships with franchisees and financial health of franchisees;
* legal proceedings and regulatory matters; and
* our development and expansion plans.
Given these risks and uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. We do not undertake and specifically decline any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.
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