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TheStreet Open House

AFC Enterprises Reports Earnings For Third Quarter 2012

Stocks in this article: AFCE

Through the end of the third quarter, Operating EBITDA of $40.9 million was 31.2% of total revenues, compared to $34.5 million, at 29.4% of total revenues, in 2011. The 180 basis point increase in Operating EBITDA was primarily due to strong same-store sales increases. Operating EBITDA as a percentage of total revenues remains among the highest in the restaurant industry. Operating EBITDA is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”

Interest expense, net was $0.7 million compared to $0.8 million last year.

Income tax expense was $3.5 million at an effective tax rate of 33.7%, compared to an effective tax rate of 31.0% in 2011. Excluding favorable return to provision adjustments, adjustments to estimated tax reserves and recognition of tax credits in each period, the effective tax rates were 37.5% and 36.9% in 2012 and 2011, respectively. The effective tax rates differ from statutory rates due to credits and permanent differences between reported income before income taxes and taxable income for tax purposes.

Reported net income grew to $6.9 million, or $0.29 per diluted share, compared to $5.8 million, or $0.24 per diluted share, in 2011. Adjusted earnings per diluted share were $0.29 compared to $0.25 last year. This improvement was primarily due to stronger same-store sales and higher average new restaurant sales. Through the end of the third quarter, adjusted earnings per diluted share were $0.91 compared to $0.75, representing a 21% increase over last year. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”

Free cash flow through the end of the third quarter was $26.3 million compared to $22.1 million in 2011. As a percentage of Total Revenue, Free Cash Flow was 20.0% compared to 18.8% last year. Free cash flow is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”

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