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AFC Enterprises Reports Earnings For Third Quarter 2013; Narrows Fiscal Year 2013 EPS Guidance

Stocks in this article: AFCE

Global same-store sales increased 5.1%, rolling over a 6.3% increase in 2012, for a two-year growth of 11.4%. Through the end of the third quarter, global same-store sales increased 4.6%, rolling over a 7.1% increase last year, for a two-year growth rate of 11.7%.

Total domestic same-store sales increased 5.1% compared to a 6.8% increase last year. International same-store sales increased 5.1% compared to a 2.5% increase in 2012. Same-store sales growth at company-operated restaurants in the third quarter of 2013 was 4.8% compared to 1.9% last year.

Total revenues were $49.3 million, compared to $38.9 million last year, an increase of approximately 27% year-over-year. Though principally driven by positive same-store sales and new restaurant growth, this revenue growth includes $1.6 million of one-time fees associated with the conversion of restaurants acquired in Minnesota and California.

Company-operated restaurant operating profit (“ROP”) was $3.3 million at 17.7% of sales, compared to $2.2 million at 16.3% of sales last year. The improvement in ROP margin was primarily attributable to lower commodity costs and increased leverage on occupancy and other expenses.

General and administrative expenses were $16.2 million, or 2.8% of system-wide sales, compared to $14.7 million, or 2.9% of system-wide sales in 2012. The $1.5 million increase was primarily attributable to an increase in domestic franchisee restaurant support services and assessments, and an increase in performance-based incentive compensation expense.

Through the end of the third quarter, Operating EBITDA was $51.2 million at 32.5% of total revenues, compared to $40.9 million at 31.2% of total revenues, in 2012. The 130 basis point increase in Operating EBITDA was primarily due to strong same-store sales increases, one-time franchise fees associated with the conversion of the restaurants in Minnesota and California acquired in 2012, and higher restaurant operating profit at Company-operated restaurants. Operating EBITDA as a percentage of total revenues remains among the highest in the restaurant industry.

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