Pizza Inn Holdings, Inc. Reports Results For Third Quarter Fiscal Year 2013

THE COLONY, Texas, May 8, 2013 (GLOBE NEWSWIRE) -- PIZZA INN HOLDINGS, INC. (Nasdaq:PZZI)

Third Quarter Highlights :
  • EBITDA from continuing operations decreased $0.3 million to $0.1 million compared to the third quarter of fiscal 2012
  • Net income decreased to a loss of $0.4 million compared to net income of $0.1 million for the third quarter of fiscal 2012
  • The Company continues to grow the Pie Five concept: -- Company-owned restaurant sales increased 24.7% over the third quarter of fiscal 2012 to $2.1 million -- Two additional Pie Five Pizza Co. multi-unit franchise development agreements were awarded -- Company opened one additional Pie Five Pizza Co. restaurant
  • Pizza Inn total domestic franchise same store sales decreased 8.1% compared to third quarter of fiscal 2012
  • Company sold property in Little Elm, Texas for $0.2 million, contributing $0.1 million to the total net loss

Pizza Inn Holdings, Inc. (Nasdaq:PZZI) today announced results for the third fiscal quarter ended March 24, 2013. Third quarter net income decreased to a loss of $0.4 million, or $0.05 per share, compared to net income of $0.1 million, or $0.01 per share, for the same quarter of the prior fiscal year. The decline in net income was primarily attributable to lower revenue earned from franchising, lower food and supply sales at Pizza Inn, higher costs related to the continued development of the Pie Five Pizza Co. concept and a loss on the sale of property in Little Elm, Texas when compared to the third quarter ended March 25, 2012.

Third quarter revenues decreased to $9.8 million in fiscal 2013 compared to $10.6 million in the prior fiscal year. Third quarter food and supply sales decreased by approximately $1.2 million, or 15.0%, in fiscal 2013 compared to fiscal 2012 due primarily to a 14.7% decrease in total domestic franchise retail sales as the result of a decrease in both the average number of restaurants open and same store sales. Compared to the third quarter of fiscal 2012, Company-owned restaurant sales increased 24.7% to $2.1 million in the most recent quarter due primarily to new Pie Five restaurant openings.

"Restaurant sales were heavily impacted by a weak start to the fiscal quarter," said Chief Executive Officer Randy Gier. "January was particularly challenging to the industry as consumers adjusted to the changes in their take-home pay resulting from the expiration of the payroll tax cuts and delays in federal income tax refunds."

"Pizza Inn sales performance has also been impacted by restaurant closings primarily as a result of non-renewals of expiring franchise agreements," said Gier. "We are moving forward with a stronger performing restaurant base operated by committed franchisees. We have been working with our Pizza Inn franchise leadership team to improve product quality and to develop marketing programs to promote our unique product offerings."

"We continued to expand our Pie Five concept with the opening of another Company-owned restaurant during the fiscal third quarter," said Randy Gier. "We are pleased with the sales performance of those restaurants that are now approaching the 18 month maturity window. On the franchise side, we awarded two additional multi-unit franchise agreements during the quarter, bringing the total to four awarded this fiscal year, providing for up to 38 Pie Five restaurants to be developed under these agreements. In April, our first Pie Five franchise location was opened in Holladay, Utah."

"We now have nine company-owned Pie Five restaurants operating in different types of trade areas across the Dallas - Ft. Worth market and several more in development. Our experience operating these restaurants has provided us with valuable learning to drive the success of future company and franchise restaurants as we accelerate into our next phase of development." 

"We have identified the characteristics of our best performing sites and continue to elevate our product offering. Additionally, we continue to strengthen the team and solidify operating procedures to drive consistency, efficiency, and profitability," concluded Gier.

Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Pizza Inn Holdings, Inc. Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of Pizza Inn Holdings, Inc. will be achieved. 

About Pizza Inn Holdings, Inc.:

Headquartered in the Dallas suburb of The Colony, TX, Pizza Inn Holdings, Inc., is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, Pizza Inn Holdings, Inc. owns and franchises approximately 300 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI".  For more information, please visit www.pizzainn.com .
 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
         
  Three Months Ended Nine Months Ended
  March 24, March 25, March 24, March 25,
  2013 2012 2013 2012
         
REVENUES:  $ 9,781  $ 10,646  $ 30,767  $ 32,129
         
COSTS AND EXPENSES:        
Cost of sales  8,460  8,863  26,127  26,724
General and administrative expenses  840  946  2,995  2,740
Franchise expenses  608  592  1,675  1,565
Pre-opening expenses  82  70  249  246
Bad debt  45  35  135  65
Interest expense  58  38  197  71
   10,093  10,544  31,378  31,411
         
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAXES  (312)  102  (611)  718
Income tax (benefit) expense  (22)  35  (170)  252
(LOSS) INCOME FROM CONTINUING OPERATIONS  (290)  67  (441)  466
         
Loss from discontinued operations, net of taxes  (100)  (15)  (127)  (45)
NET (LOSS) INCOME  $ (390)  $ 52  $ (568)  $ 421
         
EARNINGS PER SHARE OF COMMON STOCK - BASIC:        
(Loss) Income from continuing operations  $ (0.04)  $ 0.01  $ (0.05)  $ 0.06
Loss from discontinued operations  (0.01)  --   (0.02)  (0.01)
Net (loss) income  $ (0.05)  $ 0.01  $ (0.07)  $ 0.05
         
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:        
(Loss) Income from continuing operations  $ (0.04)  $ 0.01  $ (0.05)  $ 0.06
Loss from discontinued operations  (0.01)  --   (0.02)  (0.01)
Net (loss) income  $ (0.05)  $ 0.01  $ (0.07)  $ 0.05
         
Weighted average common shares outstanding - basic 8,021 8,021 8,021 8,015
         
Weighted average common and potential dilutive common shares outstanding 8,267 8,385 8,198 8,322
 
 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
     
  March 24, June 24,
  2013 (unaudited) 2012
ASSETS    
CURRENT ASSETS    
Cash and cash equivalents  $ 815  $ 590
Accounts receivable, less allowance for bad debts of $297 and $253, respectively  3,314  3,098
Inventories  1,522  1,852
Income tax receivable  343  431
Deferred income tax assets  1,005  1,078
Prepaid expenses and other  484  256
Total current assets  7,483  7,305
     
LONG-TERM ASSETS    
Property, plant and equipment, net  5,116  4,794
Long-term notes receivable  115  27
Deposits and other  112  372
   $ 12,826  $ 12,498
LIABILITIES AND SHAREHOLDERS' EQUITY    
CURRENT LIABILITIES    
Accounts payable - trade  $ 1,541  $ 1,562
Accrued expenses  1,885  1,756
Deferred revenues  306  200
Bank debt  556  765
Total current liabilities  4,288  4,283
     
LONG-TERM LIABILITIES    
Bank debt, net of current portion  2,094  977
Deferred tax liability  383  699
Deferred revenues, net of current portion  99  125
Deferred gain on sale of property  65  84
Other long-term liabilities  22  22
Total liabilities  6,951  6,190
     
COMMITMENTS AND CONTINGENCIES     
     
SHAREHOLDERS' EQUITY    
Common stock, $.01 par value; authorized 26,000,000 shares; issued 15,140,319; outstanding 8,020,919  151  151
Additional paid-in capital  9,289  9,154
Retained earnings  21,071  21,639
Treasury stock at cost    
Shares in treasury: 7,119,400   (24,636)  (24,636)
Total shareholders' equity   5,875  6,308
   $ 12,826  $ 12,498
 
 
PIZZA INN HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
     
  Nine Months Ended
  March 24, March 25,
  2013 2012
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
     
Net (loss) income  $ (568)  $ 421
Adjustments to reconcile net (loss) income to cash provided by operating activities:    
Depreciation and amortization  958  663
Loss on the sale of assets  129  --
Stock compensation expense  135  104
Deferred tax  (243)  46
Provision for litigation costs    
Provision for bad debts  44  65
Changes in operating assets and liabilities:    
Notes and accounts receivable  (172)  (394)
Inventories  330  140
Accounts payable - trade  (21)  (2)
Accrued expenses  129  76
Deferred revenue  61  (60)
Prepaid expenses and other  (102)  (175)
Cash provided by operating activities  680  884
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from sale of assets  184  --
Capital expenditures  (1,547)  (2,208)
Cash used by investing activities  (1,363)  (2,208)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of stock options  --  23
Borrowings of bank debt  3,160  1,795
Repayments of bank debt  (2,252)  (749)
Cash provided by financing activities   908  1,069
     
Net increase (decrease) in cash and cash equivalents  225  (255)
Cash and cash equivalents, beginning of period  590  949
Cash and cash equivalents, end of period  $ 815  $ 694
     
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
     
CASH PAYMENTS (RECEIPTS) FOR:    
     
Interest  $ 248  $ 55
Income taxes - net  (84)  37
 
 
PIZZA INN HOLDINGS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands)
(Unaudited)
     
  Three Months Ended
  March 24, March 25,
  2013 2012
 Net (loss) income   $ (390)  $ 52
 Interest expense   58  38
 Taxes   (22)  35
 Depreciation and amortization   340  269
 Loss from discontinued operations, net of taxes   100  15
 EBITDA from continuing operations   $ 86  $ 409
     
     
  Nine Months Ended
  March 24, March 25,
  2013 2012
 Net (loss) income   $ (568)  $ 421
 Interest expense   197  71
 Taxes   (170)  252
 Depreciation and amortization   958  663
 Loss from discontinued operations, net of taxes   127  45
 EBITDA from continuing operations   $ 544  $ 1,452
CONTACT: Jerry L. Trojan          Chief Financial Officer         Pizza Inn Holdings, Inc.         469-384-5000

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