- Revenues decreased 3.8% to $94.6 million from $98.3 million.
- Total comparable restaurant sales decreased 5.3%.
- Comparable restaurant sales decreased 8.0% at BRAVO! and 3.7% at BRIO.
- Restaurant-level operating profit decreased 37.8% to $7.9 million from $12.7 million.
- GAAP net loss was $(3.0) million, or $(0.20) per diluted share, compared to GAAP net income of $0.9 million, or $0.06 per diluted share.
- Adjusted net loss was $(2.4) million, or $(0.16) per diluted share, compared to adjusted net income of $0.9 million, or $0.06 per diluted share. Please see the reconciliation from GAAP to adjusted (non-GAAP) net income in the accompanying financial tables.
Third Quarter 2016 Financial ResultsRevenues decreased $3.7 million, or 3.8%, to $94.6 million in the third quarter of 2016, from $98.3 million in the third quarter of 2015. The decrease in revenues was primarily due to a 5.3% decrease in comparable restaurant sales that was partially offset by a net additional 20 operating weeks. The comparable restaurant sales decrease consisted of a 5.4% decrease in guest counts and a 0.1% increase in average check. Total restaurant operating costs, which include costs of sales, labor costs, operating costs and occupancy costs, increased $1.1 million, or 1.3%, to $86.7 million in the third quarter of 2016, from $85.6 million in the third quarter of 2015. Total restaurant-level operating profit decreased $4.8 million, or 37.8%, to $7.9 million from $12.7 million in the same period last year. As a percentage of revenues, total restaurant-level operating profit decreased to 8.4% in the third quarter of 2016 from 13.0% in the third quarter of 2015. GAAP net loss in the third quarter of 2016 was $(3.0) million, or $(0.20) per diluted share, as compared to GAAP net income of $0.9 million, or $0.06 per diluted share, in the same period last year. On an adjusted basis, a measure that the Company believes provides additional information to facilitate a year-over-year performance comparison, adjusted net loss in the third quarter of 2016 was $(2.4) million, or $(0.16) per diluted share, compared to adjusted net income of $0.9 million, or $0.06 per diluted share, in the same period last year. Please see the accompanying financial tables for a reconciliation from GAAP net income to adjusted (non-GAAP) net income. Third Quarter 2016 Brand Operating Highlights Comparable restaurant sales decreased 8.0% at BRAVO! and 3.7% at BRIO. Average weekly sales for BRAVO! and BRIO were $53,000 and $71,200, respectively. During the third quarter of 2016, the Company closed two BRAVO! restaurants through lease expirations. As of September 25, 2016, the Company operated 51 BRAVO! restaurants, 64 BRIO restaurants, and one Bon Vie restaurant across 33 states. Included in this total is one BRIO restaurant that is operated under a management agreement. Additionally, one BRIO restaurant is operated under a franchise agreement.
2016 OutlookThe Company is providing the following outlook for the 52-week period ending December 25, 2016:
- Revenues of $408 million to $413 million.
- Total comparable restaurant sales of minus 5.5% to minus 4.5%.
- Development of three Company-operated restaurants.
- Pre-opening costs of approximately $1.0 million to $1.5 million (previously approximately $1.5 million).
- Adjusted net income per diluted share of $0.15 to $0.20, which reflects adjustments made during the thirty-nine weeks ended September 25, 2016. Please see the reconciliation from GAAP net loss to adjusted (non-GAAP) net income and adjusted net income per share in the tables below.
- Capital expenditures of $12.0 million to $14.0 million.
- Diluted share count of approximately 15.5 million.
|(in thousands except per share data)||Fiscal 2016|
|Asset impairment charges (1)||1,249||1,249|
|Tax expense related to an Internal Revenue Service audit settlement (2)||265||265|
|Tax expense from excess tax deficiency for option exercises (3)||2,500||2,200|
|Income tax expense (4)||(125||)||(125||)|
|Adjusted net income||$||2,264||$||3,039|
|Adjusted net income per share||$||0.15||$||0.20|
|Weighted average shares outstanding - diluted||15,500||15,500|
Amendment to Senior Secured Revolving Credit FacilityThe Company also announced that it has entered into an amendment to its existing senior secured revolving credit facility. This amendment, among other things, converts an aggregate of $35.0 million of the outstanding balance under the revolving credit facility into a term loan facility, reduces the amount available under the revolving credit facility to $30.0 million, as well as adds and amends certain financial covenants. After giving effect to the amendment, as of September 25, 2016 the Company would have had $16.0 million in outstanding debt under our revolving credit facility and $35.0 million in outstanding debt under its term loan facility. Investor Conference Call and Webcast The Company will host an investor conference call to discuss third quarter 2016 financial results today at 5:00 PM ET. Hosting the call will be Brian O'Malley, President and Chief Executive Officer and Jim O'Connor, Executive Vice President and Chief Financial Officer. The conference call can be accessed live over the phone by dialing (800) 818-6592. A replay will be available one hour after the call and can be accessed by dialing (858) 384-5517; the conference ID is 9361679. The replay will be available until Wednesday, November 9, 2016. The call will also be webcast live and later archived on the Company's investor relations website at http://investors.bbrg.com in the 'Presentations & Events' section. Non-GAAP Measures. Adjusted net (loss) income and Adjusted net (loss) income per share are supplemental measures of the Company's performance that are not required or presented in accordance with generally accepted accounting principles, or GAAP. These non-GAAP measures may not be comparable to similarly titled measures used by other companies and should not be considered by themselves or as a substitute for measures of performance prepared in accordance with GAAP. The Company calculates these non-GAAP measures by adjusting net (loss) income and net (loss) income per share for the impact of certain non-comparable items that are reflected in the its GAAP results. The Company believes these adjusted measures provide investors with additional information to facilitate the comparison of its past and present financial results and assist users of the financial statements to better understand these results. The Company utilizes results that both include and exclude the identified items in evaluating its business performance. However, the inclusion of these adjusted measures should not be construed as an indication that the Company's future results will not be affected by certain unusual or non-comparable items.
About Bravo Brio Restaurant Group, Inc.Bravo Brio Restaurant Group, Inc. is a leading owner and operator of two distinct Italian restaurant brands, BRAVO! Cucina Italiana and BRIO Tuscan Grille. BBRG has positioned its brands as multifaceted culinary destinations that deliver the ambiance, design elements and food quality reminiscent of fine dining restaurants at a value typically offered by casual dining establishments, a combination known as the upscale affordable dining segment. Each of BBRG's brands provides its guests with a fine dining experience and value by serving affordable cuisine prepared using fresh flavorful ingredients and authentic Italian cooking methods, combined with attentive service in an attractive, lively atmosphere. BBRG strives to be the best Italian restaurant company in America and is focused on providing its guests an excellent dining experience through consistency of execution. Forward-Looking Statements Some of the statements in this release contain forward-looking statements, which involve risks and uncertainties. These statements relate to future events or Bravo Brio Restaurant Group, Inc.'s future financial performance. The Company has attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "should" or "will" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors, including those discussed under the heading "Risk Factors" in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission on February 29, 2016. Although Bravo Brio Restaurant Group, Inc. believes that the expectations reflected in the forward-looking statements are reasonable based on its current knowledge of the business and operations, it cannot guarantee future results, levels of activity, performance or achievements. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change.
|BRAVO BRIO RESTAURANT GROUP, INC. AND SUBSIDIARIES|
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|FOR THE THIRTEEN AND THIRTY-NINE WEEKS ENDED SEPTEMBER 25, 2016 AND SEPTEMBER 27, 2015 (UNAUDITED)|
|(in thousands except per share data)|
|Thirteen Weeks Ended||Thirty-Nine Weeks Ended|
|September 25, 2016||September 27, 2015||September 25, 2016||September 27, 2015|
|Costs and expenses|
|Cost of sales||25,265||26.7||%||24,463||24.9||%||80,507||26.1||%||79,905||25.2||%|
|General and administrative expenses||6,896||7.3||%||5,401||5.5||%||20,141||6.5||%||17,231||5.4||%|
|Restaurant preopening costs||107||0.1||%||628||0.6||%||621||0.2||%||2,383||0.8||%|
|Depreciation and amortization||5,600||5.9||%||5,637||5.7||%||16,680||5.4||%||16,532||5.2||%|
|Total costs and expenses||99,274||105.0||%||97,221||98.9||%||310,400||100.6||%||306,779||96.9||%|
|(Loss) income from operations||(4,686||)||(5.0||)%||1,073||1.1||%||(1,799||)||(0.6||)%||9,930||3.1||%|
|Interest expense, net||406||0.4||%||353||0.4||%||1,098||0.4||%||1,142||0.4||%|
|(Loss) income before income taxes||(5,092||)||(5.4||)%||720||0.7||%||(2,897||)||(0.9||)%||8,788||2.8||%|
|Income tax (benefit) expense||(2,107||)||(2.2||)%||(190||)||(0.2||)%||(1,506||)||(0.5||)%||1,506||0.5||%|
|Net (loss) income||$||(2,985||)||(3.2||)%||$||910||0.9||%||$||(1,391||)||(0.5||)%||$||7,282||2.3||%|
|Net (loss) income per basic share||$||(0.20||)||$||0.06||$||(0.09||)||$||0.48|
|Net (loss) income per diluted share||$||(0.20||)||$||0.06||$||(0.09||)||$||0.46|
|Weighted average shares outstanding-basic||14,582||15,202||14,648||15,174|
|Weighted average shares outstanding-diluted||14,582||15,948||14,648||15,917|
|Certain percentage amounts may not sum due to rounding.|
|ADJUSTMENTS TO RECONCILE GAAP TO ADJUSTED RESULTS|
|Asset impairment charge (1)||$||—||$||—||$||1,249||$||—|
|Tax expense related to an Internal Revenue Service audit settlement (2)||—||—||265||—|
|Tax expense from excess tax deficiency for option exercises (3)||624||—||758||—|
|Income tax expense (4)||—||—||(125||)||—|
|Adjusted net (loss) income||$||(2,361||)||$||910||$||756||$||7,282|
|Net (loss) income per basic share- adjusted||$||(0.16||)||$||0.06||$||0.05||$||0.48|
|Net (loss) income per diluted share- adjusted||$||(0.16||)||$||0.06||$||0.05||$||0.46|
|Weighted average shares outstanding-basic||14,582||15,202||14,648||15,174|
|Weighted average shares outstanding-diluted (5)||14,582||15,948||15,372||15,917|
1) Reflects non-cash asset impairment charges for the thirty-nine weeks ended September 25, 2016 for one restaurant.2) Reflects the tax expense associated with the settlement of an Internal Revenue Service audit during the period.3) Reflects the excess tax deficiency associated with the exercise of stock options during the period.4) Reflects the adjustments for income taxes related to impairment charges.5) Diluted weighted average shares outstanding includes potentially issuable common shares. Shares of common stock equivalents of 90,520 and 29,250 were excluded from the diluted calculation due to their anti-dilutive effect for the thirty-nine weeks ended September 25, 2016 and September 27, 2015, respectively.
|BRAVO BRIO RESTAURANT GROUP, INC. AND SUBSIDIARIES|
|CONSOLIDATED BALANCE SHEETS|
|AS OF SEPTEMBER 25, 2016 AND DECEMBER 27, 2015|
|(Dollars in thousands)|
|September 25, 2016||December 27, 2015|
|Cash and cash equivalents||$||388||$||447|
|Tenant improvement allowance receivable||901||286|
|Prepaid expenses and other current assets||1,053||1,859|
|Total current assets||11,535||15,372|
|Property and equipment — net||162,477||170,463|
|Deferred income taxes — net||59,560||58,054|
|Other assets — net||4,081||4,171|
|Liabilities and stockholders' equity|
|Trade and construction payables||$||13,279||$||16,283|
|Current portion of long-term debt||4,000||—|
|Deferred lease incentives||7,228||7,230|
|Deferred gift card revenue||11,147||14,728|
|Total current liabilities||61,001||67,110|
|Deferred lease incentives||55,583||59,553|
|Other long-term liabilities||23,119||23,273|
|Commitments and contingencies|
|Common shares, no par value per share— authorized 100,000,000 shares; 20,656,917 shares issued at September 25, 2016 and 20,293,296 shares issued at December 27, 2015||201,717||200,739|
|Preferred shares, no par value per share— authorized 5,000,000 shares; issued and outstanding, 0 shares at September 25, 2016 and December 27, 2015||—||—|
|Treasury shares, 5,977,860 shares at September 25, 2016 and 5,534,308 shares at December 27, 2015||(81,019||)||(77,558||)|
|Total stockholders' equity||50,950||54,824|
|Total liabilities and stockholders' equity||$||237,653||$||248,060|
Contacts:Investor RelationsDon Duffy / Raphael Gross(203) 682-8200