Same Store Sales Up In Both Concepts
J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner and
operator of the J. Alexander’s Restaurants, Redlands Grill, Stoney River
Steakhouse and Grill and Lyndhurst Grill collection of restaurants,
today reported financial results for the third quarter and first nine
months ended October 1, 2017.
Third Quarter 2017 Highlights Compared To The Third Quarter Of 2016
-
Net sales increased 4.7% to $53,879,000 in the most recent quarter
from $51,459,000 in the third quarter of 2016.
-
For the J. Alexander’s/Grill restaurants, average weekly same store
sales per restaurant(1) were $107,000, up 1.4% from
$105,500 in the third quarter of 2016. For the Stoney River Steakhouse
and Grill restaurants, average weekly same store sales increased 3.7%
to $67,300 from $64,900 recorded in the comparable quarter of 2016.
-
The Company recorded a loss from continuing operations of $1,597,000
in the third quarter of 2017 compared to income from continuing
operations before taxes of $1,177,000 achieved in the third quarter of
2016. The most recent results were primarily due to the combination of
several factors, including non-recurring transaction and integration
expenses of $1,975,000 related to the Company’s planned acquisition of
the Ninety Nine Restaurant and Pub concept discussed elsewhere in this
release. Additionally in the third quarter of 2017, the Company’s
restaurants in Florida were closed for 36 days due to the impact of
Hurricane Irma. Management estimates the impact of such closures was
approximately $650,000 in lost revenue, and a decrease to income from
continuing operations of approximately $400,000, consisting of
approximately $300,000 of lost restaurant operating profit and
approximately $100,000 of food spoilage losses, cleanup costs and
expenses associated with re-opening the restaurants. Finally, the
opening of three new restaurants during the previous ten months, and
anticipated inefficiencies in cost of sales, labor and selected other
expense categories associated with supporting these new locations, had
an unfavorable impact of the quarter ended October 1, 2017 as well.
-
During the third quarter of 2017, the Company’s profits interest grant
with Black Knight Advisory Services, LLC (“Black Knight”) resulted in
a profits interest expense of $40,000, down from an expense of
$246,000 in the third quarter a year ago. The agreement with Black
Knight is based on a quarterly valuation of a profits interest grant
issued in October 2015. The non-cash expense associated with this
grant is required to be recognized over the three-year vesting period
of the grant and is calculated each quarter based upon the most recent
valuation performed using the Black-Scholes valuation model, with any
cumulative change associated with the most recent valuation impacting
the current quarter. Primarily due to the $11.60 per share closing
price of the Company’s stock at the end of the most recent quarter,
the grant’s valuation decreased from $7,533,000 at July 2, 2017 to
$6,650,000 at October 1, 2017. Also during the third quarter of 2017,
the Company incurred consulting fees of $120,000 under its management
agreement with Black Knight. This compares to consulting fees of
$133,000 in the third quarter of the prior year.
-
On August 4, 2017, the Company and Fidelity National Financial, Inc.
(“FNF”) announced that J. Alexander’s, Fidelity Newport Holdings, LLC
(“FNH”) and Fidelity National Financial Ventures, LLC (“FNFV”), a
direct wholly‐owned subsidiary of FNF, had entered into a definitive
agreement under which the Company will acquire 99 Restaurants, LLC
(“99 Restaurants”) in an all‐stock transaction valued at approximately
$199 million, including the assumption of approximately $20 million in
net debt. A preliminary proxy statement related to the acquisition was
filed with the Securities and Exchange Commission (“SEC”) on October
11, 2017 and the SEC has notified the Company that this document will
be subjected to their standard review process.
-
For the third quarter of 2017, J. Alexander’s Holdings, Inc. had a
loss of $876,000 compared to net income of $945,000 posted in the
comparable quarter a year ago. The Company had a tax benefit of
$832,000 for the most recent quarter compared to a tax provision of
$121,000 in the third quarter of 2016.
-
The Company’s basic and diluted loss per share was $0.06 for the third
quarter of 2017 compared to basic and diluted earnings per share of
$0.06 for the third quarter of 2016.
-
Adjusted EBITDA(2) for the third quarter of 2017 was
$3,725,000, a decrease of 15.3% from $4,397,000 for the third quarter
of 2016.
-
Restaurant Operating Profit Margin(3) was 9.2% for the
third quarter of 2017 compared to 10.9% in the third quarter of 2016.
-
Cost of sales as a percentage of net sales in the third quarter of
2017 was 32.0% compared to 31.6% in the corresponding quarter of 2016.
(1) Average weekly same store sales per restaurant is computed by
dividing total restaurant same store sales for the period by the total
number of days all same store restaurants were open for the period to
obtain a daily sales average. The daily same store sales average is then
multiplied by seven to arrive at average weekly same store sales per
restaurant. Days on which restaurants are closed for business for any
reason other than scheduled closures on Thanksgiving and Christmas are
excluded from this calculation. Sales and sales days used in this
calculation and amounts of other “same store” figures in this release
include only those for restaurants in operation at the end of the period
which have been open for more than eighteen months. Revenue associated
with reduction in liabilities for gift cards which are considered to be
only remotely likely to be redeemed (based on historical redemption
rates) is not included in the calculation of average weekly same store
sales per restaurant. Average weekly same store sales is computed
from sales amounts that have been determined in accordance with U.S.
generally accepted accounting principles (GAAP).
(2) Please refer to the financial information accompanying this
release for our definition of and a reconciliation of the non‐GAAP
financial measure Adjusted EBITDA to net income. Management uses
Adjusted EBITDA to evaluate operating performance and the effectiveness
of its business strategies.
(3) “Restaurant Operating Profit Margin” is the ratio of Restaurant
Operating Profit, a non‐GAAP financial measure, to net sales. Please
refer to the financial information accompanying this release for our
definition of and a reconciliation of the non‐GAAP financial measure
Restaurant Operating Profit to net income. Management uses Restaurant
Operating Profit and Restaurant Operating Profit Margin to measure
operating performance at the restaurant level.
For the third quarter of 2017, the Company’s consolidated operating loss
totaled $1,392,000 compared to operating income of $1,306,000 recorded
in the corresponding quarter a year earlier.
The Company’s restaurant labor and related costs as a percentage of net
sales were 32.6% compared to 32.1% of net sales in the third quarter a
year ago. Other restaurant operating expenses were 21.5% of net sales in
the third quarter of 2017 compared to 21.1% of net sales in the third
quarter of 2016.
The average weekly guest counts within the same store base of the
Company’s J. Alexander’s/Grills collection decreased 1.2% for the third
quarter of 2017 compared to the corresponding quarter of 2016. Guest
counts within the same store base at the Company’s Stoney River
Steakhouse and Grill restaurants were up 6.0% for the third quarter of
2017 compared to the same quarter of 2016. With respect to average guest
checks, which include alcoholic beverage sales, the average guest check
within the J. Alexander’s/Grills same store base of restaurants during
the third quarter of 2017 totaled $30.85, up 2.7% from $30.04 during the
third quarter of 2016. The average guest check within the same store
base of Stoney River Steakhouse and Grill restaurants totaled $42.32,
down 2.6% from $43.44 for the third quarter of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations decreased 1.3% for the third
quarter of 2017 compared to the third quarter of the prior year. On a
consolidated basis, average weekly guest counts within the Company’s
Stoney River Steakhouse Grill locations increased 5.0% for the third
quarter of 2017 compared to the third quarter of 2016. Average guest
checks for the combined J. Alexander’s/Grills concepts rose 2.6% from
$30.11 in the third quarter of 2016 to $30.90 in the most recent
quarter. The average guest check for the Stoney River Steakhouse and
Grill restaurants decreased 2.9% to $42.19 in the third quarter of 2017
from $43.44 in the third quarter of 2016.
The effect of menu pricing for the quarter just ended was estimated to
be a 1.5% increase for the J. Alexander’s/Grills restaurants and a 0.2%
decrease for the Stoney River Steakhouse and Grill restaurants compared
to the same quarter of 2016. Inflation in food costs for the third
quarter of 2017 was estimated to total 0.8% for the J. Alexander’s/Grill
restaurants, with beef costs decreasing by an estimated 3.3% compared to
the third quarter of 2016. For the Stoney River Steakhouse and Grill
restaurants, inflation for the third quarter of 2017 was an estimated to
total 0.4%, with beef costs down approximately 1.8%.
Chief Executive Officer’s Review/Third Quarter
“We were confronted by a combination of unforeseen and adverse factors
negatively impacting our results in the third quarter ended October 1,
2017,” said Lonnie J. Stout II, President and Chief Executive Officer.
“Among these were forced restaurant closings in six Florida markets
during Hurricane Irma, along with incremental operating expenses in our
three new restaurants opened during the past 10 months, which we
typically experience post-opening. These incremental expenses primarily
relate to higher than average cost of sales as our kitchens become
accustomed to operating at volume, extra labor staffing to ensure that
our guests have an outstanding experience and, in certain situations, we
will provide higher than average complimentary meals as a means of
marketing the restaurant to the local community. These challenges were
in addition to the non-recurring transaction and integration expenses
associated with the planned acquisition of the Ninety Nine Restaurant
and Pub.”
“We are never satisfied with guest count declines,” Stout continued,
“but we are not overly concerned about the guest traffic at our J.
Alexander’s/Grill locations, as we started to see positive guest counts
during September and that trend has continued into the early part of the
fourth quarter. As we’ve shared in the past, our third quarter is always
the most challenging quarter of the year due to mix shift, vacations and
the loss of business guests during the summer. It is always our lowest
sales average quarter of the year.”
Restaurant Development
During the third quarter of 2017, the Company began construction on one
new J. Alexander’s Restaurant in King of Prussia, PA, and one new Stoney
River Steakhouse and Grill in Troy, MI. Each of these new restaurants is
expected to open in 2018.
First Nine Months Highlights For 2017
For the nine months ended October 1, 2017, J. Alexander’s Holdings, Inc.
recorded net sales of $171,917,000, up from $162,259,000 posted during
the comparable nine months of 2016. Within the J. Alexander’s/Grill
restaurants, average weekly same store sales per restaurant were
$113,600 for the first nine months of 2017, up 3.2% from $110,100
reported in the same nine months of the prior year. For the Stoney River
Steakhouse and Grill restaurants, average weekly same store sales
totaled $70,900, an increase of 2.2% from $69,400 recorded in the
comparable nine months of 2016. Income from continuing operations before
income taxes was $2,086,000, down from $5,860,000 achieved in the same
nine months of 2016.
The Company recorded net income of $1,994,000 for the first nine months
of 2017 compared to $4,322,000 achieved in the first nine months of the
previous year. Adjusted EBITDA for the first nine months of 2017 totaled
$16,792,000, an increase of 4.6% from $16,047,000 recorded in the first
nine months of 2016. Basic and diluted earnings per share were $0.14 and
$0.13, respectively, for the first nine months of 2017 and $0.29 for the
comparable nine months of 2016.
The Company’s consolidated operating income for the most recent nine
months was $2,617,000 compared to $6,300,000 recorded in the
corresponding nine months of 2016.
For the nine months ended October 1, 2017, the Company’s cost of sales,
as a percent of net sales, were 31.9%, consistent with 31.9% in the
first nine months of 2016. Restaurant labor and related costs were 31.1%
of net sales in the first nine months of 2017 compared to 30.9% of net
sales in the corresponding period of 2016. Other restaurant operating
expenses were 20.2% of net sales in the first nine months of 2017
compared to 20.3% of net sales in the first nine months of 2016.
The average weekly guest counts within the same store base for the
Company’s J. Alexander’s/Grills collection increased 0.5% for the first
nine months of 2017 compared to the corresponding nine months of 2016.
Guest counts within the same store base at the Company’s Stoney River
Steakhouse and Grill restaurants increased 4.3% for the first nine
months of 2017 compared to the same nine months of 2016. With respect to
average guest checks, the average guest check within the J.
Alexander’s/Grills same store base of restaurants during the first nine
months of 2017 totaled $30.91, up 2.6% from $30.12 during the same nine
months of the prior year. The average guest check within the same store
base of Stoney River Steakhouse and Grill restaurants totaled $42.74, a
2.6% decrease from $43.86 for the first nine months of 2016.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations increased 0.4% for the first
nine months of 2017 compared to the comparable nine months of 2016. With
respect to the Stoney River Steakhouse and Grill locations, consolidated
average weekly guest counts increased 3.2% for the first nine months of
2017 compared to the same nine months of 2016. Average guest checks for
the combined J. Alexander’s/Grills concepts increased 2.7% from $30.17
in the first nine months of 2016 to $30.97 in the first recent nine
months of 2017. The average guest check for the Stoney River Steakhouse
and Grill restaurants decreased 2.7% to $42.66 in the first nine months
of 2017 from $43.86 in the same nine months of 2016.
The effect of menu pricing for the first nine months of 2017 was
estimated to be a 2.1% increase for the J. Alexander’s/Grills
restaurants and a 0.4% decrease for the Stoney River Steakhouse and
Grill restaurants compared to the first nine months a year ago.
Inflation in food costs for the first nine months of 2017 was estimated
to total 0.4% for the J. Alexander’s/Grills restaurants, with beef costs
down by an estimated 2.7% compared to the same nine months of the
previous year. For the Stoney River Steakhouse and Grill restaurants,
inflation for the first nine months of 2017 was also estimated at 0.4%,
with beef costs down approximately 0.8% compared to the corresponding
period of 2016.
Outlook For 2017/Guidance
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Same Store Sales:
|
|
|
|
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Prior Guidance
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|
|
|
|
|
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Full Year 2017
|
|
Stoney River Steakhouse and Grill
|
|
|
|
|
|
+1.0% ‐ 2.0%
|
|
|
|
|
|
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+2.0% - 3.0%
|
|
|
|
|
|
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|
|
|
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|
|
|
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The Company’s Adjusted EBITDA guidance range included in the March 2,
2017 release is unchanged. However, due in large part to the impact of
Hurricane Irma during the third quarter of 2017, the Company anticipates
that Adjusted EBITDA for the full year 2017 will approximate the lower
end of the targeted guidance. The Company’s guidance range relative to
capital expenditures included in the May 2, 2017 release is unchanged,
as is the Company’s guidance range included in the August 10, 2017
release relative to consolidated revenue and same store sales for the J.
Alexander’s/Grills restaurants for 2017. As a result of the Company’s
planned acquisition of 99 Restaurants discussed above, and the
uncertainty of transaction costs and changes to the Company’s financial
statements that may result from the transaction, the Company is not
presenting other items of guidance, and previous disclosures of those
items should not be relied upon.
Conference Call
The Company will hold a conference call on Thursday, November 9, 2017 at
10 a.m. Central time to discuss its financial results for the third
quarter ended October 1, 2017. The conference call can be accessed live
over the phone by dialing 1-877-407-0789 (Toll‐Free) or 1-201-689-8562
(Toll/International). To access the call via the internet, go to the J.
Alexander’s website at http://investor.jalexandersholdings.com
or http://public.viavid.com/index.php?id=126981.
A replay of the conference call will be available shortly following the
conclusion of the call at http://investor.jalexandersholdings.com
and http://public.viavid.com/index.php?id=126981,
as well as dialing 1-844-512-2921 or 1-412-317-6671 and providing the
access code 13672732. The replay will be accessible through November 16,
2017 via telephone and for 30 days on the internet.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of boutique restaurants
that focus on providing high quality food, outstanding professional
service and an attractive ambiance. On October 1, 2017, the Company
owned and operated the following restaurant concepts: J. Alexander’s,
Redlands Grill, Stoney River Steakhouse and Grill and Lyndhurst Grill.
The Company has its headquarters in Nashville, TN.
Forward‐Looking Statements
This press release issued by J. Alexander’s Holdings, Inc. contains
forward‐looking statements, which include all statements that do not
relate solely to historical or current facts, such as statements
regarding our expectations, intentions or strategies regarding the
future, and in particular, our statements concerning and the agreement
to acquire 99 Restaurants, LLC and the termination of the Black Knight
consulting agreement the impact of such termination on the Black Knight
profits interest grant, as well as our guidance disclosure. These
forward‐looking statements are based on management's beliefs, as well as
assumptions made by, and information currently available to, management.
Because such statements are based on expectations as to future financial
and operating results and are not statements of fact, actual results may
differ materially from those projected and are subject to a number of
known and unknown risks and uncertainties, including the Company’s
ability to maintain satisfactory guest count levels and maintain or
increase sales and operating margins in its restaurants under varying
economic conditions; the effect of higher commodity prices, unemployment
and other economic factors on consumer demand; increases in food input
costs or product shortages and the Company’s response to them; the
number and timing of new restaurant openings, associated costs and the
Company’s ability to operate new restaurants profitably; competition
within the casual dining industry and within the markets in which our
restaurants are located; adverse weather conditions in regions in which
the Company’s restaurants are located; factors that are under the
control of third parties, including government agencies; uncertainties
concerning the recently announced 99 Restaurants transactions, including
the following: uncertainties as to whether the requisite approvals of
the J. Alexander’s shareholders will be obtained; the risk of
shareholder litigation in connection with the transaction and any
related significant costs of defense, indemnification and liability; the
possibility that competing offers will be made; the possibility that
various closing conditions for the transaction may not be satisfied or
waived; the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement, including
circumstances that may give rise to the payment of a termination fee by
J. Alexander’s; the effects of disruptions to respective business
operations of J. Alexander’s or Ninety Nine resulting from the
transactions, including the ability of the combined company to retain
and hire key personnel and maintain relationships with suppliers and
other business partners; the risks associated with the future
performance of the Ninety Nine business; the risks of integration of the
Ninety Nine business and the possibility that costs or difficulties
related to such integration of the Ninety Nine business and J.
Alexander’s will be greater than expected; the possibility that the
anticipated benefits and synergies from the proposed transaction cannot
be fully realized or may take longer to realize than expected; as well
as other risks and uncertainties described under the headings
"Forward‐Looking Statements," "Risk Factors" and other sections of the
Company’s Annual Report on Form 10‐K filed with the Securities and
Exchange Commission on March 16, 2017 and subsequent filings. The
Company undertakes no obligation to update any forward‐looking
statements, whether as a result of new information, future events or
otherwise.
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J. Alexander's Holdings, Inc. and Subsidiaries
|
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Condensed Consolidated Statements of Operations
|
|
(Unaudited in thousands, except per share amounts)
|
|
|
|
|
|
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Quarter Ended
|
|
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Nine Months Ended
|
|
|
|
|
October 1
|
|
|
October 2
|
|
|
October 1
|
|
|
October 2
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
53,879
|
|
|
|
$
|
51,459
|
|
|
|
$
|
171,917
|
|
|
|
$
|
162,259
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
17,250
|
|
|
|
|
16,252
|
|
|
|
|
54,878
|
|
|
|
|
51,695
|
|
|
Restaurant labor and related costs
|
|
|
|
17,552
|
|
|
|
|
16,540
|
|
|
|
|
53,456
|
|
|
|
|
50,087
|
|
|
Depreciation and amortization of restaurant property and equipment
|
|
|
|
2,567
|
|
|
|
|
2,232
|
|
|
|
|
7,445
|
|
|
|
|
6,636
|
|
|
Other operating expenses
|
|
|
|
11,564
|
|
|
|
|
10,833
|
|
|
|
|
34,673
|
|
|
|
|
32,909
|
|
|
Total restaurant operating expenses
|
|
|
|
48,933
|
|
|
|
|
45,857
|
|
|
|
|
150,452
|
|
|
|
|
141,327
|
|
|
Transaction and integration expenses
|
|
|
|
1,975
|
|
|
|
|
-
|
|
|
|
|
2,435
|
|
|
|
|
62
|
|
|
General and administrative expenses
|
|
|
|
4,315
|
|
|
|
|
4,104
|
|
|
|
|
15,479
|
|
|
|
|
13,963
|
|
|
Pre-opening expense
|
|
|
|
48
|
|
|
|
|
192
|
|
|
|
|
934
|
|
|
|
|
607
|
|
|
Total operating expenses
|
|
|
|
55,271
|
|
|
|
|
50,153
|
|
|
|
|
169,300
|
|
|
|
|
155,959
|
|
|
Operating income (loss)
|
|
|
|
(1,392
|
)
|
|
|
|
1,306
|
|
|
|
|
2,617
|
|
|
|
|
6,300
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(227
|
)
|
|
|
|
(147
|
)
|
|
|
|
(625
|
)
|
|
|
|
(514
|
)
|
|
Other, net
|
|
|
|
22
|
|
|
|
|
18
|
|
|
|
|
94
|
|
|
|
|
74
|
|
|
Total other expense
|
|
|
|
(205
|
)
|
|
|
|
(129
|
)
|
|
|
|
(531
|
)
|
|
|
|
(440
|
)
|
|
Income (loss) from continuing operations before income taxes
|
|
|
|
(1,597
|
)
|
|
|
|
1,177
|
|
|
|
|
2,086
|
|
|
|
|
5,860
|
|
|
Income tax benefit (expense)
|
|
|
|
832
|
|
|
|
|
(121
|
)
|
|
|
|
242
|
|
|
|
|
(1,210
|
)
|
|
Loss from discontinued operations, net
|
|
|
|
(111
|
)
|
|
|
|
(111
|
)
|
|
|
|
(334
|
)
|
|
|
|
(328
|
)
|
|
Net income (loss)
|
|
|
$
|
(876
|
)
|
|
|
$
|
945
|
|
|
|
$
|
1,994
|
|
|
|
$
|
4,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.07
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.31
|
|
|
Loss from discontinued operations, net
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
(0.02
|
)
|
|
Basic earnings (loss) per share
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.06
|
|
|
|
$
|
0.14
|
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, net of tax
|
|
|
$
|
(0.05
|
)
|
|
|
$
|
0.07
|
|
|
|
$
|
0.16
|
|
|
|
$
|
0.31
|
|
|
Loss from discontinued operations, net
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.02
|
)
|
|
|
|
(0.02
|
)
|
|
Diluted earnings (loss) per share
|
|
|
$
|
(0.06
|
)
|
|
|
$
|
0.06
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
14,695
|
|
|
|
|
14,700
|
|
|
|
|
14,695
|
|
|
|
|
14,862
|
|
|
Diluted
|
|
|
|
14,695
|
|
|
|
|
14,700
|
|
|
|
|
14,792
|
|
|
|
|
14,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Per share amounts may not sum due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander's Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Operations Data as a
Percentage of Net Sales and
|
|
Other Financial and Performance Data (Unaudited)
|
|
|
|
|
Quarter Ended
|
|
|
Nine Months Ended
|
|
|
|
|
October 1
|
|
|
October 2
|
|
|
October 1
|
|
|
October 2
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Net sales
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
32.0
|
|
|
|
|
31.6
|
|
|
|
|
31.9
|
|
|
|
|
31.9
|
|
|
Restaurant labor and related costs
|
|
|
|
32.6
|
|
|
|
|
32.1
|
|
|
|
|
31.1
|
|
|
|
|
30.9
|
|
|
Depreciation and amortization of restaurant property and equipment
|
|
|
|
4.8
|
|
|
|
|
4.3
|
|
|
|
|
4.3
|
|
|
|
|
4.1
|
|
|
Other operating expenses
|
|
|
|
21.5
|
|
|
|
|
21.1
|
|
|
|
|
20.2
|
|
|
|
|
20.3
|
|
|
Total restaurant operating expenses
|
|
|
|
90.8
|
|
|
|
|
89.1
|
|
|
|
|
87.5
|
|
|
|
|
87.1
|
|
|
Transaction and integration expenses
|
|
|
|
3.7
|
|
|
|
|
-
|
|
|
|
|
1.4
|
|
|
|
|
0.0
|
|
|
General and administrative expenses
|
|
|
|
8.0
|
|
|
|
|
8.0
|
|
|
|
|
9.0
|
|
|
|
|
8.6
|
|
|
Pre-opening expense
|
|
|
|
0.1
|
|
|
|
|
0.4
|
|
|
|
|
0.5
|
|
|
|
|
0.4
|
|
|
Total operating expenses
|
|
|
|
102.6
|
|
|
|
|
97.5
|
|
|
|
|
98.5
|
|
|
|
|
96.1
|
|
|
Operating income (loss)
|
|
|
|
(2.6
|
)
|
|
|
|
2.5
|
|
|
|
|
1.5
|
|
|
|
|
3.9
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(0.4
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.4
|
)
|
|
|
|
(0.3
|
)
|
|
Other, net
|
|
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
|
0.1
|
|
|
|
|
0.0
|
|
|
Total other expense
|
|
|
|
(0.4
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
Income (loss) from continuing operations before income taxes
|
|
|
|
(3.0
|
)
|
|
|
|
2.3
|
|
|
|
|
1.2
|
|
|
|
|
3.6
|
|
|
Income tax benefit (expense)
|
|
|
|
1.5
|
|
|
|
|
(0.2
|
)
|
|
|
|
0.1
|
|
|
|
|
(0.7
|
)
|
|
Loss from discontinued operations, net
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
Net income (loss)
|
|
|
|
(1.6
|
)%
|
|
|
|
1.8
|
%
|
|
|
|
1.2
|
%
|
|
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Certain percentage totals do not sum due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial and Performance Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
|
$
|
3,725
|
|
|
|
$
|
4,397
|
|
|
|
$
|
16,792
|
|
|
|
$
|
16,047
|
|
|
As a % of net sales
|
|
|
|
6.9
|
%
|
|
|
|
8.5
|
%
|
|
|
|
9.8
|
%
|
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average weekly sales per restaurant:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s Restaurant/ Grills
|
|
|
$
|
105,500
|
|
|
|
$
|
104,200
|
|
|
|
$
|
112,100
|
|
|
|
$
|
108,800
|
|
|
Percent change
|
|
|
|
1.2
|
%
|
|
|
|
|
|
|
3.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stoney River Steakhouse and Grill
|
|
|
$
|
67,600
|
|
|
|
$
|
66,300
|
|
|
|
$
|
72,700
|
|
|
|
$
|
72,500
|
|
|
Percent change
|
|
|
|
2.0
|
%
|
|
|
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average weekly same store sales per restaurant:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s Restaurant/ Grills
|
|
|
$
|
107,000
|
|
|
|
$
|
105,500
|
|
|
|
$
|
113,600
|
|
|
|
$
|
110,100
|
|
|
Percent change
|
|
|
|
1.4
|
%
|
|
|
|
|
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stoney River Steakhouse and Grill
|
|
|
$
|
67,300
|
|
|
|
$
|
64,900
|
|
|
|
$
|
70,900
|
|
|
|
$
|
69,400
|
|
|
Percent change
|
|
|
|
3.7
|
%
|
|
|
|
|
|
|
2.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See definitions and reconciliation attached.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander's Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
(Unaudited in thousands)
|
|
|
|
|
October 1
|
|
|
January 1
|
|
|
|
|
2017
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
8,285
|
|
|
$
|
6,632
|
|
Other current assets
|
|
|
|
6,287
|
|
|
|
7,741
|
|
Total current assets
|
|
|
|
14,572
|
|
|
|
14,373
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
5,895
|
|
|
|
6,012
|
|
Property and equipment, net
|
|
|
|
101,915
|
|
|
|
101,470
|
|
Goodwill
|
|
|
|
15,737
|
|
|
|
15,737
|
|
Tradename and other indefinite-lived intangibles
|
|
|
|
25,160
|
|
|
|
25,155
|
|
Deferred charges, net
|
|
|
|
196
|
|
|
|
291
|
|
|
|
|
$
|
163,475
|
|
|
$
|
163,038
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
$
|
26,187
|
|
|
$
|
27,704
|
|
Long-term debt, net of portion classified as current and
unamortized deferred loan costs
|
|
|
|
12,007
|
|
|
|
15,418
|
|
Deferred compensation obligations
|
|
|
|
6,213
|
|
|
|
6,010
|
|
Deferred income taxes
|
|
|
|
3,532
|
|
|
|
4,031
|
|
Other long-term liabilities
|
|
|
|
6,558
|
|
|
|
5,555
|
|
Stockholders' equity
|
|
|
|
108,978
|
|
|
|
104,320
|
|
|
|
|
$
|
163,475
|
|
|
$
|
163,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander's Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(Unaudited in thousands)
|
|
|
Nine Months Ended
|
|
|
|
|
October 1
|
|
|
October 2
|
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
1,994
|
|
|
|
$
|
4,322
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment
|
|
|
|
7,661
|
|
|
|
|
6,842
|
|
|
Equity-based compensation expense
|
|
|
|
2,664
|
|
|
|
|
1,834
|
|
|
Other, net
|
|
|
|
19
|
|
|
|
|
(403
|
)
|
|
Changes in assets and liabilities, net
|
|
|
|
599
|
|
|
|
|
(4,386
|
)
|
|
Net cash provided by operating activities
|
|
|
|
12,937
|
|
|
|
|
8,209
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
|
(8,657
|
)
|
|
|
|
(12,153
|
)
|
|
Other investing activities
|
|
|
|
(264
|
)
|
|
|
|
(244
|
)
|
|
Net cash used in investing activities
|
|
|
|
(8,921
|
)
|
|
|
|
(12,397
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Proceeds from borrowing under debt agreement
|
|
|
|
-
|
|
|
|
|
4,000
|
|
|
Payments on long-term debt and obligations under capital leases
|
|
|
|
(2,361
|
)
|
|
|
|
(1,250
|
)
|
|
Purchases of common stock
|
|
|
|
-
|
|
|
|
|
(3,153
|
)
|
|
Other financing activities
|
|
|
|
(2
|
)
|
|
|
|
(1,319
|
)
|
|
Net cash used in financing activities
|
|
|
|
(2,363
|
)
|
|
|
|
(1,722
|
)
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
1,653
|
|
|
|
|
(5,910
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
6,632
|
|
|
|
|
13,424
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
8,285
|
|
|
|
$
|
7,514
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
Property and equipment obligations accrued at beginning of period
|
|
|
$
|
2,587
|
|
|
|
$
|
1,845
|
|
|
Property and equipment obligations accrued at end of period
|
|
|
|
2,153
|
|
|
|
|
2,011
|
|
|
Cash paid for interest
|
|
|
|
605
|
|
|
|
|
503
|
|
|
Cash paid for income taxes
|
|
|
|
579
|
|
|
|
|
4,730
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander's Holdings, Inc. and Subsidiaries
|
|
Non-GAAP Financial Measures and Reconciliations
|
|
(Unaudited in thousands)
|
|
|
|
Non-GAAP Financial Measures
|
|
Within this press release, we present the following non-GAAP
financial measures which we believe are useful to investors as key
measures of our operating performance:
|
|
|
|
We define Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization, or “Adjusted EBITDA”, as net income (loss) before
interest expense, income tax expense (benefit), depreciation and
amortization, and adding asset impairment charges and restaurant
closing costs, loss on disposals of fixed assets, transaction and
integration costs, non-cash compensation, loss from discontinued
operations, gain on debt extinguishment and pre-opening costs.
|
|
|
|
Adjusted EBITDA is a non-GAAP financial measure that we believe is
useful to investors because it provides information regarding
certain financial and business trends relating to our operating
results and excludes certain items that are not indicative of our
operations. Adjusted EBITDA does not fully consider the impact of
investing or financing transactions as it specifically excludes
depreciation and interest charges, which should also be considered
in the overall evaluation of our results of operations.
|
|
|
|
We define “Restaurant Operating Profit” as net sales less restaurant
operating costs, which are cost of sales, restaurant labor and
related costs, depreciation and amortization of restaurant property
and equipment, and other operating expenses. Restaurant Operating
Profit is a non-GAAP financial measure that we believe is useful to
investors because it provides a measure of profitability for
evaluation that does not reflect corporate overhead and other
non-operating or unusual costs. “Restaurant Operating Profit Margin”
is the ratio of Restaurant Operating Profit to net sales.
|
|
|
|
Our management uses Adjusted EBITDA and Restaurant Operating Profit
to evaluate the effectiveness of our business strategies. We caution
investors that amounts presented in accordance with the above
definitions of Adjusted EBITDA or Restaurant Operating Profit may
not be comparable to similar measures disclosed by other companies,
because not all companies calculate these non-GAAP financial
measures in the same manner. Adjusted EBITDA and Restaurant
Operating Profit should not be assessed in isolation from, or
construed as a substitute for, net income or other measures
presented in accordance with GAAP.
|
|
|
|
A reconciliation of these non-GAAP financial measures to the closest
GAAP measure is set forth in the following tables:
|
|
|
|
|
Quarter Ended
|
|
|
Nine Months Ended
|
|
|
|
|
October 1
|
|
|
October 2
|
|
|
October 1
|
|
|
October 2
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
$
|
(876
|
)
|
|
|
$
|
945
|
|
|
$
|
1,994
|
|
|
|
$
|
4,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit)
|
|
|
|
(832
|
)
|
|
|
|
121
|
|
|
|
(242
|
)
|
|
|
|
1,210
|
|
Interest expense
|
|
|
|
227
|
|
|
|
|
147
|
|
|
|
625
|
|
|
|
|
514
|
|
Depreciation and amortization
|
|
|
|
2,653
|
|
|
|
|
2,319
|
|
|
|
7,701
|
|
|
|
|
6,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
1,172
|
|
|
|
|
3,532
|
|
|
|
10,078
|
|
|
|
|
12,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and integration expenses
|
|
|
|
1,975
|
|
|
|
|
-
|
|
|
|
2,435
|
|
|
|
|
62
|
|
Loss on disposal of fixed assets
|
|
|
|
30
|
|
|
|
|
54
|
|
|
|
119
|
|
|
|
|
164
|
|
Asset impairment charges and restaurant closing costs
|
|
|
|
2
|
|
|
|
|
1
|
|
|
|
135
|
|
|
|
|
3
|
|
Non-cash compensation
|
|
|
|
387
|
|
|
|
|
507
|
|
|
|
2,757
|
|
|
|
|
1,948
|
|
Loss from discontinued operations, net
|
|
|
|
111
|
|
|
|
|
111
|
|
|
|
334
|
|
|
|
|
328
|
|
Pre-opening expense
|
|
|
|
48
|
|
|
|
|
192
|
|
|
|
934
|
|
|
|
|
607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
3,725
|
|
|
|
$
|
4,397
|
|
|
$
|
16,792
|
|
|
|
$
|
16,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: For purposes of computing Adjusted EBITDA, the $40 and $246
for the quarters ended October 1, 2017 and October 2, 2016,
respectively, and $1,715 and $1,158 for the nine months ended
October 1, 2017 and October 2, 2016, respectively, in non-cash
compensation associated with a profits interest grant issued to
Black Knight Advisory Services, LLC ("BKAS") on October 6, 2015
has been included in "Non-cash compensation" above. Additional
expenses associated with the Company's management agreement with
BKAS totaling $120 and $133 for the quarters ended October 1, 2017
and October 2, 2016, respectively, and totaling $559 and $451 for
the nine months ended October 1, 2017 and October 2, 2016,
respectively, are included in general and administrative expenses
and have not been included in the reconciliation set forth above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander's Holdings, Inc. and Subsidiaries
|
|
Non-GAAP Financial Measures and Reconciliations
|
|
(Unaudited in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Nine Months Ended
|
|
|
|
|
October 1
|
|
|
October 2
|
|
|
October 1
|
|
|
October 2
|
|
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
|
|
|
Amount
|
|
|
Percent of
Net Sales
|
|
|
Amount
|
|
|
Percent of
Net Sales
|
|
|
Amount
|
|
|
Percent of
Net Sales
|
|
|
Amount
|
|
|
Percent of
Net Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
$
|
(1,392
|
)
|
|
|
-2.6
|
%
|
|
|
$
|
1,306
|
|
|
2.5
|
%
|
|
|
$
|
2,617
|
|
|
1.5
|
%
|
|
|
$
|
6,300
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
4,315
|
|
|
|
8.0
|
%
|
|
|
|
4,104
|
|
|
8.0
|
%
|
|
|
|
15,479
|
|
|
9.0
|
%
|
|
|
|
13,963
|
|
|
8.6
|
%
|
|
Transaction and integration expenses
|
|
|
|
1,975
|
|
|
|
3.7
|
%
|
|
|
|
-
|
|
|
0.0
|
%
|
|
|
|
2,435
|
|
|
1.4
|
%
|
|
|
|
62
|
|
|
0.0
|
%
|
|
Pre-opening expense
|
|
|
|
48
|
|
|
|
0.1
|
%
|
|
|
|
192
|
|
|
0.4
|
%
|
|
|
|
934
|
|
|
0.5
|
%
|
|
|
|
607
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant Operating Profit
|
|
|
$
|
4,946
|
|
|
|
9.2
|
%
|
|
|
$
|
5,602
|
|
|
10.9
|
%
|
|
|
$
|
21,465
|
|
|
12.5
|
%
|
|
|
$
|
20,932
|
|
|
12.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
