Net Sales Up 3% For Fourth Quarter
NASHVILLE, Tenn.--(BUSINESS WIRE)--J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner and
operator of J. Alexander’s, Redlands Grill, Stoney River Steakhouse and
Grill and selected other restaurants, today reported financial results
for the fourth quarter ended December 30, 2018. The Company’s fiscal
year ends on the Sunday closest to December 31 each year and therefore,
as fiscal 2018 began on January 1, 2018, the benefit of New Year’s Eve
activity, which is typically one of the Company’s highest volume days
during the year, is not reflected in the Company’s reported results for
any of the periods comprising annual results for 2018.
Fourth Quarter 2018 Highlights Compared To The Fourth Quarter Of 2017
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Net sales were $63,205,000, an increase of 3.0% from $61,338,000
reported in the fourth quarter of 2017.
-
For the J. Alexander’s/Grill restaurants, average weekly same store
sales per restaurant(1) were $115,800, a gain of 0.3% from
$115,500 reported in the fourth quarter of 2017. For the Stoney River
Steakhouse and Grill restaurants, average weekly same store sales per
restaurant were $85,400, up 2.4% from $83,400 recorded in the fourth
quarter of 2017.
-
The Company recorded a loss from continuing operations before income
taxes of $470,000 for the fourth quarter of 2018 compared to income
from continuing operations before income taxes of $4,340,000 in the
corresponding quarter of the prior year. The principal factor
impacting income for the fourth quarter of 2018 was the non-recurring
transaction expense of $4,560,000 related to the termination of the
consulting agreement (“Consulting Agreement”) between Black Knight
Advisory Services, LLC (“Black Knight”) and the Company announced on
November 30, 2018 (see “Black Knight Consulting Agreement Terminated”
below). The Company funded this obligation on January 31, 2019 through
use of cash on hand and eliminated the obligation to pay Black Knight
3% of the Company’s Adjusted EBITDA for the remaining 6.8-year term of
the Consulting Agreement. According to termination provisions of the
Consulting Agreement, the Company is also required to make a separate
cash payment of $705,000 to Black Knight for the pro-rata portion of
the 2018 consulting fee within ten days of the completion of its 2018
audit.
-
The final valuation of the Black Knight profits interest grant was
calculated at the completion of the vesting period on October 6, 2018
and resulted in profits interest income of $450,000 in the most recent
quarter. This compares to profits interest income of $773,000 in the
fourth quarter of 2017. The Company also accrued consulting fees of
$116,000 under the Consulting Agreement in the fourth quarter of 2018.
This compares to consulting fees of $250,000 recorded in the final
quarter of 2017.
-
The loss from continuing operations before income taxes for the fourth
quarter of 2018 included non-recurring transaction expenses of
$4,715,000, up from non-recurring transaction expenses of $1,094,000
in the same quarter a year earlier. Excluding these non-recurring
transaction expenses for both periods, the Company’s income from
continuing operations before income taxes would have totaled
$4,245,000 for the fourth quarter of 2018 compared to $5,434,000 for
the fourth quarter of 2017.
-
The Company recorded net income of $934,000 for the fourth quarter of
2018. This compares to net income of $5,340,000 in the fourth quarter
of 2017. Results included an income tax benefit of $1,524,000 in the
fourth quarter of 2018 compared to an income tax benefit of $1,105,000
in the corresponding quarter of the previous year. The tax benefit for
2018 was the result of a (66%) effective tax rate, driven in large
part by the impact of FICA tip credits on lower pre-tax income.
-
The basic and diluted earnings per share totaled $0.06 for the fourth
quarter of 2018 compared to $0.36 for the fourth quarter of 2017.
-
Adjusted EBITDA(2) was $7,364,000 in the fourth quarter of
2018, down 9.9% from $8,177,000 in the final quarter of 2017.
-
Restaurant Operating Profit Margin(3) as a percent of net
sales was 12.8% in the fourth quarter of 2018 compared to
14.9% for the same quarter of 2017.
-
Cost of sales as a percentage of net sales in the fourth quarter of
2018 was 32.7% compared to 32.1% in the last quarter of 2017.
(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 18 months. Revenue associated with
reduction in liabilities for gift cards, which is recognized in
proportion to guest redemptions based on historical redemption rates and
commonly referred to as gift card breakage, is not included in the
calculation of average weekly same store sales per restaurant. Average
weekly same store sales are 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 Operating Income (Loss). Management uses
Restaurant Operating Profit to measure operating performance at the
restaurant level.
For the fourth quarter of 2018, the Company’s restaurant labor and
related costs as a percentage of net sales were 30.4% compared to 29.5%
of net sales in the last quarter of 2017. Other restaurant operating
expenses were 19.5% of net sales in the fourth quarter of 2018 compared
to 19.4% of net sales in the final quarter of 2017.
The Company’s consolidated operating loss for the fourth quarter of 2018
was ($361,000) compared to operating income of $4,507,000 for the
fourth quarter of 2017.
The average weekly guest counts within the same store base of the
Company’s J. Alexander’s/Grill locations were down 1.7% in the fourth
quarter of 2018 compared to the fourth quarter of the prior year. Guest
counts within the same store base at the Company’s Stoney River
Steakhouse and Grill restaurants were up 2.2% for the fourth quarter of
2018 compared to the fourth quarter of 2017. With respect to average
guest checks, which include alcoholic beverage sales, the average guest
check within the J. Alexander’s/Grill same store base of restaurants
during the fourth quarter of 2018 was $32.51, up 1.9% from $31.90 during
the fourth quarter of 2017. The average guest check within the same
store base of Stoney River Steakhouse and Grill restaurants was $44.05
during the final quarter of 2018, down 0.1% from $44.09 posted in the
corresponding quarter of 2017.
On a consolidated basis, average weekly guest counts within the
Company’s J. Alexander’s/Grill locations in the fourth quarter of 2018
were down 3.0% from the fourth quarter of 2017, while average weekly
guest counts within the Company’s Stoney River Steakhouse and Grill
locations increased 4.4% for the fourth quarter of 2018 compared to the
fourth quarter of 2017. Average guest checks for the combined J.
Alexander’s/Grill restaurants increased 1.9% from $31.90 in the fourth
quarter of 2017 to $32.52 for the final quarter of 2018. Average guest
checks for the Stoney River Steakhouse and Grill restaurants decreased
0.8% from $44.09 in the fourth quarter of 2017 to $43.72 in the fourth
quarter of 2018.
The effect of menu pricing for the fourth quarter of 2018 was estimated
to be a 0.9% increase for both the J. Alexander’s/Grill restaurants and
the Stoney River Steakhouse and Grill restaurants compared to the last
quarter of 2017. Inflation in food costs for the fourth quarter of 2018
was estimated to total 2.8% for the J. Alexander’s/Grill restaurants,
with beef costs increasing by an estimated 4.1% compared to the fourth
quarter of 2017. For the Stoney River Steakhouse and Grill restaurants,
inflation for the fourth quarter of 2018 was estimated to total 2.9%,
with beef costs up by 5.7% from the comparable quarter of 2017.
Board Approves Stock Repurchase Program
During the fourth quarter of 2018, the Company’s board of directors
authorized a share repurchase program, replacing the program that had
been in place since October 29, 2015. The board authorized the Company
to purchase up to $15,000,000 of its common stock in the aggregate over
a three-year period ending November 1, 2021. Under the prior program,
the Company repurchased 305,059 shares of common stock over three years
for an aggregate purchase price of $3,203,000, using cash on hand and
operating cash flow to fund such purchases. Share repurchases under the
newly authorized program are expected to be made solely from cash on
hand and available operating cash flow. Repurchases will be made in
accordance with applicable securities laws and may be made from time to
time in the open market. The timing, prices and amount of repurchases
will depend upon prevailing market prices, general economic and market
conditions and other considerations. The repurchase program does not
obligate the Company to acquire any amount of stock.
Black Knight Consulting Agreement Terminated
On November 30, 2018, the Company entered into a termination agreement
(“Termination Agreement”) which effectively terminated its Consulting
Agreement with Black Knight. The Consulting Agreement had been in place
since September 2015 in connection with the Company’s separation from
Fidelity National Financial, Inc. (NYSE: FNF) (the “Spin off”). Under
the terms of the Termination Agreement and the Consulting Agreement, the
Company made a termination payment of $4,560,000 to Black Knight on
January 31, 2019. In addition, the Company agreed to make a final
payment of the pro-rated annual fee related to fiscal 2018 within ten
days of the completion of the 2018 audit. Such payment, totaling
$705,000, is expected to occur on March 15, 2019 and will also be funded
through use of cash on hand. Additionally, in accordance with the terms
of the Consulting Agreement, the Termination Agreement and the 2015 Unit
Grant Agreement (the “Grant Agreement”), also entered into in connection
with the Spin-off and pursuant to which Black Knight was granted
1,500,024 Class B profits interest units of the Company’s operating
subsidiary, J. Alexander’s Holdings, LLC, Black Knight had 90 days from
the effective termination date of November 30, 2018 to exercise exchange
rights relative to the fully-vested profits interest units it held.
Under the Grant Agreement, the profits interest units could be exchanged
by Black Knight for shares of the Company’s common stock if the market
capitalization of the Company exceeded a hurdle amount of approximately
$151,052,000 at the time of the exchange. The number of shares of
Company common stock issuable on exchange would have been determined in
accordance with the terms of the Grant Agreement and the J. Alexander’s
Holdings, LLC operating agreement. The Black Knight profits interest
grant expired on February 28, 2019 without an exchange of the related B
units into the Company’s common stock and, as a result, the Class B
units were cancelled and forfeited for no consideration.
Chief Executive Officer’s Comments
“Persistently soft sales from selected new restaurants, coupled with a
significant beef price inflation of 4.1%, were primary factors impacting
the performance of our J. Alexander’s/Grill restaurant collection in the
final quarter of 2018,” said Lonnie J. Stout II, President and Chief
Executive Officer of J. Alexander’s Holdings, Inc. “In contrast, we
continued to be pleased with the results in our Stoney River Steakhouse
and Grill collection, highlighted by another quarter of increased same
store sales and higher guest counts.”
Stout said that the soft sales trend in the newer J. Alexander’s/Grill
restaurants occurred for much of the final two quarters of 2018. He also
stated “this is not unusual to have soft sales in our openings. Our
history has been that the ramp up associated with our new restaurants
can be slow, especially in markets that are new to us.” The Company is
aggressively promoting these new locations through the use of social
media.
“We have experienced a modest improvement in guest counts and sales at
our newest J. Alexander’s restaurant,” Stout continued. “We do believe
that our initiatives will ultimately move the needle related to
consistently raising guest traffic in each of our selected
underperforming restaurants. We remain convinced from experience that
once guests realize what we offer, they will help us build the
foundation for long-term success in these newer restaurants.”
Stout noted that at the Stoney River Steakhouse and Grill group, various
operational measures implemented over past quarters to build guest
counts and sales at specific locations have translated into a steadily
improved financial performance. “Stoney River continues to perform well
on a comparative basis, although not quite as robust as in recent
quarters of 2018 as we bumped up against strong performances in the
previous year. We are pleased again to report that most of the sales
increases generated within this group have been organic. At the same
time, we are continuing to experience solid performances from our newer
Stoney River restaurants, the latest opening in the fourth quarter in
Troy, Michigan.”
Stout said that beef prices in 2019 are presently trending higher than
in 2018. “At this time, we do not know what the impact will be from
extreme cold weather. Other commodities are expected to increase
modestly in 2019 but we do not anticipate the need at present to pass on
any significant price increases.”
Stout added that the Company’s guidance for fiscal 2019 calls for
improving same store sales in the J. Alexander’s/Grill restaurant
collection and a continued upward trend in same store sales in the
Stoney River Steakhouse and Grill collection. The guidance for 2019 also
reflects increases in the Company’s Adjusted EBITDA, net income and
basic EPS range.
Full Year Highlights For 2018
For fiscal 2018, the Company recorded net sales of $242,264,000, up 3.9%
from $233,255,000 recorded in 2017. Within the J. Alexander’s/Grill
restaurants, average weekly same store sales per restaurant rose 1.1% to
$115,100 in 2018 from $113,800 in the same four quarters of 2017. For
the Stoney River Steakhouse and Grill restaurants, average weekly same
store sales per restaurant advanced 5.0% from $76,200 in 2017 to $80,000
in 2018.
Income from continuing operations before income taxes for fiscal 2018
was $2,862,000, down from $6,426,000 reported for 2017. These balances
reflect the impact of $5,648,000 in transaction expenses for 2018 and
$3,529,000 in transaction expenses during 2017.
During fiscal 2018, the Black Knight profits interest grant resulted in
non-cash profits interest expense of $2,644,000 compared to profits
interest expense of $942,000 reported in 2017. For the most recent year,
the Company accrued consulting fees of $703,000 from its consulting
agreement with Black Knight compared to $809,000 of expense in 2017.
The Company posted net income of $3,999,000 in fiscal 2018, down from
$7,334,000 achieved in 2017. Adjusted EBITDA for fiscal 2018 totaled
$25,622,000, up from $24,969,000 recorded in the prior year. Basic
earnings per share and diluted earnings per share totaled $0.27 in 2018.
In the comparable four quarters of 2017, basic earnings per share and
diluted earnings per share totaled $0.50. (See attached “Adjusted EBITDA
Reconciliation” for the Company’s definition of Adjusted EBITDA and a
reconciliation to net income.)
Guest counts within the same store base of restaurants decreased by 1.3%
within the J. Alexander’s/Grill restaurants for fiscal 2018 and
increased 5.2% within the Stoney River Steakhouse and Grill restaurants
during 2018. The average guest check within the same store base at the
combined J. Alexander’s/Grill restaurants increased 2.5% from $31.17 for
2017 to $31.95 for 2018, while the average guest check within the Stoney
River Steakhouse and Grill same store base of restaurants decreased by
0.3% from $43.11 in 2017 to $43.00 for 2018. The effect of menu price
changes for 2018 was estimated to be a 1.7% increase over 2017 at the J.
Alexander’s/Grill locations and a 1.6% increase over 2017 at the Stoney
River Steakhouse and Grill restaurants.
Cost of sales as a percentage of net sales for 2018 was 31.9% compared
to 32.0% for 2017. The estimated effect of inflation in food costs for
2018 was 1.6% for the J. Alexander’s/Grill restaurants, with beef costs
increasing by approximately 0.7% compared to the same twelve months a
year earlier. For the Stoney River Steakhouse and Grill restaurants,
inflation was estimated to be 0.4% during 2018, with beef costs
increasing by 0.3% from 2017.
Restaurant Development
During 2018, the Company opened one new J. Alexander’s restaurant and
one new Stoney River Steakhouse and Grill. The new J. Alexander’s
restaurant opened on April 30, 2018 in King of Prussia, Pennsylvania.
The new Stoney River Steakhouse opened on October 29, 2018 in Troy,
Michigan. The 2019 development plan calls for two new J.
Alexander’s/Grill restaurants which are scheduled to open during the
fourth quarter of 2019, the first of which will be located in Houston,
Texas.
2019 Guidance
The Company’s performance outlook is based on current information as of
March 11, 2019. The Company does not expect to update its 2019 guidance
as set forth below before the next quarter’s earnings release. However,
the information on which the outlook is based is subject to change, and
the Company may update its full business outlook or any portion thereof
at any time for any reason.
Based upon current information, the guidance for the 2019 fiscal year is
as follows:
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Same Store Sales:
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|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s/Grill
|
|
|
|
|
+1.0% - +2.0%
|
|
|
|
|
|
|
|
|
Stoney River Steakhouse and Grill
|
|
|
|
|
+2.0% - +3.0%
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
|
|
|
$19.0MM - $21.0MM
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$253.0MM - $256.0MM
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
|
|
$10.2MM - $11.2MM
|
|
|
|
|
|
|
|
|
AEBITDA
|
|
|
|
|
$27.2MM - $28.2MM
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
|
2.0% - 6.0%
|
|
|
|
|
|
|
|
|
Basic EPS Range
|
|
|
|
|
$0.69 - $0.76
|
|
|
|
|
|
|
|
Conference Call
The Company will hold a conference call on Tuesday, March 12, 2019, at
10:00 a.m., Central Time, to discuss its financial results for the
fourth quarter and year ended December 30, 2018. 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 J. Alexander’s website at http://investor.jalexandersholdings.com
or http://public.viavid.com/index.php?id=133414.
A replay of the conference call will be available shortly following the
conclusion of the call (beginning at 1 p.m. Central Time) at http://investor.jalexandersholdings.com
and http://public.viavid.com/index.php?id=133414,
as well as by dialing 1-844-512-2921 or 1-412-317-6671 and entering
access code 13687954. The replay will be accessible through March 19,
2019 via telephone, and for 30 days on the internet.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants that focus
on providing high quality food, outstanding professional service and an
attractive ambiance. The Company presently operates 46 restaurants in 16
states. The Company has its headquarters in Nashville, TN.
For additional information, visit www.jalexandersholdings.com.
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. 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 and the Company’s ability to operate them 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; 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 15, 2018 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.
|
|
|
J. Alexander’s Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Income
|
|
(Unaudited in thousands, except per share amounts)
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Year Ended
|
|
|
|
|
December 30
|
|
|
December 31
|
|
|
December 30
|
|
|
December 31
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
63,205
|
|
|
|
$
|
61,338
|
|
|
|
$
|
242,264
|
|
|
|
$
|
233,255
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
20,692
|
|
|
|
|
19,670
|
|
|
|
|
77,262
|
|
|
|
|
74,548
|
|
|
Restaurant labor and related costs
|
|
|
|
19,240
|
|
|
|
|
18,085
|
|
|
|
|
74,850
|
|
|
|
|
71,541
|
|
|
Depreciation and amortization of restaurant property and equipment
|
|
|
|
2,847
|
|
|
|
|
2,554
|
|
|
|
|
10,870
|
|
|
|
|
9,999
|
|
|
Other operating expenses
|
|
|
|
12,319
|
|
|
|
|
11,917
|
|
|
|
|
48,245
|
|
|
|
|
46,590
|
|
|
Total restaurant operating expenses
|
|
|
|
55,098
|
|
|
|
|
52,226
|
|
|
|
|
211,227
|
|
|
|
|
202,678
|
|
|
Transaction and integration expenses
|
|
|
|
4,715
|
|
|
|
|
1,094
|
|
|
|
|
5,648
|
|
|
|
|
3,529
|
|
|
General and administrative expenses
|
|
|
|
3,362
|
|
|
|
|
3,407
|
|
|
|
|
20,485
|
|
|
|
|
18,886
|
|
|
Pre-opening expense
|
|
|
|
391
|
|
|
|
|
104
|
|
|
|
|
1,415
|
|
|
|
|
1,038
|
|
|
Total operating expenses
|
|
|
|
63,566
|
|
|
|
|
56,831
|
|
|
|
|
238,775
|
|
|
|
|
226,131
|
|
|
Operating (loss) income
|
|
|
|
(361
|
)
|
|
|
|
4,507
|
|
|
|
|
3,489
|
|
|
|
|
7,124
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(187
|
)
|
|
|
|
(191
|
)
|
|
|
|
(724
|
)
|
|
|
|
(816
|
)
|
|
Other, net
|
|
|
|
78
|
|
|
|
|
24
|
|
|
|
|
97
|
|
|
|
|
118
|
|
|
Total other expense
|
|
|
|
(109
|
)
|
|
|
|
(167
|
)
|
|
|
|
(627
|
)
|
|
|
|
(698
|
)
|
|
(Loss) income from continuing operations before income taxes
|
|
|
|
(470
|
)
|
|
|
|
4,340
|
|
|
|
|
2,862
|
|
|
|
|
6,426
|
|
|
Income tax benefit
|
|
|
|
1,524
|
|
|
|
|
1,105
|
|
|
|
|
1,596
|
|
|
|
|
1,347
|
|
|
Loss from discontinued operations, net
|
|
|
|
(120
|
)
|
|
|
|
(105
|
)
|
|
|
|
(459
|
)
|
|
|
|
(439
|
)
|
|
Net income
|
|
|
$
|
934
|
|
|
|
$
|
5,340
|
|
|
|
$
|
3,999
|
|
|
|
$
|
7,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
$
|
0.07
|
|
|
|
$
|
0.37
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.53
|
|
|
Loss from discontinued operations, net
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.03
|
)
|
|
Basic earnings per share
|
|
|
$
|
0.06
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.27
|
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
$
|
0.07
|
|
|
|
$
|
0.37
|
|
|
|
$
|
0.30
|
|
|
|
$
|
0.53
|
|
|
Loss from discontinued operations, net
|
|
|
|
(0.01
|
)
|
|
|
|
(0.01
|
)
|
|
|
|
(0.03
|
)
|
|
|
|
(0.03
|
)
|
|
Diluted earnings per share
|
|
|
$
|
0.06
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.27
|
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
14,695
|
|
|
|
|
14,695
|
|
|
|
|
14,695
|
|
|
|
|
14,695
|
|
|
Diluted
|
|
|
|
14,695
|
|
|
|
|
14,695
|
|
|
|
|
14,863
|
|
|
|
|
14,768
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Income Data as a Percentage
of Net Sales and
|
|
Other Financial and Performance Data (Unaudited)
|
|
|
|
|
|
|
Quarter Ended
|
|
|
Year Ended
|
|
|
|
|
December 30
|
|
|
December 31
|
|
|
December 30
|
|
|
December 31
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Net sales
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
|
|
100.0
|
%
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
32.7
|
|
|
|
|
32.1
|
|
|
|
|
31.9
|
|
|
|
|
32.0
|
|
|
Restaurant labor and related costs
|
|
|
|
30.4
|
|
|
|
|
29.5
|
|
|
|
|
30.9
|
|
|
|
|
30.7
|
|
|
Depreciation and amortization of restaurant property and equipment
|
|
|
|
4.5
|
|
|
|
|
4.2
|
|
|
|
|
4.5
|
|
|
|
|
4.3
|
|
|
Other operating expenses
|
|
|
|
19.5
|
|
|
|
|
19.4
|
|
|
|
|
19.9
|
|
|
|
|
20.0
|
|
|
Total restaurant operating expenses
|
|
|
|
87.2
|
|
|
|
|
85.1
|
|
|
|
|
87.2
|
|
|
|
|
86.9
|
|
|
Transaction and integration expenses
|
|
|
|
7.5
|
|
|
|
|
1.8
|
|
|
|
|
2.3
|
|
|
|
|
1.5
|
|
|
General and administrative expenses
|
|
|
|
5.3
|
|
|
|
|
5.6
|
|
|
|
|
8.5
|
|
|
|
|
8.1
|
|
|
Pre-opening expense
|
|
|
|
0.6
|
|
|
|
|
0.2
|
|
|
|
|
0.6
|
|
|
|
|
0.4
|
|
|
Total operating expenses
|
|
|
|
100.6
|
|
|
|
|
92.7
|
|
|
|
|
98.6
|
|
|
|
|
96.9
|
|
|
Operating (loss) income
|
|
|
|
(0.6
|
)
|
|
|
|
7.3
|
|
|
|
|
1.4
|
|
|
|
|
3.1
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
Other, net
|
|
|
|
0.1
|
|
|
|
|
0.0
|
|
|
|
|
0.0
|
|
|
|
|
0.1
|
|
|
Total other expense
|
|
|
|
(0.2
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
(Loss) income from continuing operations before income taxes
|
|
|
|
(0.7
|
)
|
|
|
|
7.1
|
|
|
|
|
1.2
|
|
|
|
|
2.8
|
|
|
Income tax benefit
|
|
|
|
2.4
|
|
|
|
|
1.8
|
|
|
|
|
0.7
|
|
|
|
|
0.6
|
|
|
Loss from discontinued operations, net
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
Net income
|
|
|
|
1.5
|
%
|
|
|
|
8.7
|
%
|
|
|
|
1.7
|
%
|
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Certain percentage totals do not sum due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Financial and Performance Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(1)
|
|
|
$
|
7,364
|
|
|
|
$
|
8,177
|
|
|
|
$
|
25,622
|
|
|
|
$
|
24,969
|
|
|
As a % of net sales
|
|
|
|
11.7
|
%
|
|
|
|
13.3
|
%
|
|
|
|
10.6
|
%
|
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average weekly sales per restaurant:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s / Grill Restaurants
|
|
|
$
|
114,100
|
|
|
|
$
|
115,500
|
|
|
|
$
|
112,900
|
|
|
|
$
|
112,900
|
|
|
Percent change
|
|
|
|
-1.2
|
%
|
|
|
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stoney River Steakhouse and Grill
|
|
|
$
|
86,400
|
|
|
|
$
|
83,400
|
|
|
|
$
|
79,800
|
|
|
|
$
|
75,400
|
|
|
Percent change
|
|
|
|
3.6
|
%
|
|
|
|
|
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average weekly same store sales per restaurant:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s / Grill Restaurants
|
|
|
$
|
115,800
|
|
|
|
$
|
115,500
|
|
|
|
$
|
115,100
|
|
|
|
$
|
113,800
|
|
|
Percent change
|
|
|
|
0.3
|
%
|
|
|
|
|
|
|
1.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stoney River Steakhouse and Grill
|
|
|
$
|
85,400
|
|
|
|
$
|
83,400
|
|
|
|
$
|
80,000
|
|
|
|
$
|
76,200
|
|
|
Percent change
|
|
|
|
2.4
|
%
|
|
|
|
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See definitions and reconciliation attached.
|
|
|
|
|
|
J. Alexander’s Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Balance Sheets
|
|
(Unaudited in thousands)
|
|
|
|
|
|
|
December 30
|
|
|
December 31
|
|
|
|
|
2018
|
|
|
2017
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
8,783
|
|
|
$
|
10,711
|
|
Other current assets
|
|
|
|
8,682
|
|
|
|
8,019
|
|
Total current assets
|
|
|
|
17,465
|
|
|
|
18,730
|
|
|
|
|
|
|
|
|
|
Other assets
|
|
|
|
5,557
|
|
|
|
5,661
|
|
Deferred income taxes
|
|
|
|
539
|
|
|
|
522
|
|
Property and equipment, net
|
|
|
|
109,332
|
|
|
|
103,615
|
|
Goodwill
|
|
|
|
15,737
|
|
|
|
15,737
|
|
Tradename and other indefinite-lived intangibles
|
|
|
|
25,647
|
|
|
|
25,202
|
|
Deferred Charges, net
|
|
|
|
272
|
|
|
|
184
|
|
|
|
|
$
|
174,549
|
|
|
$
|
169,651
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
$
|
33,778
|
|
|
$
|
30,027
|
|
Long term debt, net of portion classified as current and
unamortized deferred loan costs
|
|
|
|
5,866
|
|
|
|
10,781
|
|
Deferred compensation obligations
|
|
|
|
6,251
|
|
|
|
6,451
|
|
Deferred income taxes
|
|
|
|
-
|
|
|
|
2,075
|
|
Other long-term liabilities
|
|
|
|
6,995
|
|
|
|
6,456
|
|
Stockholders’ equity
|
|
|
|
121,659
|
|
|
|
113,861
|
|
|
|
|
$
|
174,549
|
|
|
$
|
169,651
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s Holdings, Inc. and Subsidiaries
|
|
Condensed Consolidated Statements of Cash Flows
|
|
(Unaudited in thousands)
|
|
|
Year Ended
|
|
|
|
|
December 30
|
|
|
December 31
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
3,999
|
|
|
|
$
|
7,334
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization of property and equipment
|
|
|
|
11,157
|
|
|
|
|
10,287
|
|
|
Equity-based compensation expense
|
|
|
|
3,765
|
|
|
|
|
2,207
|
|
|
Other, net
|
|
|
|
(1,659
|
)
|
|
|
|
(1,706
|
)
|
|
Changes in assets and liabilities, net
|
|
|
|
4,418
|
|
|
|
|
3,138
|
|
|
Net cash provided by operating activities
|
|
|
|
21,680
|
|
|
|
|
21,260
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
|
(18,111
|
)
|
|
|
|
(13,312
|
)
|
|
Other investing activities
|
|
|
|
(497
|
)
|
|
|
|
(256
|
)
|
|
Net cash used in investing activities
|
|
|
|
(18,608
|
)
|
|
|
|
(13,568
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Payments on long-term debt and obligations under capital leases
|
|
|
|
(5,000
|
)
|
|
|
|
(3,611
|
)
|
|
Other financing activities
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
Net cash used in financing activities
|
|
|
|
(5,000
|
)
|
|
|
|
(3,613
|
)
|
|
(Decrease) increase in cash and cash equivalents
|
|
|
|
(1,928
|
)
|
|
|
|
4,079
|
|
|
Cash and cash equivalents at beginning of year
|
|
|
|
10,711
|
|
|
|
|
6,632
|
|
|
Cash and cash equivalents at end of year
|
|
|
$
|
8,783
|
|
|
|
$
|
10,711
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
Property and equipment obligations accrued at beginning of year
|
|
|
$
|
1,854
|
|
|
|
$
|
2,587
|
|
|
Property and equipment obligations accrued at end of year
|
|
|
|
819
|
|
|
|
|
1,854
|
|
|
Cash paid for interest
|
|
|
|
795
|
|
|
|
|
797
|
|
|
Cash paid for income taxes
|
|
|
|
704
|
|
|
|
|
850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
Year Ended
|
|
|
|
|
December 30
|
|
|
December 31
|
|
|
December 30
|
|
|
December 31
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
934
|
|
|
|
$
|
5,340
|
|
|
|
$
|
3,999
|
|
|
|
$
|
7,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
|
(1,524
|
)
|
|
|
|
(1,105
|
)
|
|
|
|
(1,596
|
)
|
|
|
|
(1,347
|
)
|
|
Interest expense
|
|
|
|
187
|
|
|
|
|
191
|
|
|
|
|
724
|
|
|
|
|
816
|
|
|
Depreciation and amortization
|
|
|
|
2,920
|
|
|
|
|
2,638
|
|
|
|
|
11,195
|
|
|
|
|
10,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
2,517
|
|
|
|
|
7,064
|
|
|
|
|
14,322
|
|
|
|
|
17,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and integration expenses
|
|
|
|
4,715
|
|
|
|
|
1,094
|
|
|
|
|
5,648
|
|
|
|
|
3,529
|
|
|
Loss on disposal of fixed assets
|
|
|
|
80
|
|
|
|
|
28
|
|
|
|
|
202
|
|
|
|
|
147
|
|
|
Asset impairment charges and restaurant closing costs
|
|
|
|
3
|
|
|
|
|
(3
|
)
|
|
|
|
17
|
|
|
|
|
132
|
|
|
Non-cash compensation
|
|
|
|
(462
|
)
|
|
|
|
(215
|
)
|
|
|
|
3,559
|
|
|
|
|
2,542
|
|
|
Loss from discontinued operations, net
|
|
|
|
120
|
|
|
|
|
105
|
|
|
|
|
459
|
|
|
|
|
439
|
|
|
Pre-opening expense
|
|
|
|
391
|
|
|
|
|
104
|
|
|
|
|
1,415
|
|
|
|
|
1,038
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
7,364
|
|
|
|
$
|
8,177
|
|
|
|
$
|
25,622
|
|
|
|
$
|
24,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: For purposes of computing Adjusted EBITDA, the ($450) and ($773)
for the quarters ended December 30, 2018 and December 31, 2017,
respectively, and $2,644 and $942 for the years ended December 30, 2018
and December 31, 2017, 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 $116 and $250 for the quarters
ended December 30, 2018 and December 31, 2017, respectively, and
totaling $703 and $809 for the years ended December 30, 2018 and
December 31, 2017, 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
|
|
|
Year Ended
|
|
|
|
|
December 30
|
|
|
December 31
|
|
|
December 30
|
|
|
December 31
|
|
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
Amount
|
|
|
Percent of Net
Sales
|
|
|
Amount
|
|
|
Percent of Net
Sales
|
|
|
Amount
|
|
|
Percent of Net
Sales
|
|
|
Amount
|
|
|
Percent of Net
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income
|
|
|
$
|
(361
|
)
|
|
|
-0.6
|
%
|
|
|
$
|
4,507
|
|
|
7.3
|
%
|
|
|
$
|
3,489
|
|
|
1.4
|
%
|
|
|
$
|
7,124
|
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
|
3,362
|
|
|
|
5.3
|
%
|
|
|
|
3,407
|
|
|
5.6
|
%
|
|
|
|
20,485
|
|
|
8.5
|
%
|
|
|
|
18,886
|
|
|
8.1
|
%
|
|
Transaction and integration expenses
|
|
|
|
4,715
|
|
|
|
7.5
|
%
|
|
|
|
1,094
|
|
|
1.8
|
%
|
|
|
|
5,648
|
|
|
2.3
|
%
|
|
|
|
3,529
|
|
|
1.5
|
%
|
|
Pre-opening expense
|
|
|
|
391
|
|
|
|
0.6
|
%
|
|
|
|
104
|
|
|
0.2
|
%
|
|
|
|
1,415
|
|
|
0.6
|
%
|
|
|
|
1,038
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant Operating Profit
|
|
|
$
|
8,107
|
|
|
|
12.8
|
%
|
|
|
$
|
9,112
|
|
|
14.9
|
%
|
|
|
$
|
31,037
|
|
|
12.8
|
%
|
|
|
$
|
30,577
|
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Alexander’s Holdings, Inc. and Subsidiaries
|
|
Reconciliation of Guidance Range for 2019 Adjusted EBITDA
|
|
(Unaudited in thousands)
|
|
|
|
|
|
|
2019 Guidance Range
|
|
|
|
|
Low
|
|
|
High
|
|
|
|
|
|
|
|
|
|
Net income (estimated)
|
|
|
$
|
10,200
|
|
|
$
|
11,200
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
655
|
|
|
|
715
|
|
Interest expense
|
|
|
|
505
|
|
|
|
505
|
|
Depreciation and amortization
|
|
|
|
12,380
|
|
|
|
12,380
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
23,740
|
|
|
|
24,800
|
|
|
|
|
|
|
|
|
|
Loss on disposal of fixed assets
|
|
|
|
250
|
|
|
|
250
|
|
Non-cash compensation
|
|
|
|
1,255
|
|
|
|
1,255
|
|
Loss from discontinued operations, net
|
|
|
|
475
|
|
|
|
475
|
|
Pre-opening expense
|
|
|
|
1,450
|
|
|
|
1,450
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$
|
27,170
|
|
|
$
|
28,230
|
|
|
|
|
|
|
|
|
