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J. Alexander’s Holdings, Inc. Reports Results for Second Quarter Ended July 4, 2021; Sales for the Quarter Exceed 2019 Levels by Nearly 10%

08/17/2021

J. Alexander’s Holdings, Inc. (NYSE: JAX) (the “Company”), owner and operator of J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and other restaurants, today provided a business update and reported results for the second quarter ended July 4, 2021.

Mark A. Parkey, Chief Executive Officer of the Company, stated, “Our sales momentum in 2021 continues to be impressive, with sales for the second quarter of 2021 representing nearly 110% of sales in the second quarter of 2019. Further, our profit margins continue to be solid despite recent pressure on input costs. We’re optimistic at this point that we’ve managed through the worst of the supply chain uncertainty and continue to expect strong demand for the dining experience that we provide daily to our loyal guests.”

Second Quarter 2021 Highlights Compared To The Second Quarter Of 2020

  • Cash provided by operating activities for the first half of 2021 was $15,280,000 as compared to cash used in operating activities in the first half of 2020 of $3,764,000.
  • Average weekly same store sales per restaurant(1) for the second quarter of 2021 were $121,600 for the J. Alexander’s/Grill restaurants, up 135.7% as compared to $51,600 for the second quarter of 2020. For the Stoney River restaurants average weekly same store sales per restaurant were $88,000 for the second quarter of 2021 as compared to $34,300 for the second quarter of 2020, for an increase of 156.6%.
  • Net sales for the second quarter of 2021 were $68,101,000, up from $27,602,000 reported in the second quarter of 2020. The second quarter of 2020 saw the COVID-19 pandemic at its peak, and dining room closures and capacity restrictions were pervasive throughout the Company’s restaurants. In the second quarter of 2021, the majority of the Company’s locations were operating at full capacity for the entire quarter, while a limited number of locations (primarily those in Michigan and Illinois) continued to have some level of capacity restrictions into late June 2021. However, all restaurants were fully reopened as of the end of the second quarter of 2021.
  • Income from continuing operations before income taxes totaled $2,232,000 for the second quarter of 2021. This compares to a loss from continuing operations before income taxes of $11,352,000 in the second quarter of 2020, which included the impact of approximately $1,100,000 in expenses related to emergency and other vacation and sick leave benefits related to the COVID-19 pandemic and approximately $321,000 related to severance and other restaurant closing costs. The second quarter of 2021 was impacted by approximately $1,888,000 of transaction costs related to the Company’s evaluation of strategic alternatives and the merger agreement entered into on July 2, 2021, as further discussed below.
  • Results for the second quarter of 2021 included income tax benefit of $24,000 compared to an income tax benefit of $4,419,000 in the second quarter of 2020.
  • Net income for the second quarter of 2021 totaled $2,253,000 compared to a net loss of $6,988,000 in the second quarter of 2020.
  • Basic and diluted earnings per share were $0.15 for the second quarter of 2021 compared to basic and diluted loss per share of $0.48 for the second quarter of 2020.
  • Adjusted EBITDA (2) was $7,788,000 in the second quarter of 2021 compared to $(7,363,000) in the second quarter of 2020.
  • Restaurant Operating Profit (Loss) Margin (3) was 14.2% in the second quarter of 2021 compared to (25.4)% for the second quarter of 2020.
  • Food and beverage costs as a percentage of net sales in the second quarter of 2021 were 33.6% compared to 37.9% in the second quarter of 2020.

The Company has seen positive trends in its sales recovery throughout 2021. Net sales in April, May and June 2021 reached approximately 106%, 107% and 115%, respectively, of sales experienced in the comparable periods of 2019, which was partially due to the new restaurant opening in La Cantera at the end of March 2021. On a 2-year comparative basis, average weekly same store sales were up 6.2% for the J. Alexander’s / Grills restaurants and up 10.6% for the Stoney River restaurants for the second quarter of 2021 as compared to the second quarter of 2019. Off-premise net sales for the second quarter of 2021 represented approximately 10.5% of total net sales for the quarter. Sales results for the second quarter of 2021 were aided by a price increase of approximately 3% taken during June 2021, as well as the continuing benefit of the price increase and packaging fee that were implemented in the second half of 2020.

Chief Executive Officer’s Comments

“We continue to be extremely encouraged by the resilience and pace of recovery of our restaurants as they each returned to full operating capacity over the course of the first half of 2021,” stated Parkey. “Further, our newest restaurant in the La Cantera Heights development in San Antonio has performed well above our original expectations during its first full quarter of operations, generating $105,800 in average weekly sales for the quarter. While the second quarter presented us with challenges on both the commodity cost front as well as from a labor sourcing and retention standpoint, we were able to navigate through those challenges and turn in strong operating results for the quarter.”

Liquidity and Business Update

As of July 4, 2021, the Company’s cash and cash equivalents totaled $22,611,000, and total outstanding indebtedness was $12,917,000, including $10,000,000 outstanding on the Company’s lines of credit facilities. On April 30, 2021, the Company repaid $6,000,000 on its outstanding lines of credit and on July 1, 2021, the Company borrowed $5,000,000 on its lines of credit. As of August 15, 2021, the Company has available capacity under its various revolving lines of credit totaling $26,000,000. The Company was in compliance with all required debt covenants as of July 4, 2021, and expects to be in compliance with its financial covenants for at least the next twelve months and to continue to meet conditions required to access its lines of credit.

As of August 15, 2021, the Company had cash on hand of approximately $22,060,000. The Company anticipates that, based on current business levels, it will have adequate liquidity for fiscal 2021 from operating cash flows and available borrowings.

Restaurant Development

Earlier in fiscal 2021, the Company began construction of a new J. Alexander’s Restaurant in Madison, AL, which is expected to open early in the first quarter of fiscal 2022.

Announced Agreement and Plan of Merger with SPB Hospitality, LLC

On July 2, 2021, the Company announced it entered into a merger agreement under which SPB Hospitality, LLC will acquire the Company in an all cash transaction valued at approximately $220 million, with shareholders receiving $14.00 in cash per share of common stock. The transaction is subject to customary closing conditions and is expected to be completed early in the fourth quarter of 2021.

2021 Outlook

The Company is not providing guidance for fiscal 2021 in light of the pending merger transaction and the continuing uncertainty surrounding governmental restrictions on restaurant capacity.

(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 when compared to the immediately preceding year. On a 2-year comparative basis, locations that were open during both periods of comparison are included in the average weekly same store sales calculations. 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 the non‐GAAP financial measure Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA. Management uses Adjusted EBITDA to evaluate operating performance and the effectiveness of its business strategies.

(3)Restaurant Operating Profit (Loss) Margin is the ratio of Restaurant Operating Profit (Loss), a non-GAAP financial measure, to net sales. Please refer to the financial information accompanying this release for our definition of the non‐GAAP financial measure Restaurant Operating Profit (Loss) and a reconciliation of operating income (loss) to Restaurant Operating Profit (Loss). Management uses Restaurant Operating Profit (Loss) to measure operating performance at the restaurant level.

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 47 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, including the impact of the COVID-19 pandemic on our operations, operating restaurants at increased capacity, consumer demand, our sales and off-premise sales, cash position, liquidity, input costs, financial results, compliance with financial covenants in our loan agreement, borrowing availability, and our ability to manage through the COVID-19 pandemic. 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 other events 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 health and financial effects of the COVID-19 pandemic; availability and acceptance of effective vaccines and treatments for COVID-19 including any new variants; government restrictions on indoor and outdoor dining and the Company’s ability to operate its restaurants at normal capacities, and thereafter to reestablish and maintain satisfactory guest count levels and maintain or increase sales and operating margin 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 Company’s ability to obtain access to additional capital as needed; the Company’s ability to comply with financial covenants under its loan agreement with its lender and to access available borrowing capacity; the impact of any impairment of our long-lived assets, including tradename; 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; changes in laws, including possible changes in the federal minimum wage rates; the uncertainties concerning the recently announced SPB Hospitality merger transaction, including the following: uncertainties as to whether the requisite approval 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, and indemnification and liability; 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; the effects of possible disruptions to business operations of the Company prior to the closing; 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 SEC on March 18, 2021, as amended on April 29, 2021, 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.

Additional Information and Where to Find it

In connection with the proposed merger, on August 9, 2021, the Company filed with the Securities and Exchange Commission (the “SEC”) a preliminary proxy statement on Schedule 14A. In addition, the Company expects to file with the SEC and furnish to its shareholders a definitive proxy statement on Schedule 14A, as well as other relevant documents concerning the proposed merger. Promptly after filing its definitive proxy statement with the SEC, J. Alexander’s will mail the definitive proxy statement and a proxy card to each shareholder of J. Alexander’s entitled to vote at the special meeting relating to the proposed merger. The preliminary proxy statement and definitive proxy statement will contain important information about the proposed merger and related matters. SHAREHOLDERS OF J. ALEXANDER’S ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE MERGER THAT J. ALEXANDER’S WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT J. ALEXANDER’S, THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT THAT HOLDERS OF THE COMPANY’S SECURITIES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING VOTING. This press release is not a substitute for the preliminary proxy statement, definitive proxy statement, or any other document that J. Alexander’s may file with the SEC and send to its shareholders in connection with the proposed merger. The proposed merger will be submitted to J. Alexander’s shareholders for their consideration.

Shareholders of J. Alexander’s will be able to obtain the preliminary proxy statement, definitive proxy statement, as well as other filings containing information about J. Alexander’s and the proposed merger, without charge, at the SEC’s website (http://www.sec.gov ). Copies of the proxy statements (when available) and the filings with the SEC that will be incorporated by reference therein can also be obtained, without charge, by going to J. Alexander’s Investor Relations page on its website at https://investor.jalexandersholdings.com.

Participants in Solicitation

J. Alexander’s and certain of its directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed merger. Information regarding the interests of the Company’s directors and executive officers and their ownership of shares of the Company’s common stock is set forth in the Company’s proxy statement on Schedule 14A filed with the SEC on May 13, 2021. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests in the proposed merger, by security holdings or otherwise, are contained in the preliminary proxy statement and will be contained in the definitive proxy statement and other relevant materials to be filed with the SEC in connection with the proposed merger when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.

J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited in thousands, except per share amounts)
Quarter Ended Six Months Ended
July 4, June 28, July 4, June 28,

2021

2020

2021

2020

 
Net sales

$ 68,101

 

$

27,602

 

$

125,476

 

$

84,574

 

Costs and expenses:
Food and beverage costs

22,899

 

 

10,471

 

 

39,986

 

 

29,038

 

Restaurant labor and related costs

19,046

 

 

12,554

 

 

35,721

 

 

32,892

 

Depreciation and amortization of restaurant
property and equipment

2,988

 

 

3,060

 

 

5,871

 

 

6,154

 

Other operating expenses

13,479

 

 

8,536

 

 

25,201

 

 

20,490

 

Total restaurant operating expenses

58,412

 

 

34,621

 

 

106,779

 

 

88,574

 

Transaction expenses

1,888

 

 

(66

)

 

1,934

 

 

623

 

General and administrative expenses

5,442

 

 

4,095

 

 

10,595

 

 

8,835

 

Goodwill impairment charge

-

 

 

-

 

 

-

 

 

15,737

 

Long-lived asset impairment charges and restaurant closing costs

(1

)

 

178

 

 

2

 

 

867

 

Pre-opening expense

71

 

 

72

 

 

516

 

 

91

 

Total operating expenses

65,812

 

 

38,900

 

 

119,826

 

 

114,727

 

Operating income (loss)

2,289

 

 

(11,298

)

 

5,650

 

 

(30,153

)

Other income (expense):
Interest expense

(141

)

 

(189

)

 

(294

)

 

(305

)

Other, net

84

 

 

135

 

 

38

 

 

127

 

Total other expense

(57

)

 

(54

)

 

(256

)

 

(178

)

Income (loss) from continuing operations
before income taxes

2,232

 

 

(11,352

)

 

5,394

 

 

(30,331

)

Income tax benefit (expense)

24

 

 

4,419

 

 

(343

)

 

5,806

 

(Loss) income from discontinued operations, net

(3

)

 

(55

)

 

592

 

 

(107

)

Net income (loss)

$ 2,253

 

$

(6,988

)

$

5,643

 

$

(24,632

)

 
Basic earnings (loss) per share:
Income (loss) from continuing operations, net of tax

$ 0.15

 

$

(0.47

)

$

0.34

 

$

(1.67

)

Income (loss) from discontinued operations, net

(0.00

)

 

(0.00

)

 

0.04

 

 

(0.01

)

Basic earnings (loss) per share

$ 0.15

 

$

(0.48

)

$

0.38

 

$

(1.68

)

 
Diluted earnings (loss) per share:
Income (loss) from continuing operations, net of tax

$ 0.15

 

$

(0.47

)

$

0.34

 

$

(1.67

)

Income (loss) from discontinued operations, net

(0.00

)

 

(0.00

)

 

0.04

 

 

(0.01

)

Diluted earnings (loss) per share

$ 0.15

 

$

(0.48

)

$

0.37

 

$

(1.68

)

 
Weighted average common shares outstanding:
Basic

14,757

 

 

14,695

 

 

14,757

 

 

14,695

 

Diluted

15,285

 

 

14,695

 

 

15,073

 

 

14,695

 

 
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 (Unaudited)
Quarter Ended Six Months Ended
July 4, June 28, July 4, June 28,

2021

2020

2021

2020

Net sales

100.0

%

100.0

%

 

100.0

%

100.0

%

Costs and expenses:
Food and beverage costs

33.6

 

37.9

 

31.9

 

34.3

 

Restaurant labor and related costs

28.0

 

45.5

 

28.5

 

38.9

 

Depreciation and amortization of restaurant
property and equipment

4.4

 

11.1

 

4.7

 

7.3

 

Other operating expenses

19.8

 

30.9

 

20.1

 

24.2

 

Total restaurant operating expenses

85.8

 

125.4

 

85.1

 

104.7

 

Transaction expenses

2.8

 

(0.2

)

1.5

 

0.7

 

General and administrative expenses

8.0

 

14.8

 

8.4

 

10.4

 

Goodwill impairment charge

-

 

-

 

-

 

18.6

 

Long-lived asset impairment charges and restaurant closing costs

(0.0

)

0.6

 

0.0

 

1.0

 

Pre-opening expense

0.1

 

0.3

 

0.4

 

0.1

 

Total operating expenses

96.6

 

140.9

 

95.5

 

135.7

 

Operating income (loss)

3.4

 

(40.9

)

4.5

 

(35.7

)

Other income (expense):
Interest expense

(0.2

)

(0.7

)

(0.2

)

(0.4

)

Other, net

0.1

 

0.5

 

0.0

 

0.2

 

Total other expense

(0.1

)

(0.2

)

(0.2

)

(0.2

)

Income (loss) from continuing operations
before income taxes

3.3

 

(41.1

)

4.3

 

(35.9

)

Income tax benefit (expense)

0.0

 

16.0

 

(0.3

)

6.9

 

(Loss) income from discontinued operations, net

(0.0

)

(0.2

)

0.5

 

(0.1

)

Net income (loss)

3.3

%

(25.3

)%

4.5

%

(29.1

)%

 
Note: Certain percentage totals do not sum due to rounding.
J. Alexander's Holdings, Inc. and Subsidiaries
Other Financial and Performance Data (Unaudited)
 
Quarter Ended Six Months Ended
July 4, June 28, July 4, June 28,

2021

2020

2021

2020

Other Financial and Performance Data:
 
Adjusted EBITDA(1) (in thousands)

$

7,788

 

$

(7,363

)

$

14,980

 

$

(5,399

)

As a % of net sales

 

11.4

%

 

-26.7

%

 

11.9

%

 

-6.4

%

 
All Stores Basis Operating Metrics:
Average weekly sales per restaurant:
 
J. Alexander’s / Grill Restaurants

$

120,200

 

$

51,000

 

$

112,800

 

$

76,600

 

Percent change

 

135.7

%

 

47.3

%

 
Stoney River Steakhouse and Grill

$

88,000

 

$

34,300

 

$

81,700

 

$

53,400

 

Percent change

 

156.6

%

 

53.0

%

 
Average weekly guest counts:
J. Alexander’s / Grill Restaurants

 

86.4

%

 

(49.6

)%

 

27.4

%

 

(32.1

)%

Stoney River Steakhouse and Grill

 

103.9

%

 

(50.3

)%

 

34.7

%

 

(31.4

)%

 
Average guest check per restaurant (including alcoholic beverages):
 
J. Alexander’s / Grill Restaurants

$

36.32

 

$

28.66

 

$

36.31

 

$

31.42

 

Percent change

 

26.7

%

 

15.6

%

 
Stoney River Steakhouse and Grill

$

45.28

 

$

35.89

 

$

45.14

 

$

39.69

 

Percent change

 

26.2

%

 

13.7

%

 
 
Estimated inflation:
J. Alexander’s / Grill Restaurants (total food costs)

 

15.2

%

 

3.8

%

J. Alexander’s / Grill Restaurants (beef costs)

 

24.1

%

 

5.1

%

 
Stoney River Steakhouse and Grill (total food costs)

 

21.2

%

 

5.2

%

Stoney River Steakhouse and Grill (beef costs)

 

37.0

%

 

5.8

%

 
 
Same Store Basis Operating Metrics (2):
Average weekly same store sales per restaurant:
 
J. Alexander’s / Grill Restaurants

$

121,600

 

$

51,600

 

$

114,200

 

$

77,300

 

Percent change

 

135.7

%

 

47.7

%

 
 
Average weekly same store guest counts:
J. Alexander’s / Grill Restaurants

 

86.1

%

 

(49.3

)%

 

27.6

%

 

(31.6

)%

 
Average same store guest check per restaurant (including alcoholic beverages):
 
J. Alexander’s / Grill Restaurants

$

36.16

 

$

28.62

 

$

36.20

 

$

31.35

 

Percent change

 

26.3

%

 

15.5

%

 
(1) See definitions and reconciliation attached.
(2) All open locations are included in the same store base for Stoney River for the second quarter and first six months of 2021. As such, average weekly same store sales, guest counts and check averages shown above under the heading "All Stores Basis Operating Metrics" are also representative of the Same Store Basis Operating Metrics for Stoney River.
J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited in thousands)
July 4, January 3,

2021

2021

Assets
Current assets:
Cash and cash equivalents

$

22,611

$

12,363

Other current assets

 

14,674

 

13,399

Total current assets

 

37,285

 

25,762

 
Other assets

 

6,583

 

6,195

Deferred income taxes, net

 

5,738

 

4,627

Property and equipment, net

 

99,422

 

102,188

Right-of-use lease assets, net

 

73,030

 

72,515

Tradename and other indefinite-lived intangibles

 

25,648

 

25,648

Deferred charges, net

 

163

 

184

$

247,869

$

237,119

 
Liabilities and Stockholders' Equity
 
Current liabilities

$

31,184

$

25,425

Long-term debt, net of portion classified as current
and unamortized deferred loan costs

 

11,000

 

12,746

Long-term lease liabilities

 

78,960

 

78,968

Deferred compensation obligations

 

8,255

 

7,973

Other long-term liabilities

 

1,892

 

1,902

Stockholders' equity

 

116,578

 

110,105

$

247,869

$

237,119

J. Alexander's Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited in thousands) Six Months Ended
July 4, June 28,

2021

2020

 
Cash flows from operating activities:
Net income (loss)

$

5,643

 

$

(24,632

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property and equipment

 

5,952

 

 

6,256

 

Equity-based compensation expense

 

830

 

 

908

 

Asset impairment charges

 

-

 

 

16,426

 

Other, net

 

(968

)

 

(4,117

)

Changes in assets and liabilities, net

 

3,823

 

 

1,395

 

Net cash provided by (used in) operating activities

 

15,280

 

 

(3,764

)

 
Cash flows from investing activities:
Purchase of property and equipment

 

(2,827

)

 

(3,030

)

Other investing activities

 

(378

)

 

(236

)

Net cash used in investing activities

 

(3,205

)

 

(3,266

)

 
Cash flows from financing activities:
Proceeds from borrowings under debt agreement

 

5,000

 

 

32,100

 

Payments on long-term debt

 

(6,833

)

 

(16,350

)

Other financing activities

 

6

 

 

(208

)

Net cash (used in) provided by financing activities

 

(1,827

)

 

15,542

 

Increase in cash and cash equivalents

 

10,248

 

 

8,512

 

Cash and cash equivalents at beginning of the period

 

12,363

 

 

8,803

 

Cash and cash equivalents at end of the period

$

22,611

 

$

17,315

 

 
Supplemental disclosures:
Property and equipment obligations accrued at beginning of the period

$

879

 

$

1,116

 

Property and equipment obligations accrued at end of the period

 

1,278

 

 

860

 

Cash paid for interest

 

277

 

 

109

 

Cash paid for income taxes

 

1,272

 

 

83

 

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 expenses, non-cash compensation, (income) loss from discontinued operations, and pre-opening expense.

 

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 food and beverage costs, 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 (loss) , operating income (loss) 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 Six Months Ended
July 4, June 28, July 4, June 28,

2021

2020

2021

2020

 
Net income (loss)

$

2,253

 

$

(6,988

)

$

5,643

 

$

(24,632

)

 
Income tax (benefit) expense

 

(24

)

 

(4,419

)

 

343

 

 

(5,806

)

Interest expense

 

141

 

 

189

 

 

294

 

 

305

 

Depreciation and amortization

 

3,042

 

 

3,124

 

 

5,973

 

 

6,284

 

 
EBITDA

 

5,412

 

 

(8,094

)

 

12,253

 

 

(23,849

)

 
Transaction expenses

 

1,888

 

 

(66

)

 

1,934

 

 

623

 

Loss on disposal of fixed assets

 

31

 

 

7

 

 

42

 

 

53

 

Asset impairment charges and restaurant
closing costs

 

(1

)

 

178

 

 

2

 

 

16,604

 

Non-cash compensation

 

447

 

 

485

 

 

888

 

 

972

 

(Income) loss from discontinued operations, net

 

3

 

 

55

 

 

(592

)

 

107

 

Pre-opening expense

 

71

 

 

72

 

 

516

 

 

91

 

Employee retention credits

 

(63

)

 

-

 

 

(63

)

 

-

 

 
Adjusted EBITDA

$

7,788

 

$

(7,363

)

$

14,980

 

$

(5,399

)

J. Alexander's Holdings, Inc. and Subsidiaries
Non-GAAP Financial Measures and Reconciliations
(Unaudited in thousands)
Quarter Ended Six Months Ended
July 4, June 28, July 4, June 28,

2021

2020

2021

2020

Amount Percent of Net Sales Amount Percent of Net Sales Amount Percent of Net Sales Amount Percent of Net Sales
 
Operating income (loss)

$

2,289

 

3.4

%

$

(11,298

)

-40.9

%

$

5,650

4.5

%

$

(30,153

)

-35.7

%

 
General and administrative expenses

 

5,442

 

8.0

%

 

4,095

 

14.8

%

 

10,595

8.4

%

 

8,835

 

10.4

%

Transaction expenses

 

1,888

 

2.8

%

 

(66

)

-0.2

%

 

1,934

1.5

%

 

623

 

0.7

%

Goodwill impairment charge

 

-

 

0.0

%

 

-

 

0.0

%

 

-

0.0

%

 

15,737

 

18.6

%

Long-lived asset impairment charges and restaurant closing costs

 

(1

)

0.0

%

 

178

 

0.6

%

 

2

0.0

%

 

867

 

1.0

%

Pre-opening expense

 

71

 

0.1

%

 

72

 

0.3

%

 

516

0.4

%

 

91

 

0.1

%

 
Restaurant Operating Profit

$

9,689

 

14.2

%

$

(7,019

)

-25.4

%

$

18,697

14.9

%

$

(4,000

)

-4.7

%

 
Note: Certain percentage totals do not sum due to rounding.

 

J. Alexander’s Holdings, Inc.
Jessica Hagler
Chief Financial Officer
(615) 269‐1900

Source: J. Alexander’s Holdings, Inc.

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