|
|
|
Applebee's International Reports First Quarter 2005 Earnings of $0.38 Per Diluted Share
28 April 2005
Applebee's International, Inc. (Nasdaq: APPB - News) today reported record net earnings of $31.7 million, or $0.38 per diluted share, for the first quarter ended March 27, 2005. This compares to net earnings of $29.7 million, or $0.35 per diluted share, for the first quarter of 2004.
System-wide comparable sales for the first quarter of 2005 increased 3.7 percent, the 27th consecutive quarter of comparable sales growth. Company and franchise restaurant comparable sales increased 0.3 percent and 4.9 percent, respectively, for the quarter.
The company also reported comparable sales for the March fiscal period, comprised of the five weeks ended March 27, 2005. System-wide comparable sales increased 2.0 percent for the March period, and comparable sales for franchise restaurants increased 3.2 percent. Comparable sales for company restaurants decreased 1.8 percent, reflecting a decrease in guest traffic of a similar amount, combined with a flat average check. March comparable sales were negatively impacted by approximately 1.0 percent due to the shift of Easter from the April fiscal period last year to the March fiscal period this year and by approximately 1.0 percent in company markets due to weather, but were positively impacted by approximately 0.5 percent due to the shift in President's Day from the February fiscal period last year to the March fiscal period this year.
In addition, the company reported comparable sales for the April fiscal period, comprised of the four weeks ended April 24, 2005, which were positively impacted by approximately 1.0 percent due to the timing of Easter. System-wide comparable sales increased 1.9 percent for the April period, and comparable sales for franchise restaurants increased 2.8 percent. Comparable sales for company restaurants decreased 0.9 percent, reflecting a slight decrease in guest traffic, combined with a lower average check. The lower average check in the period appears to have resulted from a change in guest purchasing behavior, particularly during early parts of the week, at lunch and in Midwest markets.
System-wide comparable sales for the year-to-date period through April have increased 3.3 percent, with franchise restaurant comparable sales up 4.4 percent and company comparable restaurant sales flat.
Lloyd L. Hill, chairman and chief executive officer, said, "Despite extremely difficult comparisons, our first quarter results exceeded our original expectations. While we are mindful of recent sales trends, we remain intent on maintaining our value proposition in this environment with continued food innovation, including our spring menu that rolled out nationwide earlier this week. Our brand awareness is being enhanced by the more than 30 percent increase in our national advertising budget that conveys multiple messages to our guests. In addition to accelerating our development pace, 2005 is a year to optimize our initiatives as we continue to focus on improving operations throughout the system, as well as leveraging our key strategies including Carside To Go(TM) and our alliance with Weight Watchers."
Other results for the first quarter ended March 27, 2005 included:
Total system-wide sales for the quarter increased by 9.5 percent over the prior year. System-wide sales are a non-GAAP financial measure that includes sales at all company and franchise Applebee's restaurants, as reported by franchisees. The company believes that system-wide sales information is useful in analyzing Applebee's market share and growth, and because franchisees pay royalties and contribute to the national advertising pool based on a percentage of their sales.
Applebee's ended the quarter with 1,694 restaurants open system-wide (437 company and 1,257 franchise restaurants). During the first quarter of 2005, there were 26 new Applebee's restaurants opened system-wide, including 13 company and 13 franchised restaurants.
The company repurchased 728,300 shares of common stock in the first quarter at an average price of $25.62 for an aggregate cost of $18.7 million. As of March 27, 2005, $131.3 million remains available under the company's current stock repurchase authorization.
As of March 27, 2005, the company had total debt outstanding of $27.6 million, with $116 million available under its revolving credit facility.
BUSINESS OUTLOOK
The company updated its guidance with respect to its business outlook for fiscal year 2005:
More than 135 new restaurants are now expected to open in 2005, including at least 50 company and 85 franchise restaurants. Approximately 25 company restaurants and 25 to 30 franchise restaurants are expected to open in the first half of the year, with the remainder opening in the second half of the year. The increased number of company openings reflects the anticipated re-opening of eight restaurants in the Memphis market.
System-wide comparable sales are expected to increase by at least three percent for the full year, with results expected to accelerate in the latter half of the year as comparisons become easier.
Overall restaurant margins before pre-opening expense for the full year are expected to be similar to fiscal year 2004 results.
Pre-opening expense is expected to be higher as a result of the increase in the number of company openings from 32 in 2004 to at least 50 in 2005.
General and administrative expenses, as a percentage of operating revenues, are now expected to be approximately nine percent. The increase in general and administrative expenses from previous guidance reflects higher management training costs associated with the increased number of company openings.
The effective income tax rate is currently expected to continue at 34.6 percent for the remainder of the year.
Excluding the cost of franchise acquisitions, capital expenditures are expected to be between $140 and $150 million in 2005, including the anticipated costs of re-opening the eight restaurants in Memphis.
On April 12, 2005, the company announced that it had entered into an agreement to acquire 12 franchise restaurants located in Missouri, Kansas and Arkansas for approximately $39.5 million in cash. The acquisition is anticipated to close in the second quarter of 2005.
Based on the foregoing assumptions and the company's performance during the first quarter, diluted earnings per share for fiscal year 2005 are now expected to be in the range of $1.49 to $1.52, with diluted earnings per share for the second quarter expected to be in the range of $0.36 to $0.38.
A conference call to review the first quarter 2005 results and the current business outlook will be held on Thursday morning, April 28, 2005, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The conference call will be broadcast live over the Internet and a replay will be available shortly after the call on the Investors section of the company's website (www.applebees.com).
Applebee's International, Inc., headquartered in Overland Park, Kan., develops, franchises and operates restaurants under the Applebee's Neighborhood Grill & Bar brand, the largest casual dining concept in the world. As of April 24, 2005, there were 1,703 Applebee's restaurants operating system-wide in 49 states and 12 international countries. Additional information on Applebee's International can be found at the company's website (www.applebees.com).
Certain statements contained in this release, including fiscal year 2005 guidance as set forth in the Business Outlook section, are forward-looking and based on current expectations. There are several risks and uncertainties that could cause actual results to differ materially from those described, including but not limited to the ability of the company and its franchisees to open and operate additional restaurants profitably, the ability of its franchisees to obtain financing, the continued growth of its franchisees, and its ability to attract and retain qualified franchisees, the impact of intense competition in the casual dining segment of the restaurant industry, and its ability to control restaurant operating costs which are impacted by market changes, minimum wage and other employment laws, food costs and inflation. For additional discussion of the principal factors that could cause actual results to be materially different, the reader is referred to the company's current report on Form 8-K filed with the Securities and Exchange Commission on February 9, 2005. The company disclaims any obligation to update these forward-looking statements.
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
13 Weeks Ended
-----------------------------
March 27, March 28,
2005 2004
------------ --------------
(as restated)(1)
Revenues:
Company restaurant sales............. $270,458 $243,560
Franchise royalties and fees......... 33,008 30,715
Other franchise income............... 1,065 3,115
------------ --------------
Total operating revenues.......... 304,531 277,390
------------ --------------
Cost of company restaurant sales:
Food and beverage.................... 71,635 63,515
Labor................................ 88,724 79,655
Direct and occupancy................. 66,367 59,342
Pre-opening expense.................. 1,167 567
------------ --------------
Total cost of company
restaurant sales................. 227,893 203,079
------------ --------------
Cost of other franchise income.......... 819 2,937
General and administrative expenses..... 26,946 25,422
Amortization of intangible assets....... 228 86
Loss on disposition of restaurants
and equipment.......................... 297 495
------------ --------------
Operating earnings...................... 48,348 45,371
------------ --------------
Other income (expense):
Investment income (expense).......... (41) 223
Interest expense..................... (337) (344)
Other income......................... 435 461
------------ --------------
Total other income................ 57 340
------------ --------------
Earnings before income taxes............ 48,405 45,711
Income taxes............................ 16,748 15,975
------------ --------------
Net earnings............................ $31,657 $29,736
============ ==============
Basic net earnings per
common share(2)........................ $0.39 $0.36
============ ==============
Diluted net earnings per
common share(2)........................ $0.38 $0.35
============ ==============
Basic weighted average
shares outstanding(2).................. 80,705 81,986
============ ==============
Diluted weighted average
shares outstanding(2).................. 82,375 84,628
============ ==============
(1) The company's Annual Report on Form 10-K for fiscal year 2004
included a restatement of certain historical information as
discussed in Note 22 to the consolidated financial statements.
(2) All earnings per share and weighted average share information
reflects a three-for-two stock split effective at the close of
business on June 15, 2004.
The following table contains information derived from the company's
consolidated statements of earnings expressed as a percentage of total
operating revenues, except where otherwise noted. Percentages may not
add due to rounding.
13 Weeks Ended
------------------------------
March 27, March 28,
2005 2004
------------- --------------
(as restated)(1)
Revenues:
Company restaurant sales............ 88.8% 87.8%
Franchise royalties and fees........ 10.8 11.1
Other franchise income.............. 0.3 1.1
------------- --------------
Total operating revenues......... 100.0% 100.0%
============= ==============
Cost of sales (as a percentage
of company restaurant sales):
Food and beverage................... 26.5% 26.1%
Labor............................... 32.8 32.7
Direct and occupancy................ 24.5 24.4
Pre-opening expense................. 0.4 0.2
------------- --------------
Total cost of sales.............. 84.3% 83.4%
============= ==============
Cost of other franchise income
(as a percentage of other
franchise income).................... 76.9% 94.3%
General and administrative expenses.... 8.8 9.2
Amortization of intangible assets...... 0.1 --
Loss on disposition of restaurants
and equipment......................... 0.1 0.2
------------- --------------
Operating earnings..................... 15.9 16.4
------------- --------------
Other income (expense):
Investment income................... -- 0.1
Interest expense.................... (0.1) (0.1)
Other income........................ 0.1 0.2
------------- --------------
Total other income............... -- 0.1
------------- --------------
Earnings before income taxes........... 15.9 16.5
Income taxes........................... 5.5 5.8
------------- --------------
Net earnings........................... 10.4% 10.7%
============= ==============
(1) The company's Annual Report on Form 10-K for fiscal year 2004
included a restatement of certain historical information as
discussed in Note 22 to the consolidated financial statements.
The following table sets forth certain financial information and other
restaurant data relating to company and franchise restaurants, as
reported to us by franchisees:
13 Weeks Ended
---------------------------
March 27, March 28,
2005 2004
------------- ------------
Number of restaurants:
Company:
Beginning of period................. 424 383
Restaurant openings................. 13 8
------------- ------------
End of period....................... 437 391
------------- ------------
Franchise:
Beginning of period................. 1,247 1,202
Restaurant openings................. 13 11
Restaurant closings................. (3) (1)
------------- ------------
End of period....................... 1,257 1,212
------------- ------------
Total:
Beginning of period................. 1,671 1,585
Restaurant openings................. 26 19
Restaurant closings................. (3) (1)
------------- ------------
End of period....................... 1,694 1,603
============= ============
Weighted average weekly sales
per restaurant:
Company............................. $48,193 $48,402
Franchise........................... $51,277 $48,769
Total............................... $50,485 $48,680
Change in comparable restaurant sales:(1)
Company............................. 0.3% 8.7%
Franchise........................... 4.9% 8.0%
Total............................... 3.7% 8.2%
Total operating revenues (in thousands):
Company restaurant sales............ $270,458 $243,560
Franchise royalties and fees(2)..... 33,008 30,715
Other franchise income(3)........... 1,065 3,115
------------- ------------
Total............................... $304,531 $277,390
============= ============
(1) When computing comparable restaurant sales, restaurants open for
at least 18 months are compared from period to period.
(2) Franchise royalties are generally 4% of each franchise
restaurant's reported monthly gross sales. Reported franchise
sales, in thousands, were $832,997 and $764,116 in the 2005
quarter and the 2004 quarter, respectively. Franchise fees
typically range from $30,000 to $35,000 for each restaurant
opened.
(3) Other franchise income includes insurance premiums from franchisee
participation in our captive insurance program and revenue from
information technology products and services provided to certain
franchisees.
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share amounts)
March 27, Dec. 26,
2005 2004
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents.................... $6,195 $10,642
Short-term investments, at market value...... 282 282
Receivables, net of allowance................ 43,712 39,152
Receivables related to captive
insurance subsidiary........................ 4,163 2,566
Inventories.................................. 28,755 35,936
Prepaid and other current assets............. 15,660 12,079
---------- ----------
Total current assets...................... 98,767 100,657
Property and equipment, net..................... 506,072 486,548
Goodwill........................................ 117,002 116,344
Restricted assets related to
captive insurance subsidiary................... 18,162 17,386
Other intangible assets, net.................... 8,318 8,524
Other assets, net............................... 27,429 24,972
---------- ----------
$775,750 $754,431
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt............ $233 $222
Notes payable................................ 2,000 --
Accounts payable............................. 34,811 42,830
Accrued expenses and other current
liabilities................................. 85,829 89,064
Loss reserve and unearned premiums
related to captive insurance subsidiary..... 15,168 12,137
Accrued dividends............................ -- 4,867
Accrued income taxes......................... 15,495 2,578
---------- ----------
Total current liabilities................. 153,536 151,698
---------- ----------
Non-current liabilities:
Long-term debt - less current portion........ 25,412 35,472
Deferred income taxes........................ 32,185 28,995
Other non-current liabilities................ 43,802 41,539
---------- ----------
Total non-current liabilities............. 101,399 106,006
---------- ----------
Total liabilities......................... 254,935 257,704
---------- ----------
Stockholders' equity:
Preferred stock - par value $0.01 per
share: authorized - 1,000,000 shares;
no shares issued............................ -- --
Common stock - par value $0.01 per
share: authorized - 125,000,000 shares;
issued - 108,503,243 shares................. 1,085 1,085
Additional paid-in capital................... 228,474 220,897
Unearned compensation........................ (4,155) (1,924)
Retained earnings............................ 654,972 623,315
---------- ----------
880,376 843,373
Treasury stock - 27,428,482
shares in 2005 and 27,375,044 shares
in 2004, at cost............................ (359,561) (346,646)
---------- ----------
Total stockholders' equity................ 520,815 496,727
---------- ----------
$775,750 $754,431
========== ==========
APPLEBEE'S INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
13 Weeks Ended
-------------------------
March 27, March 28,
2005 2004
----------- -----------
(as
restated)(1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings............................. $31,657 $29,736
Adjustments to reconcile
net earnings to net cash provided
by operating activities:
Depreciation and amortization......... 12,531 11,189
Amortization of intangible
assets............................... 228 86
Amortization of unearned
compensation......................... 496 338
Other amortization.................... 63 39
Deferred income tax provision......... 1,659 246
Loss on disposition of
restaurants and equipment............ 297 495
Income tax benefit from exercise
of stock options..................... 2,638 3,108
Changes in assets and liabilities
(exclusive of effects of acquisitions):
Receivables........................... (4,560) (3,939)
Receivables related to captive
insurance subsidiary................. (1,597) (7,705)
Inventories........................... 7,181 (9,510)
Prepaid and other current assets...... (2,050) (4,163)
Accounts payable...................... (8,019) 3,604
Accrued expenses and other current
liabilities.......................... (5,887) (17,547)
Loss reserve and unearned premiums
related to captive insurance
subsidiary........................... 3,031 12,378
Income taxes.......................... 12,917 14,236
Other non-current liabilities......... 6 643
Other................................. (282) (467)
----------- -----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES........................... 50,309 32,767
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment...... (24,619) (13,796)
Restricted assets related to captive
insurance subsidiary.................... (776) (3,074)
Acquisition of restaurants............... (5,742) --
Purchases of short-term investments...... -- (253)
Other investing activities............... -- (966)
----------- -----------
NET CASH USED BY
INVESTING ACTIVITIES................. (31,137) (18,089)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of treasury stock.............. (18,657) (32,039)
Dividends paid........................... (4,867) (3,863)
Issuance of common stock upon
exercise of stock options............... 6,927 4,971
Shares issued under employee
benefit plans........................... 1,027 2,915
Net debt proceeds (payments)............. (8,049) 4,959
----------- -----------
NET CASH USED BY
FINANCING ACTIVITIES................. (23,619) (23,057)
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS... (4,447) (8,379)
CASH AND CASH EQUIVALENTS, beginning of
period..................................... 10,642 17,867
----------- -----------
CASH AND CASH EQUIVALENTS, end of period.... $6,195 $9,488
=========== ===========
(1) The company's Annual Report on Form 10-K for fiscal year 2004
included a restatement of certain historical information as
discussed in Note 22 to the consolidated financial statements.
--------------------------------------------------------------------------------
Contact:
Applebee's International, Inc.
Carol DiRaimo, 913-967-4109
Vice President of Investor Relations
or
Laurie Ellison, 913-967-2718
Communications Executive Director
--------------------------------------------------------------------------------
Source: Applebee's International, Inc.
Source: Business Wire
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Articles
|
|
|
