BOJA Bojangles, Inc.

Bojangles’, Inc. (Bojangles’) (NASDAQ:BOJA) today announced financial results for the 13-week first fiscal quarter ended March 27, 2016.   Bojangles’® also raised its guidance for the fiscal year 2016, which is a 52-week period ending on December 25, 2016.

Financial Highlights for First Fiscal Quarter 2016

• System-wide comparable restaurant sales increased 2.0%;
• Total revenues increased 11.3% to $127.7 million from $114.6 million;
• Nine system-wide restaurants were opened – seven company-operated restaurants and two franchised restaurants;
• Net Income increased to $7.8 million from $3.4 million;
• Pro Forma Net Income* increased 36.0% to $7.9 million from $5.8 million;
• Pro Forma Diluted Net Income per Share* increased 31.3% to $0.21 from $0.16; and
• Adjusted EBITDA* increased 11.8% to $18.9 million from $16.9 million.

* Pro Forma Net Income, Pro Forma Diluted Net Income per Share and Adjusted EBITDA are non-GAAP measures.  Please see “Use and Definition of Non-GAAP Measures” and the reconciliation tables accompanying this release.

“Bojangles’ solid first fiscal quarter 2016 performance is a reflection of company and franchise teams working hard every day to provide customers with a consistent, high-quality restaurant experience.  For the thirteen-week period, system-wide comparable restaurant sales grew 2.0% despite significant competitive discounting and promotional activity, and increased 9.9% and 11.6%, respectively, on a two- and three-year stacked basis.  We have now generated system-wide comparable restaurant sales growth for 24 consecutive quarters,” said Bojangles’ President and CEO Clifton Rutledge.  

“Our iconic brand certainly resonates across all generations through its diverse, fast-casual quality menu with QSR speed, convenience and value.  This year, we are leveraging our core menu’s popularity by developing extendable platforms and limited time offers that will raise the bar on quality and uniqueness even further.  We will also connect several of our menu favorites to national calendar occasions that should go a long way toward sharing the Bojangles’ experience with more and more new customers in adjacent as well as core markets,” he continued.

“Bojangles’ is a growing force in the fast-casual and QSR space and our track record of generating consistently strong results is, in part, a testament to our development strategy.  We intend to expand our system by approximately 8% in net unit count during fiscal year 2016 by infilling our core North and South Carolina markets and developing in adjacent states within the Southeast.  In executing our growth strategy, we will stay focused on ensuring operational excellence and providing an outstanding experience for all our customers,” he concluded.

First Fiscal Quarter 2016 Financial ReviewSystem-wide comparable restaurant sales increased 2.0%, consisting of company-operated and franchised comparable restaurant sales growth of 2.7% and 1.6%, respectively.  Comparable restaurant sales growth at company-operated restaurants was due to increases in price and transactions.

Total revenues increased 11.3% to $127.7 million in the first fiscal quarter of 2016 from $114.6 million in the prior year fiscal quarter.  The increase was primarily due to an additional net 36 system-wide restaurants at March 27, 2016 compared to March 29, 2015, and comparable restaurant sales growth at our company-operated and franchised restaurants.

Company restaurant revenues increased 12.1% to $121.4 million in the first fiscal quarter of 2016 from $108.3 million in the prior year fiscal quarter.  Franchise royalty revenues increased 4.0% to $6.2 million in the first fiscal quarter of 2016 from $5.9 million in the prior year fiscal quarter.

Restaurant contribution, a non-GAAP measure, increased 21.3% to $21.1 million in the first fiscal quarter of 2016 from $17.4 million in the prior year fiscal quarter.  As a percentage of company restaurant revenues, restaurant contribution margin, a non-GAAP measure, increased to 17.4% in the first fiscal quarter of 2016 from 16.1% in the prior year fiscal quarter.

General and administrative expenses decreased 12.8% to $9.5 million in the first fiscal quarter of 2016 from $10.9 million in the prior year fiscal quarter.  The decline was primarily due to expenses incurred in the first fiscal quarter 2015 related to public offering expenses, partially offset by additional positions to support a growing restaurant system, additional costs as a result of operating as a public company, and expenses incurred in connection with the transition to a new distributor.

Adjusted EBITDA increased 11.8% to $18.9 million in the first fiscal quarter of 2016 from $16.9 million in the prior year fiscal quarter.  

Net Income was $7.8 million in the first fiscal quarter of 2016 compared to $3.4 million in the prior year fiscal quarter.

Pro Forma Net Income increased 36.0% to $7.9 million in the first fiscal quarter of 2016 compared to $5.8 million in the prior year fiscal quarter.  Pro Forma Diluted Net Income per Share increased 31.3% to $0.21 in the first fiscal quarter of 2016 compared to $0.16 in the prior year fiscal quarter.

Fiscal Year 2016 Guidance

Bojangles’ raised its annual guidance for the 52-week period ending on December 25, 2016:

• Total revenues of $535.0 million to $543.0 million (previously $533.0 million to $543.0 million);
• System-wide comparable restaurant sales growth of low-single digits;
• The opening of 60 to 65 system-wide restaurants;
  • 28 to 29 company-operated restaurants;
  • 32 to 36 franchised restaurants;
• Net increase of 53 to 58 system-wide restaurants;
  • 26 to 27 net increase of company-operated restaurants;
  • 27 to 31 net increase of franchised restaurants;
• Restaurant contribution margin of 17.7% to 18.1% (previously 17.6% to 18.1%);
• General and administrative expenses between $40.0 million and $41.5 million;
• Pro Forma Diluted Net Income per Share of $0.89 to $0.93 (previously $0.86 to $0.90); and
• Adjusted EBITDA of $84.5 million to $86.5 million (previously $83.5 million to $86.5 million).

Conference Call and Webcast TodayBojangles’ will host a conference call and webcast to discuss the first fiscal quarter 2016 results and fiscal year 2016 guidance today at 5:00 p.m. Eastern Time.  The conference call dial-in numbers are 1-877-705-6003 for domestic toll-free calls and 1-201-493-6725 for international.  A telephone replay will be available through Sunday, June 5, 2016 and may be accessed by dialing 1-877-870-5176 for domestic toll-free calls and 1-858-384-5517 for international.  The conference ID is 13634668.

The conference call will also be webcast live and later archived on the Investors section of our website at www.bojangles.com.

About Bojangles’, Inc.Bojangles', Inc. is a highly differentiated and growing restaurant operator and franchisor dedicated to serving customers high-quality, craveable food made from our Southern recipes.  Founded in 1977 in Charlotte, N.C., Bojangles' serves menu items such as delicious, famous chicken, made-from-scratch buttermilk biscuits, flavorful fixin's and Legendary Iced Tea®.   At March 27, 2016, Bojangles' had 671 system-wide restaurants, of which 288 were company-operated and 383 were franchised restaurants, primarily located in the Southeastern United States.  For more information, visit www.bojangles.com or follow Bojangles' on Facebook and Twitter.

Use and Definition of Non-GAAP MeasuresWe utilize certain non-GAAP measures when assessing the operational strength and the performance of our business.  Bojangles’ cautions that non-GAAP measures should be considered in addition to, but not as a substitute for, reported GAAP results.  

Comparable restaurant sales reflects the change in year-over-year sales for the comparable restaurant base (as applicable, system-wide, franchised or company-operated restaurants).  A restaurant enters our comparable restaurant base the first full day of the month after being open for 15 months using a mid-month convention.

Restaurant contribution is defined as company restaurant revenues less food and supplies costs, restaurant labor costs and operating costs, as identified by the reconciliation table below.  Restaurant contribution margin is defined as restaurant contribution as a percentage of company restaurant revenues.  Restaurant contribution and restaurant contribution margin are supplemental measures of operating performance of our company-operated restaurants and our calculations thereof may not be comparable to those reported by other companies.  Restaurant contribution and restaurant contribution margin have limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. 

Pro Forma Net Income represents company net income before items that we do not consider representative of our ongoing operating performance, as well as an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, both as identified in the reconciliation table below.  Pro Forma Diluted Net Income per Share represents company diluted net income per share before items that we do not consider representative of our ongoing operating performance, as well as an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company for those periods where they had not yet been incurred, both as identified in the reconciliation table below.

EBITDA represents company net income before interest expense (net of interest income), provision for income taxes and depreciation and amortization. Adjusted EBITDA represents company net income before interest expense (net of interest income), provision for income taxes, depreciation and amortization, items that we do not consider representative of our ongoing operating performance and certain non-cash items, as identified in the reconciliation table below.

Pro Forma Net Income, Pro Forma Diluted Net Income per Share, EBITDA and Adjusted EBITDA are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP.  Pro Forma Net Income, Pro Forma Diluted Net Income per Share, EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, operating income or any other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities as a measure of our liquidity.  In addition, in evaluating Pro Forma Net Income, Pro Forma Diluted Net Income per Share, EBITDA and Adjusted EBITDA, you should be aware that in the future we will incur expenses or charges such as those added back to calculate Pro Forma Net Income, Pro Forma Diluted Net Income per Share, EBITDA and Adjusted EBITDA.

Forward-Looking StatementsThis release contains forward-looking statements.  All statements other than statements of historical fact included in this release are forward-looking statements.  Forward-looking statements discuss our current expectations, projections and guidance relating to our financial condition, results of operations, plans, objectives, future performance and business.  These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning.

Forward-looking statements are inherently subject to risks, uncertainties and assumptions; they are not guarantees of performance.  Actual results may differ materially from these expectations due to risks relating to our vulnerability to changes in consumer preferences and economic conditions; our ability to open restaurants in new and existing markets and expand our franchise system; our ability to generate comparable restaurant sales growth; financial or other difficulties which could cause our restaurants and our franchisees’ restaurants to close; our ability to generate increased sales or profits from new menu items, advertising campaigns, changes in discounting strategy and restaurant designs and remodels; cancellation or delay in anticipated future restaurant openings; our reliance on, limited degree of control over and potential responsibility for, our franchisees; increases in the cost of chicken, pork, dairy, wheat, corn and other products; our ability to compete successfully with other quick-service and fast-casual restaurants; our vulnerability to conditions in the Southeastern United States; negative publicity, whether or not valid; concerns about food safety and quality and about food-borne illnesses, including adverse public perception due to the occurrence of avian flu, swine flu or other food-borne illnesses; changes in employment and labor laws; labor shortages and increases in labor costs; and our dependence upon frequent and timely deliveries of restaurant food and other supplies.  For further details and discussion of these and other risks and uncertainties, see our annual report on Form 10-K  filed with the Securities and Exchange Commission and available at www.sec.gov.  You should not place undue reliance on these statements. We have based these forward-looking statements on our current expectations and projections about future events.  Although we believe that our assumptions made in connection with the forward-looking statements are reasonable, we cannot assure you that the assumptions and expectations will prove to be correct.

All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.  In addition, all forward-looking statements speak only as of the date of this earnings release.  We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise other than as required under the federal securities laws.

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(in thousands)
Assets								March 27, 2016				December 27,2015
Current assets:
	Cash and cash equivalents						$		21,409			14,263
	Accounts and vendor receivables, net								4,038			4,736
	Accounts receivable, related parties, net								458			403
	Inventories, net								2,923			3,080
	Other current assets								2,349			5,639
					Total current assets				31,177			28,121
	Property and equipment, net								48,781			48,137
	Goodwill								161,140			161,140
	Brand								290,500			290,500
	Franchise rights, net								25,066			25,341
	Favorable leases, net								1,267			1,394
	Other noncurrent assets								3,376			3,673
					Total assets		$		561,307			558,306
Liabilities and Stockholders’ Equity
Current liabilities:
	Accounts payable						$		14,734			17,893
	Accrued expenses								20,798			19,086
	Current maturities of long-term debt								—			—
	Current maturities of capital lease obligations								5,900			5,968
	Other current liabilities								4,430			2,155
					Total current liabilities				45,862			45,102
	Long-term debt, less current maturities and deferred debt issuance costs, net								194,212			197,735
	Deferred income taxes								112,241			115,028
	Capital lease obligations, less current maturities								20,793			21,483
	Other noncurrent liabilities								12,649			11,834
					Total liabilities				385,757			391,182
Stockholders’ equity:
	Preferred stock								—			—
	Common stock								361			360
	Additional paid-in capital								120,079			119,084
	Retained earnings								55,505			47,661
	Accumulated other comprehensive (loss) income								(395	)		19
					Total stockholders’ equity				175,550			167,124
					Total liabilities and stockholders’ equity		$		561,307			558,306

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
								Thirteen Weeks Ended
								March 27, 2016				March 29, 2015
Revenues:
	Company restaurant revenues						$		121,413				108,336
	Franchise royalty revenues								6,172				5,936
	Other franchise revenues								70				375
					Total revenues				127,655				114,647
Company restaurant operating expenses:
	Food and supplies costs								38,521				36,561
	Restaurant labor costs								33,336				30,468
	Operating costs								28,413				23,871
	Depreciation and amortization								3,083				2,674
					Total Company restaurant operating expenses				103,353				93,574
					Operating income before other operating expenses				24,302				21,073
Other operating expenses:
	General and administrative								9,511				10,913
	Depreciation and amortization								717				659
	Impairment								201				15
	Gain on disposal of property and equipment								(199	)			(2	)
					Total other operating expenses				10,230				11,585
					Operating income				14,072				9,488
Amortization of deferred debt issuance costs									(146	)			(184	)
Interest income									1				1
Interest expense									(2,024	)			(2,222	)
					Income before income taxes				11,903				7,083
Income taxes									4,059				3,645
					Net income		$		7,844				3,438
Net income per share:
					Basic		$		0.22				—
					Diluted		$		0.21				0.09
Weighted average shares used in computing net income per share:
					Basic				36,023				—
					Diluted				37,435				37,375

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
								Thirteen Weeks Ended
								March 27,  2016				March 29,  2015
Cash flows from operating activities:
	Net income						$		7,844				3,438
	Adjustments to reconcile net income to net cash provided by operating activities:
			Deferred income tax benefit						(855	)			(1,158	)
			Depreciation and amortization						3,800				3,333
			Amortization of deferred debt issuance costs						146				184
			Impairment						201				15
			Gain on disposal of property and equipment						(199	)			(2	)
			Provision for doubtful accounts						63				24
			(Benefit) provision for inventory spoilage						(1	)			6
			Benefit for closed stores						(1	)			(50	)
			Stock-based compensation						276				339
			Excess tax benefit from stock-based compensation						(449	)			—
			Changes in operating assets and liabilities						1,500				685
					Net cash provided by operating activities				12,325				6,814
Cash flows from investing activities:
	Purchases of property and equipment								(839	)			(1,168	)
	Proceeds from disposition of property and equipment								9				17
					Net cash used in investing activities				(830	)			(1,151	)
Cash flows from financing activities:
	Principal payments on long-term debt								(3,669	)			(3,652	)
	Stock option exercises								271				—
	Excess tax benefit from stock-based compensation								449				—
	Principal payments on capital lease obligations								(1,400	)			(1,095	)
					Net cash used in financing activities				(4,349	)			(4,747	)
					Net increase in cash and cash equivalents				7,146				916
Cash and cash equivalents balance, beginning of fiscal period									14,263				13,201
Cash and cash equivalents balance, end of fiscal period							$		21,409				14,117

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(in thousands)
								Thirteen Weeks Ended
								March 27,  2016		March 29,  2015
Net income							$	7,844		3,438
Income taxes								4,059		3,645
Interest expense, net								2,023		2,221
Depreciation and amortization (a)								3,946		3,517
EBITDA								17,872		12,821
Non-cash rent (b)								378		389
Stock-based compensation (c)								296		339
Preopening expenses (d)								218		300
Sponsor and board member fees and expenses (e)								—		129
Certain professional, transaction and other costs (f)								33		2,873
Distributor transition costs (g)								65		—
Impairment and dispositions (h)								11		30
Adjusted EBITDA							$	18,873		16,881
(a)	Includes amortization of deferred debt issuance costs.
(b)	Includes deferred rent, which represents the extent to which our rent expense has been above or below our cash rent payments, amortization of favorable (unfavorable) leases and closed store reserves for rent net of cash payments.
(c)	Includes non-cash, stock-based compensation, as well as employer payroll taxes associated with stock option exercises related to stock options that were outstanding prior to our initial public offering.
(d)	Includes expenses directly associated with the opening of company-operated restaurants and incurred prior to the opening of a company-operated restaurant.
(e)	Includes reimbursement of expenses to our sponsor prior to our initial public offering and compensation and expense reimbursement to members of our board prior to our initial public offering.
(f)	Includes public offering expenses and costs associated with third-party consultants for one-time projects.
(g)	Includes expenses incurred in connection with the transition to our new distributor.
(h)	Includes gain on disposal of property and equipment, impairment and cash proceeds on disposals from disposition of property and equipment.

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Net Income to Pro Forma Net Income
(in thousands)
								Thirteen Weeks Ended
								March 27,  2016				March 29,  2015
Net income							$		7,844				3,438
Certain professional and transaction costs (a)									33				2,873
Incremental public company costs (b)									—				(600	)
Stock-based compensation (c)									20				—
Distributor transition costs (d)									65				—
Tax impact of adjustments (e)									(44	)			111
Total adjustments									74				2,384
Pro Forma Net Income							$		7,918				5,822
BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Diluted Net Income Per Share to Pro Forma Diluted Net Income Per Share
								Thirteen Weeks Ended
								March 27,  2016				March 29,  2015
Diluted net income per share							$		0.21				0.09
Certain professional and transaction costs (a)									—				0.08
Incremental public company costs (b)									—				(0.02	)
Stock-based compensation (c)									—				—
Distributor transition costs (d)									—				—
Tax impact of adjustments (e)									—				0.01
Total adjustments									—				0.07
Pro Forma Diluted Net Income per Share							$		0.21				0.16
(a)	Includes public offering expenses and costs associated with third-party consultants for one-time projects.
(b)	Reflects an estimate of recurring incremental legal, accounting, insurance and other operating and compliance costs we expect to incur as a public company in addition to actual amounts incurred. By its nature, this adjustment involves risks and uncertainties, and the actual costs incurred could be different than this adjustment.
(c)	Includes employer payroll taxes associated with stock option exercises related to stock options that were outstanding prior to our initial public offering.
(d)	Includes expenses incurred in connection with the transition to our new distributor.
(e)	Represents the income tax (expense) benefit associated with the adjustments in (a) through (d) that are deductible for income tax purposes.

 

BOJANGLES’, INC. AND SUBSIDIARIES
Unaudited Reconciliation of Company Restaurant Revenues to Restaurant Contribution
(in thousands)
								Thirteen Weeks Ended
								March 27,  2016				March 29,  2015
Company restaurant revenues							$		121,413				108,336
Food and supplies costs									(38,521	)			(36,561	)
Restaurant labor costs									(33,336	)			(30,468	)
Operating costs									(28,413	)			(23,871	)
Restaurant contribution							$		21,143				17,436
Restaurant contribution margin									17.4	%			16.1	%

 

 

 

For Investor Relations Inquiries:
Raphael Gross of ICR
203.682.8253

For Media Inquiries:
Brian Little of Bojangles’ Restaurants, Inc.
704.519.2118