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8-K - FORM 8-K - POPEYES LOUISIANA KITCHEN, INC. | g25746e8vk.htm |
Exhibit 99.1
NEWS RELEASE |
AFC ENTERPRISES REPORTS FISCAL 2010 FOURTH QUARTER OPERATING
RESULTS; INCREASES FISCAL 2010 EARNINGS GUIDANCE
RESULTS; INCREASES FISCAL 2010 EARNINGS GUIDANCE
ATLANTA, January 10, 2011 AFC Enterprises, Inc. (NASDAQ: AFCE), the franchisor and operator of
Popeyes® restaurants, today reported selected operating results for its fiscal 2010 fourth quarter
and full year which ended December 26, 2010, and increased fiscal 2010 earnings guidance.
Global same-store sales increased 6.0 percent in the fourth quarter compared to a 1.0 percent
decrease last year. For the full year 2010, global same-store sales increased 2.6 percent compared
to a 0.7 percent increase in 2009, exceeding the Companys previous guidance of positive 2.0
percent to 2.5 percent.
During the fourth quarter, the Popeyes system opened 22 domestic and 26 international restaurants,
bringing full year 2010 openings to 106 restaurants, compared to 95 restaurants last year.
Openings were lower than previous guidance of 120-130 restaurants due primarily to year-end
construction delays resulting from poor weather and permitting delays. Management expects to have
approximately 8 of these restaurants opened by the end of January. The Popeyes system permanently
closed 67 restaurants in fiscal 2010, resulting in net unit growth of 39 restaurants, compared to
14 net restaurants in 2009.
AFC Enterprises Chief Executive Officer Cheryl Bachelder stated, We continue to be pleased with
our strong same-store sales momentum, which reflects our superior food and effective marketing
campaigns in the U.S. and around the globe. Today our business model is stronger and more
profitable to our franchise owners. While we missed our aggressive new unit opening goal by 14
units, we expect half of those units will be open in this month. We remain in a very good position
to continue the acceleration of unit growth in 2011 and beyond.
Based on the fourth quarter sales performance, the Company expects fiscal 2010 fourth quarter
reported earnings will be $0.16-$0.17 per diluted share and full year reported earnings will be
$0.88-$0.89 per diluted share. Adjusted earnings per diluted share for the fourth quarter is now
expected to be $0.18-$0.19, bringing full year adjusted earnings per diluted share to $0.85-$0.86,
compared to adjusted earnings per diluted share of $0.74 in fiscal 2009. This is an increase from
the Companys previous adjusted earnings per diluted share guidance of $0.81-$0.83. Adjusted
earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading
entitled Managements Use of Non-GAAP Financial Measures.
Within this updated guidance, the Company continues to expect general and administrative expenses
for the fourth quarter of 2010 will be in the range of $14.0-$14.5 million and full year 2010
general and administrative expenses will be approximately 3.0 percent of system-wide sales, among
the lowest in the restaurant industry.
Management expects to provide fiscal 2011 guidance concurrent with the filing of the Companys 2010
Annual Report on Form 10-K.
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Page 2
NEWS RELEASE |
New Credit Facility
As previously announced, on December 23, 2010, the Company completed a new five-year $100 million
credit facility, comprised of a $40 million term loan and a $60 million revolver. Proceeds from
the refinancing together with available cash were used to retire approximately $63 million of the
outstanding principal debt balance of its previous credit facility. At closing, $22 million was
drawn on the revolver.
The rate of interest under the new facility is currently 2.8 percent and is determined using the
LIBO Rate plus a spread of 250 basis points. The spread above the LIBO Rate can adjust from 225 to
325 basis points depending on the Companys total leverage. In the fourth quarter of 2010, the
Company will recognize approximately $0.6 million of interest charges and defer approximately $1
million of fees associated with the refinancing to be amortized over the life of the new facility.
The Companys required quarterly principal payments will be $1.25 million for the first two years,
$1.5 million for the third and fourth years and $4.5 million in the fifth year.
Corporate Profile
AFC Enterprises, Inc. is the franchisor and operator of Popeyes® restaurants, the worlds
second-largest quick-service chicken concept based on number of units. As of December 26, 2010,
Popeyes had 1,977 operating restaurants in the United States, Guam, Puerto Rico, the Cayman Islands
and 26 foreign countries. AFCs primary objective is to deliver sales and profits by offering
excellent investment opportunities in its Popeyes brand and providing exceptional franchisee
support systems and services to its owners. AFC Enterprises can be found at
www.afce.com.
AFC Contact Information
Investor inquiries:
Cheryl Fletcher, Director, Finance & Investor Relations
(404) 459-4487 or investor.relations@afce.com
Cheryl Fletcher, Director, Finance & Investor Relations
(404) 459-4487 or investor.relations@afce.com
Media inquiries:
Alicia Thompson, Vice President, Popeyes Communications & Public Relations
(404) 459-4572 or popeyescommunications@popeyes.com
Alicia Thompson, Vice President, Popeyes Communications & Public Relations
(404) 459-4572 or popeyescommunications@popeyes.com
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Page 3
NEWS RELEASE |
Q4 Ended | Q4 Ended | Year-end | Year-end | |||||||||||||
Total Same-Store Sales | 12/26/2010 | 12/27/2009 | 12/26/2010 | 12/27/2009 | ||||||||||||
Company-operated |
9.2 | % | (1.3 | %) | 4.0 | % | (0.8 | %) | ||||||||
Franchised a |
6.1 | % | (1.0 | %) | 2.5 | % | 0.7 | % | ||||||||
Total Domestic |
6.2 | % | (1.0 | %) | 2.5 | % | 0.6 | % | ||||||||
International b |
4.3 | % | (0.8 | %) | 3.1 | % | 1.9 | % | ||||||||
Global |
6.0 | % | (1.0 | %) | 2.6 | % | 0.7 | % | ||||||||
Total Franchised (a and b) |
5.9 | % | (1.0 | %) | 2.6 | % | 0.8 | % | ||||||||
New Unit Openings |
||||||||||||||||
Company-operated |
1 | 0 | 1 | 0 | ||||||||||||
Franchised |
21 | 20 | 44 | 39 | ||||||||||||
Total Domestic |
22 | 20 | 45 | 39 | ||||||||||||
International |
26 | 24 | 61 | 56 | ||||||||||||
Global |
48 | 44 | 106 | 95 | ||||||||||||
Unit Count |
||||||||||||||||
Company-operated |
38 | 37 | 38 | 37 | ||||||||||||
Franchised |
1,542 | 1,539 | 1,542 | 1,539 | ||||||||||||
Total Domestic |
1,580 | 1,576 | 1,580 | 1,576 | ||||||||||||
International |
397 | 367 | 397 | 367 | ||||||||||||
Global |
1,977 | 1,943 | 1,977 | 1,943 |
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Page 4
NEWS RELEASE |
Managements Use of Non-GAAP Financial Measures
Adjusted earnings per diluted share: Calculation and Definition
The Company calculates fiscal 2010 fourth quarter adjusted earnings per diluted share by excluding
$0.6 million, or $0.02 per diluted share, of interest expense associated with refinancing the
credit facility. The Company calculates fiscal 2010 full year adjusted earnings per diluted share
by excluding $1.4 million, or $0.05 per diluted share, of tax benefit, and $0.6 million, or $0.02
per diluted share, of interest expense associated with refinancing the credit facility.
The Company defines adjusted earnings for fiscal 2009 as the Companys reported net income after
adjusting for certain non-operating items consisting of (i) other income, net (which for fiscal
2009 includes $3.3 million on the sale of assets partially offset by a $0.4 million loss on
insurance recoveries related to asset damages, a $0.2 million impairment related to restaurant
closures and $0.6 million related to impairments and disposals of fixed assets), (ii) the interest
expense associated with the credit facility amendment, (iii) the tax effect of these adjustments.
Adjusted earnings per diluted share provides the per share effect of adjusted net income on a
diluted basis. The following table reconciles on a historical basis for fiscal 2009, the Companys
adjusted earnings per diluted share on a consolidated basis to the line on its consolidated
statement of operations entitled net income, which the Company believes is the most directly
comparable GAAP measure on its consolidated statement of operations to adjusted earnings per
diluted share:
(in millions, except per share data) | Fiscal 2009 | |||
Net income |
$ | 18.8 | ||
Other expense (income), net |
$ | (2.1 | ) | |
Interest expense associated with credit facility amendment |
$ | 1.9 | ||
Tax effect |
$ | 0.1 | ||
Adjusted net income |
$ | 18.7 | ||
Adjusted earnings per diluted share |
$ | 0.74 | ||
Weighted-average diluted shares outstanding |
25.4 |
Managements Use of Non-GAAP Financial Measures
The Companys adjusted earnings per diluted share is a supplemental non-GAAP financial measure.
The Company uses adjusted earnings per diluted share, in addition to net income, operating profit
and cash flows from operating activities, to assess its performance and believes it is important
for investors to be able to evaluate the Company using the same measure used by management. The
Company believes this measure is important indicator of its operational strength and performance of
its business because it provides a link between profitability and operating cash flow. Adjusted
earnings per diluted share as calculated by the Company is not necessarily comparable to similarly
titled measures reported by other companies. In addition, adjusted earnings per diluted share: (a)
does not represent net income, or earnings per share as defined by GAAP; (b) should not be
considered as an alternative to net income, earnings per share, operating profit, cash flows from
operating activities or other financial information determined under GAAP.
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Page 5
NEWS RELEASE |
Forward-Looking Statement: Certain statements in this release contain forward-looking
statements within the meaning of the federal securities laws. Statements regarding future events
and developments and our future performance, as well as managements current expectations, beliefs,
plans, estimates or projections relating to the future, are forward-looking statements within the
meaning of these laws. These forward-looking statements are subject to a number of risks and
uncertainties. Examples of such statements in this press release include discussions regarding the
Companys planned implementation of its strategic plan, discussions regarding the
Companys projections and expectations regarding anticipated 2010 performance, including
projections regarding general and administrative expenses, and net earnings per diluted share, and
similar statements of belief or expectation regarding future events. Among the important factors
that could cause actual results to differ materially from those indicated by such forward-looking
statements are: competition from other restaurant concepts and food retailers, continued
disruptions in the financial markets, the loss of franchisees and other business partners, labor
shortages or increased labor costs, increased costs of our principal food products, changes in
consumer preferences and demographic trends, as well as concerns about health or food quality,
instances of avian flu or other food-borne illnesses, general economic conditions, the loss of
senior management and the inability to attract and retain additional qualified management
personnel, limitations on our business under our credit facility, our ability to comply with the
repayment requirements, covenants, tests and restrictions contained in our credit facility, failure
of our franchisees, a decline in the number of franchised units, a decline in our ability to
franchise new units, slowed expansion into new markets, unexpected and adverse fluctuations in
quarterly results, increased government regulation, effects of volatile gasoline prices, supply and
delivery shortages or interruptions, currency, economic and political factors that affect our
international operations, inadequate protection of our intellectual property and liabilities for
environmental contamination and the other risk factors detailed in our 2009 Annual Report on Form
10-K and other documents we file with the Securities and Exchange Commission. Therefore, you should
not place undue reliance on any forward-looking statements.
- End -