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8-K - PIZZA INN HOLDINGS. INC - PIZZA INN HOLDINGS, INC /MO/pizza8k020613.htm
FOR IMMEDIATE RELEASE

Contact:
Jerry L. Trojan
Chief Financial Officer
Pizza Inn Holdings, Inc.
469-384-5000
 
PIZZA INN HOLDINGS, INC. REPORTS RESULTS FOR
SECOND QUARTER FISCAL YEAR 2013

Company continues to grow Pie Five Pizza Co. concept

 
THE COLONY, Texas – February 6, 2013 -- PIZZA INN HOLDINGS, INC. (NASDAQ: PZZI)
 
Second Quarter Highlights:
 
·  
The Company opened an additional Pie Five Pizza Co. restaurant
·  
Company awarded first two Pie Five Pizza Co. franchise development agreements
·  
Company-owned restaurant sales increased 55.8% over the second quarter of fiscal 2012 to $2.0 million
·  
Net income decreased $0.2 million from the second quarter of fiscal 2012 to a loss of $120,000
·  
Compared to second quarter of fiscal 2012, total domestic Pizza Inn franchised same store sales decreased 4.5%
·  
EBITDA decreased $0.2 million to $0.1 million compared to the second quarter offiscal 2012
 
Pizza Inn Holdings, Inc. (NASDAQ: PZZI) today announced results for the second fiscal quarter ended December 23, 2012.  Second quarter net income decreased $0.2 million to a loss of $120,000, or $0.01 per share, compared to net income of $56,000, or $0.01 per share, for the same quarter of the prior fiscal year.  The decline in net income was primarily attributable to lower revenue earned from franchising and food and supply sales and higher costs related to the continued development of the Pie Five Pizza Co. concept when compared to the second quarter ended December 25, 2011.
 
Second quarter revenues increased to $10.5 million in fiscal 2013 compared to $10.3 million in the prior fiscal year. Food and supply sales decreased by approximately $0.4 million, or 5.4%, due to the combined impact of a decrease in the average number of restaurants open and an 8.7% decrease in total domestic franchisee retail sales. Compared to the second quarter of fiscal 2012, Company-owned restaurant sales increased 55.8% to $2.0 million due primarily to new store openings.
 
"We continued to expand our Pie Five concept with the opening of another corporate-owned location during the second fiscal quarter,” said Randy Gier, President and Chief Executive Officer. “We also welcomed 2013 with the opening of our ninth corporate-owned Pie Five in January.  In the second fiscal quarter we awarded our first two multi-unit franchise agreements to develop up to 18 locations in Utah and North Carolina. At the same time, we have invested in the people and infrastructure for further development of our brands with the addition of Flynn Dekker as Chief Marketing Officer for Pizza Inn Holdings and Chris Smith as Vice President of Operations for Pie Five. We have plans to continue opening new Pie Five locations throughout 2013.  The pace of store openings is contingent upon the availability of quality real estate and the completion of new retail centers in which we have leased space.

“The retail sales trend in the Pizza Inn system was negative when compared to the prior year period primarily as a result of significant pricing competition in the pizza market,” Gier added. “However, new initiatives are underway to improve product quality and to communicate with loyal customers as well as new audiences about the value of Pizza Inn’s legendary menu. We have a very unique product offering that is not matched by larger pizza competitors. We will continue to develop a strategy to leverage this to the benefit of the Pizza Inn system.”
 
Certain statements in this press release, other than historical information, may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and are intended to be covered by the safe harbors created thereby. These forward-looking statements are based on current expectations that involve numerous risks, uncertainties and assumptions.  Assumptions relating to these forward-looking statements involve judgments with respect to, among other things, future economic, competitive and market conditions, regulatory framework and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of Pizza Inn Holdings.  Although the assumptions underlying these forward-looking statements are believed to be reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that any forward-looking statements will prove to be accurate.  In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of such information should not be regarded as a representation that the objectives and plans of Pizza Inn Holdings will be achieved.
 
About Pizza Inn Holdings, Inc.:
 
Headquartered in the Dallas suburb of The Colony, TX, Pizza Inn Holdings, Inc., is an owner, franchisor and supplier of a system of restaurants operating domestically and internationally under the trademarks "Pizza Inn" and "Pie Five Pizza Co." Pizza Inn is an international pizza chain featuring traditional and specialty pizzas, as well as freshly made pastas, sandwiches, and desserts. Pie Five Pizza Co. is a fast-casual concept offering individual pizzas made to order and cooked in less than five minutes. Founded in 1958, Pizza Inn Holdings Inc. owns and franchises approximately 300 restaurants. The Company’s common stock is listed on the Nasdaq Capital Market under the symbol “PZZI”.  For more information, please visit www.pizzainn.com.
 
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PIZZA INN HOLDINGS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(In thousands, except per share amounts)
 
(Unaudited)
 
                         
                         
                         
   
Three Months Ended
   
Six Months Ended
 
   
December 23,
   
December 25,
   
December 23,
   
December 25,
 
   
2012
   
2011
   
2012
   
2011
 
REVENUES:
                       
Food and supply sales
  $ 7,701     $ 8,137     $ 15,411     $ 17,044  
Franchise revenue
    890       943       1,792       1,892  
Restaurant sales
    1,957       1,256       3,783       2,547  
      10,548       10,336       20,986       21,483  
                                 
COSTS AND EXPENSES:
                               
Cost of sales
    8,875       8,611       17,667       17,861  
General and administrative expenses
    1,153       898       2,158       1,793  
Franchise expenses
    566       521       1,067       973  
Pre-opening expenses
    85       164       164       176  
Bad debt
    45       15       90       30  
Interest expense
    35       17       139       33  
      10,759       10,226       21,285       20,866  
                                 
(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE TAXES
    (211 )     110       (299 )     617  
Income tax (benefit) expense
    (103 )     39       (148 )     217  
(LOSS) INCOME FROM CONTINUING OPERATIONS
    (108 )     71       (151 )     400  
                                 
Loss from discontinued operations, net of taxes
    (12 )     (15 )     (27 )     (31 )
NET (LOSS) INCOME
  $ (120 )   $ 56     $ (178 )   $ 369  
                                 
EARNINGS PER SHARE OF COMMON STOCK - BASIC:
                               
(Loss) Income from continuing operations
  $ (0.01 )   $ 0.01     $ (0.02 )   $ 0.05  
Loss from discontinued operations
    -       -       -       -  
Net (loss) income
  $ (0.01 )   $ 0.01     $ (0.02 )   $ 0.05  
                                 
EARNINGS PER SHARE OF COMMON STOCK - DILUTED:
                               
                                 
(Loss) Income from continuing operations
  $ (0.01 )   $ 0.01     $ (0.02 )   $ 0.05  
Loss from discontinued operations
    -       -       -       -  
Net (loss) income
  $ (0.01 )   $ 0.01     $ (0.02 )   $ 0.05  
                                 
Weighted average common shares outstanding - basic
    8,021       8,013       8,021       8,012  
                                 
Weighted average common and
                               
potential dilutive common shares outstanding
    8,184       8,362       8,172       8,292  

 
 
 

 
 
PIZZA INN HOLDINGS, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands, except share amounts)
 
             
   
December 23,
   
June 24,
 
ASSETS
 
2012 (unaudited)
   
2012
 
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 534     $ 590  
Accounts receivable, less allowance for bad debts
               
of $252 and $253, respectively
    3,303       3,098  
Inventories
    1,531       1,852  
Income tax receivable
    429       431  
Deferred income tax assets
    1,070       1,078  
Prepaid expenses and other
    436       256  
Total current assets
    7,303       7,305  
                 
LONG-TERM ASSETS
               
Property, plant and equipment, net
    5,520       4,794  
Long-term notes receivable
    115       27  
Deposits and other
    216       372  
    $ 13,154     $ 12,498  
LIABILITIES AND SHAREHOLDERS' EQUITY
               
CURRENT LIABILITIES
               
Accounts payable - trade
  $ 1,422     $ 1,562  
Accrued expenses
    1,856       1,756  
Deferred revenues
    128       200  
Bank debt
    556       765  
Total current liabilities
    3,962       4,283  
                 
LONG-TERM LIABILITIES
               
Bank debt, net of current portion
    2,219       977  
Deferred tax liability
    553       699  
Deferred revenues, net of current portion
    107       125  
Deferred gain on sale of property
    71       84  
Other long-term liabilities
    22       22  
Total liabilities
    6,934       6,190  
                 
COMMITMENTS AND CONTINGENCIES  
               
                 
SHAREHOLDERS' EQUITY
               
Common stock, $.01 par value; authorized 26,000,000
               
shares; issued 15,140,319;
               
outstanding 8,020,919
    151       151  
Additional paid-in capital
    9,244       9,154  
Retained earnings
    21,461       21,639  
Treasury stock at cost
               
Shares in treasury: 7,119,400
    (24,636 )     (24,636 )
Total shareholders' equity
    6,220       6,308  
    $ 13,154     $ 12,498  
 
 
 
 

 
 
PIZZA INN HOLDINGS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands)
 
(Unaudited)
 
             
   
Six Months Ended
 
   
December 23,
   
December 25,
 
   
2012
   
2011
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
             
Net (loss) income
  $ (178 )   $ 369  
Adjustments to reconcile net (loss) income to
               
cash provided by operating activities:
               
Depreciation and amortization
    627       389  
Stock compensation expense
    90       73  
Deferred tax
    (138 )     39  
Provision for litigation costs
               
Provision for bad debts
    1       30  
Changes in operating assets and liabilities:
               
Notes and accounts receivable
    (319 )     (282 )
Inventories
    321       105  
Accounts payable - trade
    (140 )     (8 )
Accrued expenses
    100       (169 )
Deferred revenue
    (103 )     (78 )
Prepaid expenses and other
    (26 )     (283 )
Cash provided by operating activities
    235       185  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
                 
Capital expenditures
    (1,324 )     (1,222 )
Cash used by investing activities
    (1,324 )     (1,222 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Proceeds from exercise of stock options
    -       23  
Borrowings of bank debt
    3,160       741  
Repayments of bank debt
    (2,127 )     (167 )
Repayments of bank debt - F&M
    -       -  
Cash provided by financing activities
    1,033       597  
                 
Net decrease in cash and cash equivalents
    (56 )     (440 )
Cash and cash equivalents, beginning of period
    590       949  
Cash and cash equivalents, end of period
  $ 534     $ 509  
                 
                 
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 
                 
                 
CASH PAYMENTS FOR:
               
                 
Interest    141      32  
Income taxes - net
    -       57  
 
 
 
 

 
 
PIZZA INN HOLDINGS, INC.
 
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 
(In thousands)
 
(Unaudited)
 
             
   
Three Months Ended
 
   
December 23,
   
December 25,
 
   
2012
   
2011
 
 Net (loss) income
  $ (120 )   $ 56  
 Interest expense
    35       17  
 Taxes
    (103 )     39  
 Depreciation and amortization
    326       206  
 EBITDA
  $ 138     $ 318  
                 
                 
   
Six Months Ended
 
   
December 23,
   
December 25,
 
      2012       2011  
 Net (loss) income
  $ (178 )   $ 369  
 Interest expense
    139       33  
 Taxes
    (148 )     217  
 Depreciation and amortization
    627       389  
 EBITDA
  $ 440     $ 1,008