Published: March 02, 2006
Main Street Restaurant Group, Inc. Announces 2005 Fourth Quarter and Year End Results
MAIN STREET RESTAURANT GROUP, INC. (NASDAQ: MAIN), the world's largest franchisee of T.G.I. Friday's restaurants, the
owner and operator of the Bamboo Club - Asian Bistro, the Redfish Seafood
Grill and Bar restaurant concepts and operator of one Alice Cooper'stown
restaurant, today announced its operating results for the fourth quarter
2005 and the full year ended December 26, 2005.
For the quarter, the Company generated revenues of $57.5 million, a 6.1%
increase compared with the year-ago quarter. The sales gain was primarily
due to a Company-wide same-store sales increase of 5%, the majority of
which resulted from higher customer traffic. In the fourth quarter of
2004, Company-wide same store sales grew 4.2%.
Bill Shrader, President and Chief Executive Officer, said, "Revenue results
for the fourth quarter reflect the positive impact of two new T.G.I.
Friday's store openings in Surprise and Phoenix, Arizona. Both of these new
sites have proven to be strategically located and operationally sound,
performing in line with our expectations. In addition, we were able to
deliver robust same-store sales growth during the quarter of 5.0%, which is
especially noteworthy considering we had a 4.2% sales increase in 2004. In
fact, each of our three key brands was in positive same stores sales
territory. We were pleased to have delivered a terrific experience to an
increasing number of guests."
Mr. Shrader continued, "At the end of January 2006, we closed an
underperforming Bamboo Club in Fairfax, Virginia where we lost nearly $1.0
million in 2005. The asset write-down and lease termination costs
associated with this closing was approximately $2.5 million, of which
$250,000 was a one time cash payment to terminate the lease." Mr. Shrader
emphasized, "As part of our overall objective of increasing profitability,
we will continue to evaluate underperforming locations and take appropriate
action if and when necessary. These steps will help maximize the Company's
long-term profitability and cash flow as well as position our stockholders
to realize long term value."
During the fourth quarter, the Company completed its review and assessment
of asset impairments based upon the financial performance of certain
restaurants and financial expectations for these locations in 2006 and
beyond. The Company determined to record additional, non-cash asset
impairments of $4.8 million (including $1.0 million of goodwill) for two
underperforming Bamboo Clubs and the Alice Cooper'stown location. These
leases have not been terminated and the restaurants will remain open.
Also during the fourth quarter, the Company consummated a $45 million
credit facility consisting of a $25 million term loan and a $20 million
revolving line of credit. Under the terms of the credit facility, proceeds
from the $25 million term loan plus approximately $5.5 million of the
Company's cash were used to repay existing debt, reducing the Company's
overall debt level to just under $39 million at year end. The $20 million
revolving line of credit will provide future flexibility for new restaurant
development and T.G.I. Friday's remodel initiatives.
As a result of the above-mentioned items, for the fourth quarter of 2005,
the Company reported a net loss of $10.6 million or $0.61 per fully diluted
share, compared with a net loss of $1.1 million or $0.08 per fully diluted
share, in the fourth quarter of 2004.
The Company's operating cash flow, known as EBITDA, was $3.5 million for
the three months ended December 26, 2005, compared with $3.4 million in the
fourth quarter of 2004. The computation of quarterly and year-to-date
EBITDA can be found in Appendix A, attached to this press release.
For the year ended December 26, 2005, revenues were $239.7 million, an
increase of 6.7% over revenues of $224.7 million for the comparable period
last year. Same store sales increased 7.6%. For the year the Company
reported a net loss of $7.8 million or $0.48 per share, compared with net
income of $953,000, or $0.07 per fully diluted share, in 2004. EBITDA for
2005 was $16.9 million, an 8.3% increase over the $15.6 million generated
in 2004.
The Company discloses pro forma or non-GAAP measures of net income and
earnings per share. The Company believes that this pro forma information
provides greater comparability regarding its ongoing operating performance.
These measures should not be considered an alternative to measurements
required by accounting principles generally accepted in the United States
("U.S. GAAP"), such as net income and/or earnings or loss per share. These
pro forma measures are unlikely to be comparable to pro forma information
provided by other companies. In accordance with SEC regulations,
reconciliation of the Company's U.S. GAAP information to the pro forma
information is provided in the appendix attached.
Looking Ahead
Main Street's next openings of T.G.I. Friday's restaurants will be in the
Orleans Hotel and Casino in Las Vegas, Nevada and in Rancho Cucamonga,
California -- both scheduled to open in the first half of 2006. The Company
expects to open two-to-four additional T.G.I. Friday's restaurants in 2006.
In addition, the Company has begun the planning and design for
implementation of its T.G.I. Friday's revitalization program. This program
will include an interior and exterior remodel for most of its T.G.I.
Friday's restaurants. The design and permitting is in process for the
first four locations, which are expected to be completed by the end of the
third quarter of 2006.
Guidance for 2006
Based on the Company's current outlook, same-stores sales are expected to
increase between 2% and 3% for each of the quarters in 2006. EBITDA for the
full year 2006 is expected to come within the range of $18.0 million to
$19.0 million.
Earnings Conference call
As a reminder, our earnings conference call is scheduled for today,
Thursday, March 2, 2006 at 5:00 pm Eastern time. The toll free dial in
number is 1-800-299-7098 (or 1-617-801-9715 for international calls), and
the participant pass code is 46870474. As previously announced, that
conference call may include forward-looking information. You can visit our
web site at http://www.mainandmain.com for a replay.
-- Appendix A and Three Tables to Follow --
MAIN STREET RESTAURANT GROUP, INC. is the world's largest franchisee of
T.G.I. Friday's restaurants, operating 55 T.G.I. Friday's, 10 Bamboo Club -
Asian Bistros, four Redfish Seafood Grill and Bar, and one Alice
Cooper'stown restaurants.
This press release contains forward-looking statements regarding the
Company's business strategies, business outlook, anticipated new store
openings, customer traffic, capital needs and financial position, operating
cash flow, same store sales, EBITDA, and revenue and earnings expectations.
These forward-looking statements are based primarily on the Company's
expectations and are subject to a number of risks and uncertainties, some
of which are beyond the Company's control. Actual results could differ
materially from the forward-looking statements as a result of numerous
factors, including those set forth in the Company's Form 10-K and 10-Q
Reports as filed with the Securities and Exchange Commission.
Appendix A
I. Computation of Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA) (dollars in millions):
Quarter ended Quarter ended
December 27, 2004 December 26, 2005
Net Income (Loss) $(1.1) $(10.6)
Add-Income taxes (0.1) .2
-Interest expense 1.0 2.4
-Depreciation & amortization 2.2 2.6
-Gain/loss on sale of assets -- --
-Non-cash litigation reserve (a) -- 1.5
-Impairment charges & other 1.4 7.3
-Non-cash stock compensation (a) -- .1
============ ============
EBITDA $3.4 $3.5
============ ============
Year ended Year ended
December 27, 2004 December 26, 2005
Net Income (Loss) $1.0 $(7.8)
Add-Income taxes -- .2
-Interest expense 3.8 5.2
-Depreciation & amortization 9.3 9.9
-Gain/loss on sale of assets .1 .5
-Non-cash litigation reserve (a) -- 1.5
-Impairment charges and other 1.4 7.3
-Non-cash stock compensation (a) -- .1
============ ============
EBITDA $15.6 $16.9
============ ============
(a) Included in general & administrative expenses
II. Quarterly supplemental brand-level data:
Restaurant level operating profit (ROP) includes all restaurant-specific
revenues and direct costs of operations, including royalties and
marketing costs paid to Carlson Restaurants Worldwide on behalf of the
T.G.I. Friday’s brand. Restaurant level EBITDA represents restaurant
level cash flow, adding depreciation and amortization to ROP:
T.G.I. Friday's Brand
---------------------
Fourth Quarter Full Year
-------------- ---------
2004 2005 2004 2005
---- ---- ---- ----
Average per T.G.I.
Friday’s Location:
SALES $.9 million $.9 million $3.6 million $3.8 million
ROP $80,000 $83,000 $313,000 $367,000
EBITDA $110,000 $114,000 $433,000 $491,000
======== ======== ======== ========
Average number of
restaurants 52.0 53.1 52.8 53.6
==== ==== ==== ====
Bamboo Brand (dollars in millions);
---------------------------------
2005 Full Year
==============
Sales ROP EBITDA # of Locations
===== === ====== ==============
Closed Locations (a) $1.6 $(1.4) $(1.1) 3
Arizona and Florida 18.6 .2 1.4 7
Other Markets (b) 5.8 (1.3) (.8) 3
--- --- -- -
Brand Totals $26.0 $(2.5) $(.5)
===== ===== ===
(a) Represents the 2005 operating activities of the restaurants closed
in 2005 (Newport and Aventura) and in early 2006 (Fairfax).
Does not include any asset write-off or lease termination payments
for these locations.
(b) Other markets represents the restaurants located in Novi, Michigan,
King of Prussia, Pennsylvania and Raleigh, North Carolina.
Other Brands (dollars in millions);
----------------------------------
2005 Full Year
==============
Sales ROP EBITDA # of Locations
===== === ====== ==============
Other Brands (c) $9.8 $(1.1) $(.4) 5
(c) Other brands category represents four Redfish and
one Alice Cooper'stown.
MAIN STREET RESTAURANT GROUP, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Par Value and Share Data)
December 26, December 27,
2005 2004
------------ -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 10,124 $ 5,593
Accounts receivable, net 2,826 1,208
Inventories 2,796 2,758
Prepaid expenses 341 477
------------ -------------
Total current assets 16,087 10,036
Property and equipment, net 58,263 66,444
Other assets, net 1,982 1,804
Notes receivable, net 516 1,212
Goodwill 20,255 21,255
Franchise fees, net 1,735 1,815
Purchased franchise territories, net 571 606
------------ -------------
Total assets $ 99,409 $ 103,172
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 3,383 $ 3,851
Accounts payable 7,194 6,626
Other accrued liabilities 23,579 19,260
------------ -------------
Total current liabilities 34,156 29,737
Long-term debt, net of current portion 34,902 42,232
Other liabilities and deferred credits 1,402 1,918
------------ -------------
Total liabilities 70,460 73,887
------------ -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $001 par value,
2,000,000 shares authorized; no
shares issued and outstanding in
2005 and 2004 - -
Common stock, $001 par value,
25,000,000 shares authorized;
17,309,550 and 14,642,000 shares
issued and outstanding in 2005 and
2004, respectively 17 15
Additional paid-in capital 60,854 54,927
Accumulated deficit (31,608) (23,812)
Unearned compensation-restricted stock (314) -
Accumulated other comprehensive loss - (1,845)
------------ -------------
Total stockholders' equity 28,949 29,285
------------ -------------
Total liabilities and
stockholders' equity $ 99,409 $ 103,172
============ =============
MAIN STREET RESTAURANT GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Three Months Ended
----------------------------
(unaudited)
December 26, December 27,
2005 2004
------------ ------------
Revenue $57,507 $54,218
------------ ------------
Restaurant operating expenses
Cost of sales 15,195 14,280
Payroll and benefits 17,372 16,367
Depreciation and amortization 2,327 2,153
Loss on disposal of assets 48 27
Other operating expenses 18,659 17,622
------------ ------------
Total restaurant operating expenses 53,601 50,449
------------ ------------
Depreciation and amortization of
intangible assets 259 220
(Gain) Loss on disposal of assets - -
General and administrative expenses 4,180 2,291
Preopening expenses 125 42
New manager training expenses 4 9
Impairement charges and other 7,294 1,385
------------ ------------
Operating income (loss) (7,956) (178)
Interest expense and other, net 2,412 1,047
------------ ------------
Net income (loss) before income tax (10,368) (1,225)
Income tax expense (benefit) 202 (112)
------------ ------------
Net income (loss) $(10,570) $(1,113)
============ ============
Basic earnings (loss) per share $(0.61) $(0.08)
============ ============
Diluted earnings (loss) per share $(0.61) $(0.08)
============ ============
Weighted average number of shares outstanding
-- Basic 17,241 14,642
============ ============
Weighted average number of shares outstanding
-- Diluted 17,241 14,642
============ ============
MAIN STREET RESTAURANT GROUP, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Year Ended
(unaudited)
December 26, December 27,
2005 2004
------------ -------------
Revenue $ 239,729 $ 224,751
------------ -------------
Restaurant operating expenses
Cost of sales 63,265 59,025
Payroll and benefits 73,222 69,287
Depreciation and amortization 8,944 8,591
Loss on disposal of assets 480 148
Other operating expenses 76,089 71,290
------------ -------------
Total restaurant operating
expenses 222,000 208,341
------------ -------------
Depreciation and amortization of
intangible assets 952 758
(Gain) loss on disposal of assets (3) 13
General and administrative expenses 11,581 9,197
Preopening expenses 307 260
New manager training expenses 21 50
Impairment charges and other 7,294 1,385
Operating income (loss) (2,423) 4,747
Interest expense and other, net 5,171 3,794
------------ -------------
Net income (loss) before income tax (7,594) 953
Income tax expense 202 -
------------ -------------
Net income (loss) $ (7,796) $ 953
============ =============
Basic earnings (loss) per share $ (0.48) $ 0.07
============ =============
Diluted earnings (loss) per share $ (0.48) $ 0.07
============ =============
Weighted average number of shares
outstanding
-- Basic 16,321 14,642
============ =============
Weighted average number of shares
outstanding
-- Diluted 16,321 14,649
============ =============
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