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El Pollo Loco, Inc. Announces Results for the 13 Weeks and 26 Weeks Ended June 29, 2005 |
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El Pollo Loco reported operating revenues for the 13 weeks ended June 30, 2005 of $61.2 million, which is an increase of $5.5 million, or 9.8%, over operating revenues for the 13 weeks ended June 30, 2004 of $55.7 million. |
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Operating revenues include both sales at company-operated stores and franchise revenues. Same store sales for the system, which includes sales from both company-operated and franchised stores, increased 9.4% in the second quarter of fiscal 2005; company-operated restaurant same store sales increased 8.8% and franchise restaurant same store sales increased 9.9%.
Operating income for the second quarter of fiscal 2005 was $7.0 million, an increase of $3.9 million, or 125.1%, from the second quarter of 2004 operating income of $3.1 million. A 1.5% reduction in payroll and benefit expenses as a percentage of sales to 25.4% for the second quarter of 2005 from 26.9% for the second quarter of 2004 contributed to this increase. In addition, advertising expense decreased by $0.4 million to 4.4% of restaurant revenue for the second quarter of 2005 compared to 5.6% of restaurant revenue for the second quarter of 2004 due to the timing of advertising expenditures.
Also contributing to the increase in operating income was a $1.5 million decrease in general and administrative expenses for bonuses accrued for option holders related to the revaluation of stock options in the second quarter of 2004, partially offset by a $0.4 million increase in outside services expense, which is primarily attributed to implementation costs of the Sarbanes-Oxley Act of 2002, and also by an impairment charge of $0.9 million, which was recorded by the Company for one under-performing company-operated store that will continue to operate.
Interest expense decreased by $0.2 million to $3.3 million in the second quarter of 2005 from $3.5 million in the second quarter of 2004 due to lower average debt balances.
Our provision for income taxes consisted of income tax expense of $1.4 million and an income tax benefit of $(0.2) million for the 13 weeks ended June 30, 2005 and 2004, respectively.
As a result of the above, net income for the second quarter of fiscal 2005 was $2.3 million, which was an increase of $2.6 million from the second quarter 2004 net loss of $0.3 million.
EBITDA for the second quarter of fiscal 2005 was $10.6 million, an increase of $4.2 million, or 64.7%, from second quarter 2004 EBITDA of $6.4 million. This increase is primarily due to the operating income factors described above. EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA and its uses and limitations are discussed further under "Non-GAAP Financial Measures," below.
Operating revenues for the 26-week period ended June 30, 2005 were $115.8 million, which was an increase of $6.3 million, or 5.8%, over operating revenues for the 26 weeks ended June 30, 2004 of $109.5 million. Same store sales for the system increased 6.1% for the 26 weeks ended June 30, 2005; company-operated restaurant same store sales increased 4.6% and franchise restaurant same store sales increased 7.6%.
Operating income for the 26 weeks ended June 30, 2005 was $12.0 million, which was an increase of $2.6 million, or 26.8% over operating income of $9.4 million for the 26 weeks ended June 30, 2004.
Interest expense decreased $0.4 million, or 5.4%, to $6.7 million for the 26-week period ended June 30, 2005 from $7.1 million for the 26-week period ended June 30, 2004 due to lower average debt balances.
Net income for the 26 weeks ended June 30, 2005 was $3.2 million, an increase of $1.9 million, or 142.8%, from net income for the 26 weeks ended June 30, 2004 of $1.3 million.
EBITDA for the 26 weeks ended June 30, 2005 was $19.0 million, an increase of $3.0 million, or 19.0%, over EBITDA of $16.0 million for the 26 weeks ended June 30, 2004.
Stephen E. Carley, president and CEO of El Pollo Loco, Inc. said, "The second quarter results show the progress we made in sales growth and labor cost controls. Our promotions celebrating our 25th Anniversary that offered 25 cent tacos al carbon with the purchase of an 8, 10 or 12 piece meal, along with a "Loco Favorites" menu that offered a taco al carbon, BRC (beans/rice/cheese) burrito, leg or thigh, churro, or cheese quesadilla for $1.00 each were successful in bringing additional customers into our stores. We designed these promotions to focus on driving purchases of our family meals and by offering menu items that our customers could add to their meals, all without sacrificing margins. In fact, our gross margin remained steady at 68.4% of sales for the second quarter of 2005 compared to 68.5% for the second quarter of 2004."
Mr. Carley added, "During the second quarter, we opened three company stores and three franchise stores. Additionally, we are pleased to announce the signing of new development agreements with experienced restaurateurs in New England and in portions of New York and New Jersey. The two development agreements are for commitments for the opening of 19 El Pollo Loco restaurants with options to open an additional 36 restaurants in these areas. With these new development agreements, we now have a total of 20 franchisees with development agreements totaling 140 restaurants to be built in 14 states."
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