Pizza Inn Holdings, Inc. Reports Results For Third Quarter Fiscal Year 2014

 

 

Adjusted EBITDA decreased $0.2 million to a loss of $0.2 million compared to the same quarter of the prior year

Pizza Inn

Third Quarter Highlights:

  • Adjusted EBITDA decreased $0.2 million to a loss of $0.2 million compared to the same quarter of the prior year
  • Net loss increased $0.1 million from the comparable prior year quarter to a loss of $0.5 million
  • Pizza Inn domestic comparable store franchise retail sales increased 0.8% year over year
  • Company-owned restaurant sales increased 36.2% year over year
  • Pie Five Company-owned average weekly sales per store increased 16.9% year over year
  • Continued growth in pipeline of Pie Five franchise restaurant openings

Pizza Inn Holdings, Inc. (NASDAQ: PZZI) today announced results for the third fiscal quarter ended March 30, 2014. The Company had a net loss in the third quarter of $0.5 million compared to a net loss of $0.4 million for the comparable period in the prior fiscal year. The increase in net loss from prior year was primarily due to higher general and administrative expenses, franchise costs attributable to growth of the Pie Five brand, and bad debt expense.

"The performance of the Pie Five concept was very strong in the third quarter," said Randy Gier, President and Chief Executive Officer. "Despite some negative weather impact early in the quarter, the average weekly sales per store for our thirteen Company-owned restaurants increased 16.9% year over year due to a 4.4% increase in comparable store sales and very strong results for the new restaurants opened in the past twelve months.  I'm particularly pleased that these strong trends have continued into the current quarter."

"The progress we've made at Pie Five to hone our site selection process and concept prototype has had a clear impact on the performance of our four new Company-owned restaurants (including one relocated restaurant) and four new franchised restaurants opened this fiscal year.  That group of eight new Pie Five restaurants generated average weekly sales per store in the third quarter that were 45% higher than that of the existing eleven Company-owned and franchised restaurants," continued Gier.

"Later this week, our Richmond franchisee will open the 20th restaurant in the Pie Five chain and we expect the number of Pie Five restaurants in operation to double by the end of the 2014 calendar year as our new franchisees open their first or second restaurants in markets across the country.  To fully capitalize on the momentum in the Pie Five concept we are also accelerating the development of Company-owned restaurants in multiple metropolitan areas.  To prepare for this growth we recently added several strong, experienced members to our management team, including a new Chief Financial Officer and a Vice President of Real Estate Development," continued Gier.

"The Pizza Inn system also demonstrated improved performance in the quarter, with an improved trend of comparable store sales and store count," said Gier. "The hard work by our restaurant support team and our Pizza Inn franchisees is paying off as we bring stability to the system", added Gier.

Total revenues for the third quarter and the comparable prior year quarter were $10.9 million and $9.8 million, respectively. Third quarter franchise revenue increased slightly as compared to the prior year as franchise fees from new Pie Five franchisees offset decreased international royalties. Additional franchise development fees previously received from Pie Five franchisees have been deferred and will be recognized as future restaurants are opened.

Third quarter food and supply sales increased by approximately $0.4 million, or 5.5%, as compared to the prior year primarily due to an increase in sales to franchisees as a result of increased domestic franchisee retail sales and higher food commodity costs passed through in prices. Third quarter Company-owned restaurant sales increased $0.7 million, or 36.2%, as compared to the prior year as a result of the opening of two new Company-owned Pie Five restaurants in the second half of fiscal 2013 and four new Company-owned Pie Five restaurants in fiscal 2014 (one of which was a relocation of an existing restaurant), partially offset by the closing of one Company-owned Pizza Inn restaurant at the completion of its lease in fiscal 2014. Third quarter general and administrative expenses increased $0.3 million over the prior year to support growth for new Company-owned Pie Five restaurants and a legal settlement related to patent litigation, partially offset by reduced stock compensation expense.  

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 275 restaurants. The Company's common stock is listed on the Nasdaq Capital Market under the symbol "PZZI". 

PIZZA INN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

Three Months Ended

Nine Months Ended

March 30,

March 24,

March 30,

March 24,

2014

2013

2014

2013

REVENUES:

$           10,912

$             9,781

$           31,281

$           30,767

COSTS AND EXPENSES:

Cost of sales

9,570

8,460

27,028

26,127

General and administrative expenses

1,130

840

3,314

2,995

Franchise expenses

677

608

2,150

1,675

Pre-opening expenses

4

82

160

249

Bad debt

93

45

203

135

Interest expense

34

58

113

197

11,508

10,093

32,968

31,378

LOSS FROM CONTINUING OPERATIONS BEFORE TAXES

(596)

(312)

(1,687)

(611)

Income tax benefit

(159)

(22)

(527)

(170)

LOSS FROM CONTINUING OPERATIONS

(437)

(290)

(1,160)

(441)

Loss from discontinued operations, net of taxes

(14)

(100)

(39)

(127)

NET LOSS

$               (451)

$               (390)

$            (1,199)

$               (568)

EARNINGS PER SHARE OF COMMON STOCK - BASIC:

Loss from continuing operations

$              (0.05)

$              (0.04)

$              (0.14)

$              (0.05)

Loss from discontinued operations

-

(0.01)

-

(0.02)

Net loss

$              (0.05)

$              (0.05)

$              (0.14)

$              (0.07)

EARNINGS PER SHARE OF COMMON STOCK - DILUTED:

Loss from continuing operations

$              (0.05)

$              (0.04)

$              (0.13)

$              (0.05)

Loss from discontinued operations

-

(0.01)

-

(0.02)

Net loss

$              (0.05)

$              (0.05)

$              (0.13)

$              (0.07)

Weighted average common shares outstanding - basic

8,771

8,021

8,566

8,021

Weighted average common and

potential dilutive common shares outstanding

9,290

8,267

9,109

8,198

 

PIZZA INN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

ASSETS

 

March 30,

2014

(unaudited)

 

June 30,

2013

CURRENT ASSETS

Cash and cash equivalents

$

365

$

919

Accounts receivable, less allowance for bad debts

of $417 and $228, respectively

3,679

3,139

Notes receivable

123

292

Inventories

1,601

1,615

Income tax receivable

343

343

Deferred income tax assets

943

882

Prepaid expenses and other

336

307

 

Total current assets

7,390

7,497

LONG-TERM ASSETS

Property, plant and equipment, net

5,652

4,711

Long-term notes receivable

14

40

Long-term deferred tax asset

657

168

Deposits and other

430

119

 

Total assets

$

14,143

$

12,535

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable - trade

$

2,178

$

1,572

Accrued expenses

1,611

1,749

Deferred revenues

154

169

Bank debt

375

669

 

Total current liabilities

4,318

4,159

LONG-TERM LIABILITIES

Bank debt, net of current portion

750

1,856

Deferred revenues, net of current portion

680

370

Deferred gain on sale of property

40

59

Other long-term liabilities

70

22

 

Total liabilities

5,858

6,466

COMMITMENTS AND CONTINGENCIES  (See Note 3)

SHAREHOLDERS' EQUITY

Common stock, $.01 par value; authorized 26,000,000

shares; issued 15,849,615 and 15,312,680 shares, respectively;

outstanding 8,730,215 and 8,193,280 shares, respectively

158

153

Additional paid-in capital

13,584

10,174

Retained earnings

19,179

20,378

Treasury stock at cost

Shares in treasury: 7,119,400 

(24,636)

(24,636)

 

   Total shareholders' equity

8,285

6,069

$

14,143

$

12,535

PIZZA INN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Nine Months Ended

March 30,

March 24

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

      Net loss

$             (1,199)

$                (568)

      Adjustments to reconcile net loss to 

cash (used) provided by operating activities:

Depreciation and amortization

1,056

958

(Gain) loss on sale of assets

(40)

129

Stock compensation expense

45

135

Deferred taxes

(551)

(243)

Provision for bad debts

203

44

      Changes in operating assets and liabilities:

Notes and accounts receivable

(548)

(172)

Inventories

14

330

Accounts payable - trade

606

(21)

Accrued expenses

(90)

129

Deferred revenue

276

61

Prepaid expenses and other

(367)

(102)

Cash (used) provided by operating activities

(595)

680

CASH FLOWS FROM INVESTING ACTIVITIES:

      Proceeds from sale of assets

58

184

      Capital expenditures

(1,987)

(1,547)

Cash used for investing activities

(1,929)

(1,363)

CASH FLOWS FROM FINANCING ACTIVITIES:

      Proceeds from sale of stock

3,288

-

      Proceeds from stock options

82

-

      Borrowings of bank debt

-

3,160

      Repayments of bank debt

(1,400)

(2,252)

Cash provided by financing activities 

1,970

908

Net increase (decrease) in cash and cash equivalents

(554)

225

Cash and cash equivalents, beginning of period

919

590

Cash and cash equivalents, end of period

$                  365

$                  815

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAYMENTS FOR:

Interest

$                  113

$                  248

Income taxes - net

$                      1

$                  (84)

Three Months Ended

Nine Months Ended

March 30,

March 24,

March 30,

March 24,

2014

2013

2014

2013

 Net loss 

$              (451)

$              (390)

$           (1,199)

$              (568)

 Interest expense 

34

58

113

197

 Income Taxes - Continuing Operations 

(159)

(22)

(527)

(170)

 Income Taxes - Discontinued Operations 

(7)

(8)

(20)

(66)

 Stock compensation expense 

15

45

45

135

 Depreciation and amortization 

370

340

1,056

958

 Adjusted EBITDA 

$              (198)

$                 23

$              (532)

$               486

 



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