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

2014-05-14
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  • Pizza Inn Adjusted EBITDA decreased $0.2 million to a loss of $0.2 million compared to the same quarter of the prior year

    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

     



    Logos, product and company names mentioned are the property of their respective owners.

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