Zoës Kitchen Announces Second Quarter 2016 Results

Zoës Kitchen Announces Second Quarter 2016 Results

Zoës Kitchen

PLANO, Texas–(BUSINESS WIRE)– Zoe’s Kitchen, Inc. (“Zoës Kitchen” or the “Company”) (NYSE: ZOES) today reported financial results for the twelve and twenty-eight weeks ended July 11, 2016.

Highlights for the twelve weeks ended July 11, 2016, as compared to the twelve weeks ended July 13, 2015:

  • Total revenue increased 21.7% to $66.3 million.
  • Comparable restaurant sales increased 4.0%.
  • Opened nine new Company-owned restaurants and reopened a restaurant in South Carolina damaged by a hurricane last year.
  • Restaurant contribution increased 23.7% to $14.3 million, or 21.7% of restaurant sales.
  • Adjusted EBITDA* increased 20.1% to $7.1 million.
  • Net income was $1.2 million, or $0.06 per basic and diluted share, compared to net income of $0.1 million, or $0.01 per basic and diluted share. Net income for the twelve weeks ended July 13, 2015 included $0.5 million of executive transition costs.
  • Adjusted net income* was $1.2 million, or $0.06 per diluted share, compared to adjusted net income of $1.0 million or $0.05per diluted share.

Highlights for the twenty-eight weeks ended July 11, 2016, as compared to the twenty-eight weeks ended July 13, 2015:

  • Total revenue increased 24.9% to $146.7 million.
  • Comparable restaurant sales increased 6.2%.
  • Opened 20 new Company-owned restaurants and reopened a restaurant in South Carolina damaged by a hurricane last year.
  • Restaurant contribution increased 26.8% to $32.0 million, or 21.9% of restaurant sales.
  • Adjusted EBITDA* increased 24.3% to $15.5 million.
  • Net income was $2.6 million, or $0.13 per basic and diluted share, compared to net income of $0.8 million, or $0.04 per basic and diluted share. Net income for the twenty-eight weeks endedJuly 13, 2015 included $0.5 million of executive transition costs.
  • Adjusted net income* was $2.3 million, or $0.12 per diluted share, compared to adjusted net income of $1.5 million or $0.08per diluted share.

(*) EBITDA, adjusted EBITDA, and adjusted net income are non-GAAP measures. For reconciliations of EBITDA, adjusted EBITDA and adjusted net income to GAAP net income and why the Company considers them useful, see the reconciliation of non-GAAP measures accompanying this release.

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“We’re pleased to have delivered strong second quarter financial results that included a 22% increase in total revenue and our 26th consecutive quarter of positive comparable restaurant sales growth,” said Kevin Miles, President and CEO of Zoës Kitchen. “Furthermore, our topline results and operational execution enabled us to deliver strong profit growth with a 20% increase in adjusted EBITDA. We believe the consistency of our results reflects the success of our long term strategic focus and we remain confident in our potential to operate over 1600 units in the US.”

Miles added, “We continue to execute on our development plans, opening nine new Zoës Kitchen locations during the second quarter and have since added another five locations in the third quarter. With 25 new locations opened year-to-date, we are on track to open 35 to 36 restaurants in 2016. Our increased footprint and growing brand presence continue to establish Zoës Kitchen as the leader in Mediterranean.”

Second Quarter 2016 Financial Results

Total revenue, which includes restaurant sales from Company-owned restaurants and royalty fees, increased 21.7% to $66.3 million in the twelve weeks ended July 11, 2016, from $54.5 million in the twelve weeks ended July 13, 2015. Restaurant sales for the twelve weeks ended July 11, 2016 were $66.2 million, an increase of 21.7% from the twelve weeks ended July 13, 2015. Comparable restaurant sales increased 4.0% during the twelve weeks ended July 11, 2016, consisting of a 0.9% increase in transactions and product mix, combined with a 3.1% increase in price. The comparable restaurant base includes those restaurants open for 18 full periods or longer and included 134 restaurants as of July 11, 2016.

Restaurant contribution increased 23.7% to $14.3 million in the twelve weeks ended July 11, 2016 from $11.6 million in the twelve weeks ended July 13, 2015. As a percentage of restaurant sales, restaurant contribution margin increased 40 basis points to 21.7% as the Company continued to benefit from lower commodity prices, which were partially offset by an increase in labor and store operating expenses. The increase in labor was driven primarily by hourly wage rate inflation and higher employee benefits costs. The increase in store operating expenses was driven by the dilutive effect on margins from our newest restaurants, which, on average, initially operate at less than system-wide average sales volumes.

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Net income for the twelve weeks ended July 11, 2016 was $1.2 million, or $0.06 per diluted share, compared to a net income of $0.1 million, or $0.01 per diluted share, for the twelve weeks ended July 13, 2015. Net income for the twelve weeks ended July 13, 2015 included $0.5 million of executive transition costs. Adjusted net income was $1.2 million, or $0.06 per diluted share, for the twelve weeks ended July 11, 2016, compared to adjusted net income of $1.0 million or $0.05 per diluted share, for the twelve weeks ended July 13, 2015.

2016 Fiscal Year Financial Results

Total revenue, which includes restaurant sales from Company-owned restaurants and royalty fees, increased 24.9% to $146.7million in the twenty-eight weeks ended July 11, 2016, from $117.5 million in the twenty-eight weeks ended July 13, 2015. Restaurant sales for the twenty-eight weeks ended July 11, 2016 were $146.6 million, an increase of 24.9% from $117.4 million in the twenty-eight weeks ended July 13, 2015.

Comparable restaurant sales increased 6.2% during the twenty-eight weeks ended July 11, 2016, consisting of a 3.7% increase in transactions and product mix combined with a 2.5% increase in price. The comparable restaurant base includes those restaurants open for 18 full periods or longer and included 134 restaurants as of July 11, 2016.

Restaurant contribution increased 26.8% to $32.0 million in the twenty-eight weeks ended July 11, 2016, from $25.3 million in the twenty-eight weeks ended July 13, 2015. As a percentage of restaurant sales, restaurant contribution margin increased 40 basis points to 21.9% as the Company benefited from lower commodity prices, primarily in poultry, and renegotiations of major paper and produce contracts in late 2015, which were partially offset by increases in labor and store operating expenses. The increase in labor was driven primarily by hourly wage rate inflation and higher employee benefits costs. The increase in store operating expenses was driven by the dilutive effect on margins from our newest restaurants, which, on average, initially operate at less than system-wide average sales volumes.

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Net income for the twenty-eight weeks ended July 11, 2016 was $2.6 million, or $0.13 per diluted share, compared to net income of $0.8 million, or $0.04 per diluted share, for the twenty-eight weeks ended July 13, 2015. Net income for the twenty-eight weeks ended July 13, 2015 included $0.5 million of executive transition costs. Adjusted net income was $2.3 million, or $0.12 per diluted share, for the twenty-eight weeks ended July 11, 2016, compared to adjusted net income of $1.5 million, or $0.08 per diluted share, for the twenty-eight weeks ended July 13, 2015.

Development

The Company opened 9 new Company-owned restaurants during the twelve weeks ended July 11, 2016. As of July 11, 2016, there were 183 Company-owned restaurants and three franchised restaurants. The company also reopened a restaurant inColumbia, South Carolina that was closed in the third quarter of last year after damage from Hurricane Joaquin. Subsequent to the end of the second quarter, the Company has opened five additional restaurants, bringing the total restaurant count to 191.

FY 2016 Outlook

For the fiscal year ending December 26, 2016, the Company is updating its outlook and currently expects the following:

  • Total revenue between $277.0 million and $280.0 million(previously $277.0 million and $281.0 million).
  • Comparable restaurant sales growth of 4.0% to 5.0%(previously 4.5% to 6.0%).
  • 35 to 36 Company-owned restaurant openings (previously 34 to 36).
  • Restaurant contribution margin between 20.5% and 20.8% (previously 20.5% and 21.0%).
  • General and administrative expenses between 11.5% and 11.7% of total revenue, inclusive of $2.3 million of non-cash equity based compensation expense (unchanged from previous guidance).
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Richard Dambrosi (JADTECNIC) Has Been Sharing FOREX INVESTORS ANALYSIS FORECAST since 2011. Editors and Founder of InvestorsBuz.com, has a passion for Forex Social Sharing analysis and Market Trends Such as Self Driving Cars, Electric Cars, Medical Marijuana, 3d printing and Cloud computing, Refers to Readers as BUZ INVESTORS.

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