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The Habit Restaurants, Inc. Announces Second Quarter 2016 Financial Results

IRVINE, Calif., Aug. 03, 2016 (GLOBE NEWSWIRE) -- The Habit Restaurants, Inc. (NASDAQ:HABT) (“The Habit” or the “Company”), today announced financial results for its second quarter ended June 28, 2016.

Highlights for the second quarter ended June 28, 2016:

  • Total revenue was $71.1 million compared to $56.7 million in the second quarter of 2015.
  • Company-operated comparable restaurant sales increased 4.0% as compared to the second quarter of 2015.
  • Net income was $1.2 million, or $0.07 per diluted weighted average share compared to $0.7 million, or $0.05 per diluted weighted average share in the second quarter of 2015.
  • Adjusted fully distributed pro forma net income(1) was $2.3 million, or $0.09 per fully distributed weighted average share compared with $2.3 million, or $0.09 per fully distributed weighted average share for the second quarter of 2015.
  • Adjusted EBITDA(1) was $8.7 million compared to $7.6 million for the second quarter of 2015.
  • The Company opened six new company-operated restaurants and one franchised restaurant during the second quarter and, as of June 28, 2016, had 146 company-operated locations and six franchised/licensed locations.

(1) Adjusted fully distributed pro forma net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See also “Non-GAAP Financial Measures,” included herein.

“We are pleased with our results for the second quarter with a company-operated comparable restaurant sales increase of 4.0%. By using high-quality limited time offers, targeted digital strategies, and innovative media partnerships we were able to amplify The Habit’s brand strategy of delivering everyday value, premium quality, and genuine hospitality. Together with great operational execution we were able to deliver our 50th consecutive quarter of positive quarterly comparable store sales increases,” said Russ Bendel, President and Chief Executive Officer of The Habit Restaurants, Inc. “We opened six new company-operated Habit Burger Grills during the quarter. These openings included two on the East Coast – our fourth in New Jersey and second in the Washington, D.C. area.”

Second Quarter 2016 Financial Results Compared to Second Quarter 2015

Total revenue was $71.1 million in the second quarter of 2016, compared to $56.7 million in the second quarter of 2015.

Company-operated comparable restaurant sales increased 4.0% for the quarter ended June 28, 2016. The increase in company-operated comparable restaurant sales was driven primarily by a 4.3% increase in average transaction amount partially offset by a 0.3% decrease in transactions.

Net income for the second quarter of 2016 was $1.2 million, or $0.07 per diluted weighted average share compared to $0.7 million, or $0.05 per diluted weighted average share in the second quarter of 2015.

Adjusted fully distributed pro forma net income in the second quarter of 2016 was $2.3 million, or $0.09 per fully distributed weighted average share, compared to $2.3 million, or $0.09 per fully distributed weighted average share, in the second quarter of 2015. A reconciliation between GAAP net income and adjusted fully distributed pro forma net income is included in the accompanying financial data.

2016 Outlook

The Company currently anticipates the following for its fiscal year 2016:

  • Total revenue between $284 million to $286 million;
  • Company-operated comparable restaurant sales growth between 2.0% to 2.5%;
  • The opening of 29 to 31 company-operated restaurants and five to seven franchised/licensed restaurants;
  • Restaurant contribution margin of 20.6% to 21.1%;
  • General and administrative expenses of $28.6 million to $29.1 million;
  • Depreciation and amortization expense of approximately $15.0 million;
  • Capital expenditures of $36.0 million to $38.0 million; and
  • An effective pro forma tax rate of approximately 43.0%, which assumes the conversion of all common units of The Habit Restaurants, LLC for shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock), which would eliminate the non-controlling interests.

Conference Call

The Company will host a conference call to discuss financial results for the second quarter 2016 today at 5:00 PM Eastern Time. Russ Bendel, President and Chief Executive Officer, and Ira Fils, Chief Financial Officer will host the call.

The conference call can be accessed live over the phone by dialing (855) 327-6837 or for international callers by dialing (778) 327-3988. A replay will be available after the call and can be accessed by dialing (877) 870-5176 or for international callers by dialing (858) 384-5517; the passcode is 10001435. The replay will be available until Wednesday, August 10, 2016. The conference call will also be webcast live from the Company’s corporate website at ir.habitburger.com under the “Events” page. An archive of the webcast will be available at the same location on the corporate website shortly after the call has concluded.

The following definitions apply to these terms as used in this release:

Comparable restaurant sales reflect the change in year-over-year sales in our comparable restaurant base. A restaurant enters our comparable restaurant base in the accounting period following its 18th full period of operations.

Average Unit Volumes (AUVs) are calculated by dividing revenue for the trailing 52-week period for all company-operated restaurants that have operated for 12 full periods by the total number of restaurants open for such period.

Adjusted fully distributed pro forma net income includes net income attributable to The Habit (i) excluding income tax expense, (ii) excluding the effect of non-recurring items, (iii) assuming the exchange of all common units of The Habit Restaurants, LLC into shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock), which results in the elimination of non-controlling interests in The Habit Restaurants, LLC, and (iv) reflecting an adjustment for income tax expense on fully distributed pro forma net income before income taxes at our estimated long term effective income tax rate. Adjusted fully distributed pro forma net income is a non-GAAP financial measure because it represents net income attributable to The Habit, before non-recurring items and the effects of non-controlling interests in The Habit Restaurants, LLC. We use adjusted fully distributed pro forma net income to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business than GAAP measures alone and eliminates the variability of non-controlling interests as a result of member owner exchanges of common units of The Habit Restaurants, LLC into shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock).

Adjusted fully distributed pro forma net income per fully distributed weighted average share is calculated using adjusted fully distributed pro forma net income as defined above and assumes the exchange of all common units of The Habit Restaurants, LLC into shares of our Class A common stock (and cancellation of corresponding shares of our Class B common stock).

EBITDA, a non-GAAP measure, represents net income before interest expense, net, provision for income taxes, and depreciation and amortization.

Adjusted EBITDA, a non-GAAP measure, represents EBITDA plus pre-opening costs, stock-based compensation, loss on disposal of assets, and offering and exchange related expenses.

About The Habit Restaurants, Inc.

The Habit Burger Grill is a fast casual restaurant concept that specializes in preparing fresh, made-to-order char-grilled burgers and sandwiches featuring USDA choice tri-tip steak, grilled chicken and sushi-grade albacore tuna cooked over an open flame. The first Habit opened in Santa Barbara, California in 1969. The Habit has since grown to over 152 restaurants in 15 markets throughout California, Arizona, Utah, New Jersey, Florida, Idaho, Virginia, Nevada, Washington and Maryland.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements because they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this press release and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in our annual report on Form 10-K for the year ended December 29, 2015, including the sections thereof captioned “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” These filings and others are available online at www.sec.gov, ir.habitburger.com or upon request from The Habit.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The forward-looking statements included in this press release are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use non-GAAP financial measures, including those discussed above. These measures are not intended to be considered in isolation or as substitutes for, or superior to, financial measures prepared and presented in accordance with GAAP. We use non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that they provide useful information about operating results, enhance understanding of past performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. However, when analyzing the Company’s operating performance, investors should not consider adjusted earnings per fully distributed weighted average share or adjusted fully distributed pro forma net income in isolation or as substitutes for net income (loss), cash flows from operating activities or other operation statement or cash flow statement data prepared in accordance with U.S. GAAP. The non-GAAP measures used in this press release may be different from the measures used by other companies.

Consolidated Statement of Operations Data (unaudited):

13 Weeks Ended 26 Weeks Ended
(amounts in thousands except share and per share data, presented as a percentage of total revenue,
with the exception of operating expenses, which are presented as a percentage of restaurant revenue)
June 28,
2016
June 30,
2015
June 28,
2016
June 30,
2015
Revenue
Restaurant revenue $70,953 99.8% $56,716 100.0% $137,766 99.8% $111,282 100.0%
Franchise/license revenue 163 0.2% 14 0.0% 307 0.2% 31 0.0%
Total revenue 71,116 100.0% 56,730 100.0% 138,073 100.0% 111,313 100.0%
Operating expenses
Restaurant operating costs (excluding depreciation and amortization)
Food and paper costs 21,150 29.8% 18,160 32.0% 41,252 29.9% 36,029 32.4%
Labor and related expenses 22,892 32.3% 16,950 29.9% 44,313 32.2% 33,374 30.0%
Occupancy and other operating expenses 11,340 16.0% 8,608 15.2% 21,828 15.8% 16,604 14.9%
General and administrative expenses 7,524 10.6% 5,716 10.1% 14,125 10.3% 10,921 9.8%
Offering and exchange related expenses 253 0.4% 651 1.1% 360 0.3% 1,134 1.0%
Depreciation and amortization expense 3,579 5.0% 2,660 4.7% 6,991 5.1% 5,327 4.8%
Pre-opening costs 533 0.8% 383 0.7% 793 0.6% 707 0.6%
Loss on disposal of assets 36 0.1% 20 0.0% 75 0.1% 34 0.0%
Total operating expenses 67,307 94.9% 53,148 93.7% 129,737 94.2% 104,130 93.6%
Income from operations 3,809 5.4% 3,582 6.3% 8,336 6.0% 7,183 6.5%
Other expenses
Interest expense, net 149 0.2% 115 0.2% 277 0.2% 232 0.2%
Income before income taxes 3,660 5.1% 3,467 6.1% 8,059 5.8% 6,951 6.2%
Provision for income taxes 1,164 1.6% 1,048 1.8% 2,169 1.6% 1,567 1.4%
Net income 2,496 3.5% 2,419 4.3% 5,890 4.3% 5,384 4.8%
Less: net income attributable to non-controlling interests (1,305) -1.8% (1,741) -3.1% (3,319) -2.4% (4,023) -3.6%
Net income attributable to The Habit Restaurants, Inc. $1,191 1.7% $678 1.2% $2,571 1.9% $1,361 1.2%


Net income attributable to The Habit Restaurants, Inc. per share Class A common stock
Basic $0.07 $0.05 $0.17 $0.12
Diluted $0.07 $0.05 $0.17 $0.12
Weighted average shares of Class A common stock outstanding:
Basic 16,657,886 13,286,492 15,353,798 11,130,521
Diluted 16,658,172 13,295,283 15,356,621 11,137,091

Selected Balance Sheet and Selected Operating Data (unaudited):

Balance Sheet Data June 28, 2016 December 29, 2015
(dollar amounts in thousands)
Balance Sheet Data-Consolidated (at period end):
Cash and cash equivalents $49,845 $46,991
Property and equipment, net(a) 90,792 81,524
Total assets 305,904 256,711
Total debt(b) 4,664 2,436
Total stockholders' equity 139,877 131,932

(a) Property and equipment, net consists of property owned or leased, net of accumulated depreciation and amortization.

(b) Total debt consists of deemed landlord financing.

13 Weeks Ended
Selected Operating Data June 28, 2016 June 30, 2015
Other Operating Data:
Total restaurants at end of period 152 118
Company-operated restaurants at end of period 146 117
Company-operated comparable restaurant sales growth(a) 4.0% 8.9%
Company-operated average unit volumes $1,931 $1,903
26 Weeks Ended
Selected Operating Data June 28, 2016 June 30, 2015
Other Operating Data:
Company-operated comparable restaurant sales growth(a) 3.0% 10.6%

(a) Company-operated comparable restaurant sales growth reflects the change in year-over-year sales for the company-operated comparable restaurant base. A restaurant enters our comparable restaurant base in the accounting period following its 18th full period of operations.

The following table includes a reconciliation of net income to adjusted EBITDA:

13 Weeks Ended 26 Weeks Ended
Adjusted EBITDA Reconciliation June 28,
2016
June 30,
2015
June 28,
2016
June 30,
2015
(amounts in thousands)
Net income $2,496 $2,419 $5,890 $5,384
Non-GAAP adjustments:
Provision for income taxes 1,164 1,048 2,169 1,567
Interest expense, net 149 115 277 232
Depreciation and amortization 3,579 2,660 6,991 5,327
EBITDA 7,388 6,242 15,327 12,510
Stock-based compensation expense(a) 521 297 867 509
Loss on disposal of assets(b) 36 20 75 34
Pre-opening costs(c) 533 383 793 707
Offering and exchange related expenses(d) 253 651 360 1,134
Adjusted EBITDA $8,731 $7,593 $17,422 $14,894

(a) Includes non-cash, stock-based compensation.

(b) Loss on disposal of assets includes the loss on disposal of assets related to retirements and replacements or write-off of leasehold improvements or equipment.

(c) Pre-opening costs consist of costs directly associated with the opening of new restaurants and incurred prior to opening, including management labor costs, staff labor costs during training, food and supplies used during training, marketing costs and other related pre-opening costs. These are generally incurred over the three to five months prior to opening. Pre-opening costs also include net occupancy costs incurred between the date of possession and opening date of our restaurants.

(d) Beginning in 2016, this category includes costs associated with the exchange of LLC Units to Class A common stock by the Continuing LLC Owners pursuant to the LLC Agreement. There were no such exchanges or costs incurred in the comparable 2015 periods.

The following is a reconciliation of GAAP net income and net income per share to adjusted fully distributed pro forma net income and adjusted fully distributed pro forma net income per share:

13 Weeks Ended 26 Weeks Ended
(dollar amounts in thousands) June 28,
2016
June 30,
2015
June 28,
2016
June 30,
2015
Net income $2,496 $2,419 $5,890 $5,384
Offering and exchange related expenses(a) 253 651 360 1,134
Income tax expense as reported 1,164 1,048 2,169 1,567
Fully distributed pro forma net income before income taxes 3,913 4,118 8,419 8,085
Income tax expense on fully distributed pro forma
income before income taxes(b)
1,637 1,797 3,522 3,510
Adjusted fully distributed pro forma net income $2,276 $2,321 $4,897 $4,575
Adjusted fully distributed pro forma net income per share
of Class A common stock:
Basic $0.09 $0.09 $0.19 $0.18
Diluted $0.09 $0.09 $0.19 $0.18
Weighted average shares of Class A common stock
outstanding used in computing adjusted fully distributed
pro forma net income(c):
Basic 26,007,167 26,002,420 26,004,118 26,002,587
Diluted 26,007,453 26,011,211 26,006,941 26,009,157

(a) Beginning in 2016, this category includes costs associated with the exchange of LLC Units to Class A common stock by the Continuing LLC Owners pursuant to the LLC Agreement. There were no such exchanges or costs incurred in the comparable 2015 periods.

(b) Reflects income tax expense at an effective rate of 41.83% and 43.41% for the periods ended June 28, 2016 and June 30, 2015, respectively, on income before income taxes assuming the conversion of all outstanding common units of The Habit Restaurants, LLC (“LLC Units”) for shares of Class A common stock (with a corresponding cancellation of shares of our Class B common stock). The estimated tax rate includes provisions for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state and local jurisdiction and excludes the impact to the rate of follow-on offering costs.

(c) For all periods presented, represents the total number of shares of Class A common stock outstanding including all outstanding LLC Units of The Habit Restaurants, LLC as if they were exchanged on a one-for-one basis for the Company’s Class A common stock (with a corresponding cancellation of shares of our Class B common stock). Diluted earnings per share gives effect during the reporting period to all dilutive potential shares outstanding resulting from employee stock-based awards using the treasury method.


Contacts Investors: (949) 943-8692 HabitIR@habitburger.com Media: (949) 943-8691 Media@habitburger.com

Source:Habit Restaurants