O’Charley’s Inc. has reported operating results for the 12-week period ended July 10, 2011.
Financial and Operating Highlights
- The Company produced its first increase in quarterly revenue since the third quarter of 2007, up 1.2 percent to $193.3 million for the second quarter of 2011 from $190.9 million for the second quarter last year.
- For the second consecutive quarter, comparable sales and guest counts increased for all three restaurant concepts:
- O’Charley’s comparable sales and guest counts for company-operated restaurants each increased 2.9 percent.
- Ninety Nine Restaurants’ comparable sales and guest counts increased 3.3 percent and 3.6 percent, respectively.
- Stoney River Legendary Steaks’ comparable sales and guest counts increased 6.3 percent and 8.4 percent, respectively.
- Restaurant-level margins declined to 12.5 percent of restaurant sales for the second quarter of 2011 from 14.5 percent for the same prior-year quarter, as food and beverage costs as a percentage of sales increased 210 basis points, primarily due to rising commodity costs.
- Income from operations was $0.7 million, or 0.4 percent of revenues, for the second quarter of 2011 compared with a loss from operations of $0.2 million, or 0.1 percent of revenue, for the second quarter of 2010. The second quarter of 2010 included severance and other charges of $2.4 million or 1.2 percent of revenues.
- Loss from continuing operations was $1.7 million, or $0.08 per diluted share, for the second quarter of 2011, down from a loss of $2.3 million, or $0.11 per diluted share, for the second quarter of 2010. Net loss was $1.8 million, or $0.09 per diluted share, for the second quarter of 2011, down from a net loss of $2.5 million, or $0.12 per diluted share, for the second quarter of 2010.
- Net cash provided by operating activities was $10.8 million for the first six months of 2011, and the Company had $34.6 million of cash and no drawings on its $45 million revolving credit facility at the quarter’s end.
“Our strategies to return the Company to a path of consistent, profitable growth gained further traction in the second quarter, and we achieved an important milestone by producing increased total revenues for the quarter versus the same quarter in the previous year,” commented David W. Head, president and chief executive officer of O’Charley’s Inc. “This performance was driven by increased comparable sales at all three of our concepts. It is important to point out that our overall sales increased even with 12 fewer locations in operation in the second quarter this year versus last year.
“Our primary focus moving forward is to continue this momentum by building guest loyalty through high quality, great tasting food and superior service. Four consecutive quarters of increased comparable sales at Ninety Nine and Stoney River and two at O’Charley’s, and continued significant increases in guest satisfaction scores at each concept, demonstrate that we can achieve this goal when we execute to the standards we have set for ourselves. Through successful execution, we can earn the opportunity to expand our focus to improving average check with menu alternatives and pricing.
“We do not underestimate the challenges to improving our performance given weak economic growth and high unemployment. We also continue to face rising commodity costs, which contributed to an increase in food and beverage cost for the second quarter. We are working hard to proactively address these pressures through menu development and engineering, labor management and other steps that will allow us to return to sustainable profitable growth. Through our company-wide commitment to exceeding our guests’ expectations, we are confident we are revitalizing our prospects for growth and increased shareholder value into the future.”
R. Jeffrey Williams Named Chief Financial Officer
The Company also today announced that it has named R. Jeffrey Williams as chief financial officer and treasurer. Mr. Williams, a certified public accountant, had been serving as interim chief financial officer and treasurer since December 2010, while also serving as chief accounting officer since February 2006 and corporate controller since February 2003. Mr. Williams also recently completed his Masters of Business Administration from Vanderbilt University’s Owen Graduate School of Management. Prior to his position at O’Charley’s, Mr. Williams served as corporate controller at The Krystal Company in Chattanooga, TN and various financial positions at Cracker Barrel Old Country Store in Lebanon, TN.
Mr. Head remarked, “Jeff has done a great job for us over the past eight months since assuming the responsibilities of CFO and treasurer on an interim basis. After conducting a comprehensive search of candidates, our Board determined that Jeff’s 10-year record of accomplishments at O’Charley’s, his intimate knowledge of the Company’s operations, financials, people and growth strategies, and his long-term experience in a publicly traded restaurant company strongly differentiated his qualifications to handle his new position successfully. We look forward to his continuing contributions to the Company’s long-term growth.”
Financial Guidance
For the third quarter of 2011, which is a 12-week quarter, the Company’s guidance includes: total revenues of between $185 million and $190 million; loss/income from operations of between a loss of $3 million and break-even; and adjusted EBITDA of between $6 million and $9 million. Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to income from operations is included with the supplementary information to this release. The Company also anticipates capital expenditures during 2011 of between $16 million and $18 million.
O’Charley’s Inc., headquartered in Nashville, Tennessee, is a multi-concept restaurant company that operates or franchises a total of 343 restaurants under three brands: O’Charley’s, Ninety Nine Restaurant, and Stoney River Legendary Steaks. The O’Charley’s concept includes 227 restaurants in 18 states in the Southeast and Midwest, including 221 company-owned and operated O’Charley’s restaurants, and 6 restaurants operated by franchisees. The menu, with an emphasis on fresh preparation, features several specialty items, such as hand-cut and aged USDA choice steaks, a variety of seafood and chicken, freshly baked yeast rolls, fresh salads with special-recipe salad dressings and signature caramel pie. The Ninety Nine concept includes 106 restaurants throughout New England and upstate New York. Ninety Nine has earned a strong reputation as a friendly, comfortable place to gather and enjoy great American food and drink at a terrific price. The menu features a wide selection of appetizers, salads, sandwiches, burgers, entrees and desserts. The Stoney River Legendary Steaks concept includes 10 restaurants in six states in the Southeast and Midwest. This steakhouse concept appeals to both upscale casual-dining and fine-dining guests by offering high-quality food and attentive customer service typical of high-end steakhouses, but at more moderate prices.