 |
O'Charley's 1Q Profit Up on Higher Sales |
|
O'Charley's Inc. Reports Results for First Fiscal Quarter Of 2005 |
Click here for financial tables
O'Charley's Inc. (NASDAQ/NM: CHUX), a leading casual dining restaurant company, today reported revenues and earnings per share for the 16-week period ended April 17, 2005. The Company also provided earnings guidance for the second quarter of 2005 and for the full year.
Financial and Operating Highlights
-- First quarter revenue rose 8.5% to $290.5 million from $267.7 million in last year's first quarter. Same store sales for the first quarter increased 1.4% at O'Charley's Restaurants, 0.2% at Ninety Nine Restaurant and Pub, and 4.1% at Stoney River Legendary Steaks.
-- Income from operations in the quarter was $19.2 million, or 6.6% of sales, compared with $15.4 million, or 5.7% of sales, in the first quarter of last year. Cost of food and beverage, payroll and benefits costs, and restaurant operating costs were all lower as a percentage of sales than in the first quarter of last year. As previously announced, results for the first quarter of fiscal 2004 were restated.
-- The Company reported first quarter net income of $10.1 million, or $0.44 per diluted share, compared with net income of $7.6 million, or $0.33 per diluted share, for the same period in 2004, representing an increase in earnings per diluted share of 33.3%.
-- The effective tax rate applied to pretax earnings was 29.0% in the first quarter, compared with a tax rate of 33.5% in the first quarter of 2004. The effective tax rate declined from the first quarter of 2004 due to higher FICA tip credits, the recognition of WOTC tax credits, and a lower estimated state income tax rate.
Gregory L. Burns, chairman and chief executive officer of O'Charley's Inc. stated, "We are pleased with the sales and operating performance of the Company in the first quarter, particularly in light of the severe winter weather experienced in many of our markets and the impact of higher gasoline prices on consumer spending. Along with customer counts we have also focused on improving operating margins. While we have more work ahead of us to return our margins to acceptable levels, the improvement in the first quarter shows that our efforts continue to produce positive results."
O'Charley's Restaurants
Revenues for O'Charley's increased 7.0% to $196.1 million for the first quarter, reflecting the net addition of 12 new company-operated stores since the first quarter of 2004. The same store sales increase of 1.4% was comprised of a 1.1% increase in customer counts and a 0.3% increase in average check to $11.63. Four new company-operated O'Charley's restaurants opened during the first quarter and one restaurant was closed, bringing the total number of company-operated O'Charley's restaurants to 224 at the end of the quarter. The Company expects to open between 13 and 15 new company-operated O'Charley's restaurants in 2005.
Commenting on results for the O'Charley's concept, Mr. Burns stated, "Maintaining the positive trends in customer counts and continuing the operating margin gains from the fourth quarter were our primary first quarter goals at O'Charley's. We are pleased with the performance of O'Charley's in each of these areas. We continue to make progress in improving guest satisfaction scores and reducing employee turnover as well as leveraging these trends to achieve continued improvement in margins. We recently announced that, as part of our strategic plan, Steve Hislop has returned to focus on the day-to-day operations of the O'Charley's concept. Steve's direct leadership as O'Charley's Concept President will position O'Charley's for new growth opportunities in 2005 and beyond."
O'Charley's Franchising and Joint Venture Efforts
The O'Charley's franchising and joint venture program continued to show momentum in the first quarter. Meritage Hospitality Group opened its second franchised O'Charley's restaurant in Livonia, Michigan, in February 2005. The Company signed an exclusive multi-unit franchise development agreement with Four Star Restaurant Group, LLC to develop and operate a total of 10 new O'Charley's restaurants in the states of Iowa and Nebraska, and in the Topeka, Kansas, and Sioux Falls, South Dakota, markets. The Company expects its franchisees and joint venture partners to open 4 or 5 new O'Charley's restaurants in 2005.
Ninety Nine Restaurant & Pub Restaurants
Revenues for Ninety Nine increased 13.5% to $84.6 million in the first quarter, reflecting the addition of 12 new stores since the first quarter of 2004. The same store sales increase of 0.2% in the quarter was comprised of a 1.2% decrease in customer counts offset by a 1.3% increase in average check to $13.71. Two new Ninety Nine restaurants opened during the first quarter bringing the total number of Ninety Nine restaurants to 101 at the end of the quarter. The Company expects to open 13 to 15 new Ninety Nine restaurants in 2005, including one location in suburban Philadelphia, Ninety Nine's newest market.
Mr. Burns stated, "The winter weather in New England during the first quarter was more severe than it was in 2004, resulting in a negative impact on same store sales at Ninety Nine for the quarter. We started to see positive customer count trends in April, and the continuation of that trend will be a primary focus for us in 2005, as we expect to hold the line on menu price increases. The development of the new distribution facility in Bellingham, Massachusetts, is on schedule, and we expect to open it in the second half of the year."
Stoney River Legendary Steaks Restaurants
First quarter sales for Stoney River Legendary Steaks increased 4.1% to $7.5 million with all six restaurants in operation included in the same store sales base for the quarter. Average check during the quarter was $40.59. The Company intends to open two new Stoney River restaurants in 2005, with the openings expected to occur in the second half of the year. The new Stoney River restaurants will be the first additions to the concept since 2002. The Company expects that the restarting of Stoney River restaurant development will require preopening, training, and other expenses of approximately $1.0 million in fiscal 2005.
Mr. Burns added, "The strong recent performance of Stoney River continued into the first quarter of 2005, further validating our decision to grow this concept in a meaningful way in 2005 and beyond. We believe that Stoney River has established strong customer appeal and attractive economics. Over time, we expect it to become a more significant part of the Company."
Outlook for Second Quarter and Full Year
The Company stated that it expects to report net earnings per diluted share of between $0.19 and $0.23 for the twelve weeks ending July 10, 2005, and net earnings per diluted share of between $1.10 and $1.16 for the full fiscal year ending December 25, 2005. For the second quarter and the full year, anticipated improvements in food cost margin are expected to be offset by higher employee benefit costs, restaurant operating costs, and preopening costs. These projected results are based upon anticipated comparable restaurant sales increases of between 0% to 2% for both the O'Charley's and the Ninety Nine concepts during the second quarter and the full year; interest expense for fiscal 2005 of between $15 million and $16 million, compared with interest expense of $13.5 million in 2004; and an effective tax rate for 2005 of 29.0%.
The Company's guidance for the 2005 fiscal year includes estimated expenses relating to restricted stock plans of between $0.05 and $0.07 per diluted share. Restricted stock expense for the first quarter of 2005 was less than $0.01 per diluted share, which includes the reversal of previously accrued amounts. The first quarter and estimated full year expenses represent a reduction from previously disclosed estimates and reflect the impact of the Company's estimated future performance on the ultimate vesting rate of the Company's performance-based restricted stock. The Company's guidance does not reflect any impact from expensing stock options in fiscal 2005. The Company expects to begin expensing stock options in its 2006 fiscal year.
Mr. Burns concluded, "While we are pleased with our performance in the first quarter of 2005, we believe that higher gasoline prices began to take their toll on consumer spending during this period. Like many others, we are taking a more cautious outlook for the balance of the year because of our concern that higher gasoline prices and rising interest rates are likely to create uncertainty in consumer spending patterns and may negatively impact customer spending in our restaurants. Longer term, we remain confident in the strength of our concepts and the ability to continue to move customer counts at O'Charley's and Ninety Nine in the right direction. Our ultimate goal is to make O'Charley's Inc. the best company for our co-workers, customers and shareholders, and we are very focused on establishing our strategic plan to achieve that goal."
|
|
|
 |
|
 |
|
|
Cannot query the database.
You have an error in your SQL syntax; check the manual that corresponds to your MySQL server version for the right syntax to use near 'Charleys'' at line 1 |
Post Release
Get Content
Email News Brief
Saved Articles
Advertising
Handheld
XML/RSS
Post News