NPC International: Reports Second Quarter Results

Overland Park / KS. (npc) NPC International Inc., wholly-owned subsidiary of NPC Restaurant Holdings LLC, reported results for its second fiscal quarter ended June 28, 2016.

Second quarter highlights

  • Pizza Hut comparable store sales were -0.6 percent.
  • Wendy’s comparable store sales were -0.3 percent.
  • The Company generated increased net income of 1.3MM USD compared to 0.1MM USD last year.
  • Adjusted Ebitda (reconciliation attached) was 32.1MM USD; an increase of 2.6MM USD or 8.9 percent from the prior year.
  • Adjusted Ebitda margin improved to 11.1 percent from 10.1 percent last year.

Year-to-date highlights

  • Pizza Hut comparable store sales were +1.8 percent.
  • Wendy’s comparable store sales were +1.0 percent.
  • Net income was 8.9MM USD, an increase of 3.9MM USD from last year.
  • Adjusted Ebitda (reconciliation attached) was 67.1MM USD; an increase of 5.4MM USD or 8.7 percent from the prior year.
  • Adjusted Ebitda margin improved to 11.3 percent from 10.5 percent last year.
  • Cash balances were 55.5MM USD, an increase of 22.8MM USD from the prior fiscal year end.
  • Our leverage ratio improved to 4.35X Consolidated Ebitda, net of allowable cash balances (as defined in our Credit Agreement) from 4.75X at the prior fiscal year end.

NPC’s President and CEO Jim Schwartz said, «We experienced slightly negative comps in both brands during our second quarter after posting strong comps in Q1. Fortunately, excellent labor performance and favorable ingredient prices provided significant year over year margin benefit and propelled the business to a 9 percent increase in Adjusted Ebitda.

«Our Pizza Hut business overcame disappointing sales results as we drove an increase in Adjusted Ebitda margin and contribution during the quarter. We managed to drive this increased profitability on the strength of improved labor efficiency due to the implementation of our improved labor model at the beginning of the quarter and lower ingredient prices.

«Our Wendy’s business was essentially flat this quarter after leveraging the 4 for 4 USD momentum the last two quarters for strong comparable store sales growth results. The promotion continued to resonate with the consumer into the second quarter; however, the overall slowdown experienced throughout the burger category more than overcame the value and innovative product offerings introduced during the quarter. Despite the flattening of comparable store sales, we posted increased Adjusted Ebitda margins and improved profitability on the strength of lower ingredient prices and improved labor efficiencies.

«Following the end of our second quarter, we announced the completion of the acquisition of 39 Wendy’s restaurants in the Raleigh-Durham market. We are pleased to have been awarded this market by Wendy’s and look forward to working with the outstanding team in Raleigh to continue the legacy of leadership and growth that has long been a hallmark of this very fine market.

«Overall, we are pleased with our improved liquidity and financial flexibility this quarter as exhibited by our increased cash balances and improved credit statistics. In addition, we made significant progress against our Delco relocation efforts in our Pizza Hut business and image activation efforts in our Wendy’s operation and expect to fully deliver upon our asset action commitments again this year».

The Company is a wholly-owned subsidiary of NPC Restaurant Holdings LLC (Parent), which has guaranteed the Company’s 10.50 percent Senior Notes due 2020. As a result of its guaranty, Parent is required to file reports with the Securities and Exchange Commission which include consolidated financial statements of Parent and its subsidiaries (including the Company).

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