NPC International, Inc. Reports Fourth Quarter Results
OVERLAND PARK, KANSAS, (MARCH 27, 2015) - NPC International, Inc. (the "Company" or "NPC"), today reported results for its fourth fiscal quarter and fiscal year ended December 30, 2014. Fiscal 2014 contained 52 weeks and Fiscal 2013 contained 53 weeks causing the prior year results to benefit from one additional week of operations in the fourth quarter and full year compared to the current year's results.
FOURTH QUARTER HIGHLIGHTS:
- Pizza Hut comparable store sales decreased (3.5)% rolling over a decrease of (5.2)% last year.
- Adjusted EBITDA (reconciliation attached) was $22.9MM; a decline of $12.3MM or 35% from the prior year partially due to the rollover of the additional fiscal week of operations in fiscal 2013, which we estimate increased Adjusted EBITDA by approximately $3.0MM in the prior year.
- The Company generated a net loss of $0.1MM compared to net income of $5.8MM last year.
FULL YEAR RESULTS:
- Pizza Hut comparable store sales decreased (3.7)% rolling over a decrease of (3.7)% last year.
- Adjusted EBITDA (reconciliation attached) was $96.5MM; a decline of $35.8MM or 27% from the prior year partially due to the rollover of the additional fiscal week of operations in fiscal 2013.
- Net income was $1.7MM, a decrease of $28.1MM from last year.
- Cash balances were $12.1MM.
- Our leverage ratio was 5.07X Consolidated EBITDA, net of allowable cash balances (as defined in our Credit Agreement).
NPC's President and CEO Jim Schwartz said, "Our fourth quarter results were disappointing as sales remained soft and our margins were stressed by continued commodity pressure and significant restaurant level training investments in our Pizza Hut business in support of the brand's new advertising platform and "Flavor of Now" brand positioning.
While we continue to see a significant increase in our digital business mix, the new positioning is not yet yielding the improved sales results that we were anticipating. We believe that the transition to the "Flavor of Now" positioning provides a diverse flavor platform that better connects with millennials and provides the brand a leveragable point of differentiation. However, there is much work to be done to bring more awareness of the "Flavor of Now" and we continue to work with the Pizza Hut leadership team to increase awareness and regain top-line momentum.
Fortunately, our Wendy's business continues to deliver performance in line with our pre-acquisition expectations and currently represents nearly 20% of our top-line business on a pro-forma basis. We continue to be pleased with the assimilation and performance of the 56-unit acquisition we completed from a Wendy's franchisee in North Carolina during the third quarter of 2014. We remain open to opportunistic acquisitions of additional Wendy's units and the related diversification it provides our business.
Looking forward to our first quarter we are continuing to experience soft top-line results in our Pizza Hut business. However, we are realizing the benefit of a deflationary commodity environment and lower energy costs, which are mitigating the negative impact of continued soft top-line sales. Our Wendy's business has continued to generate top-line sales growth during the first quarter and is experiencing expanded year-over-year margins. On a full year basis for 2015, we currently expect to realize commodity deflation in our Pizza Hut business of 3% to 5% which would provide some much needed relief. We are currently expecting manageable full year commodity inflation at Wendy's of 2% to 3%."
The Company is a wholly-owned subsidiary of NPC Restaurant Holdings, LLC ("Parent"), which has guaranteed the Company's 10.50% 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). Parent's only material asset is all of the stock of the Company. The annual financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations for Parent and the Company on a consolidated basis are set forth in Parent's Form 10-K for the fiscal year ended December 30, 2014 which can be accessed at www.sec.gov.
CONFERENCE CALL INFORMATION:
The Company's fourth quarter earnings conference call will be held Monday, March 30, 2015 at 9:00 am CT (10:00 a.m. ET). In addition to a discussion of fourth quarter results, the call may also include discussion of Company developments, forward-looking information and other material information about business and financial matters. You can access this call by dialing 888-391-6937. The international number is 716-247-5763. The access code for the call is 97648877.
For those unable to participate live, a replay of the call will be available until April 6, 2015 by dialing 855-859-2056 or by dialing international at 404-537-3406. The access code for the replay is 97648877.
A replay of the call will also be available at the Company's website at www.npcinternational.com.
NPC International, Inc. is the world's largest Pizza Hut franchisee and currently operates 1,277 Pizza Hut units in 28 states and 143 Wendy's units in 5 states.
For more complete information regarding the Company's financial position and results of operations, investors are encouraged to review the Parent's financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations, included in the Parent's Form 10-K which can be accessed at www.sec.gov.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
Certain statements contained in this news release that do not relate to historical or current facts constitute forward-looking statements. These include statements regarding our plans and expectations. Forward-looking statements are subject to inherent risks and uncertainties and there can be no assurance that such statements will prove to be correct. Actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including lower than anticipated consumer discretionary spending; deterioration in general economic conditions; competition in the quick service restaurant market; adverse changes in food, labor and other costs; price inflation or deflation; our ability to successfully complete acquisitions of additional restaurant units; and other factors. These risks and other risks are described in Parent's filings with the Securities and Exchange Commission, including Parent's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Copies of these filings may be obtained by contacting NPC or may be accessed at www.sec.gov. All forward-looking statements made in this news release are made as of the date hereof. NPC does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. Investors are cautioned not to place undue reliance on any forward-looking statements.
Contact: Troy D. Cook, Executive Vice President-Finance & Chief Financial Officer
7300 W 129th St
Overland Park, KS 66213