Buffets, Inc. Announces Most Profitable Quarter in Company History
EDEN PRAIRIE, Minn., Aug. 5 /PRNewswire/ -- Clark C. Grant, Senior Vice President of Finance and Treasurer of Buffets, Inc. (Nasdaq: BOCB), reported the second quarter of 1998 was the most profitable quarter in the history of the Company. For the second quarter (12 weeks) of 1998, net earnings increased 37% to $11,594,000 from $8,492,000 in the comparable quarter in 1997. Basic earnings per share for the quarter increased 32% to $.25 on 45,567,000 shares, compared to $.19 on 45,219,000 shares in 1997. Diluted earnings per share increased 33% to $.24 on 50,506,000 shares compared to $.18 on 49,070,000 shares in the second quarter of 1997. Restaurant sales for the quarter increased 7% to $204,579,000 from $190,536,000 during the same quarter of 1997. Average weekly sales per restaurant increased 2.2% to $46,532 from $45,543 for the second quarter 1997 and comparable restaurant sales were up 2.5%. For the twenty-eight weeks ended July 15, 1998, net earnings increased 44% to $21,459,000 from $14,867,000 in the same period in 1997. Basic earnings per share increased 42% to $.47 on 45,471,000 shares from $.33 on 45,203,000 shares in the same period of 1997. Diluted earnings per share increased 41% to $.45 on 49,972,000 shares compared to $.32 on 49,028,000 shares in the first twenty-eight weeks of 1997. Restaurant sales for the twenty-eight week period increased 7% to $461,408,000 from $431,277,000 in 1997. Average weekly sales per restaurant increased during the first twenty-eight weeks by 2.7% to $45,312 from $44,139 for the same period in 1997 and comparable restaurant sales were up 2.8%. Commenting on the second quarter, Roe H. Hatlen, Buffets' Chairman and Chief Executive Officer, stated, "We were very pleased with our second quarter results. We continue to build on the foundation we laid in 1997 thanks to dedicated and inspired leadership from across our Company. We are especially pleased that for the fourth quarter in a row, we have been able to build same store sales. Equally pleasing is the fact that we have also been able to substantially improve restaurant margins and pretax margins this quarter to 15.6% and 9.2% respectively up from 13.1% and 7.3% a year ago. "In regards to our sales growth, our marketing efforts continue to be very successful in helping us drive guest count both through our new TV commercials and through our local store marketing efforts. We now have 200 restaurants receiving media support versus 119 restaurants last year. We will expand our media coverage to 16 new restaurants in the third and fourth quarter as we test new radio spots and new cable TV commercials. "In regards to development, our new restaurants continue to generate sales well above the Company average. We opened one new restaurant during the quarter and, as previously announced, we acquired 11 Country Harvest restaurants on June 30, 1998. By the end of the year we will have all but one of the Country Harvest restaurants converted to our Buffet brands. We are expecting them to give us a strong return on our investment. We currently plan to open four restaurants in the third quarter and 8 to 10 restaurants in the fourth quarter. Three of these new restaurants will be Original Roadhouse Grills as we continue to be pleased with the financial performance of the four Original Roadhouse Grills we currently operate. We also continue to be pleased with our Country Roadhouse Buffet and Grill restaurant in Winston- Salem and by year end plan to convert two more of our buffet restaurants to this concept. "We continue to monitor our underperforming restaurants and evaluate their potential relative to our conversion and marketing successes. Determination on several locations will be made by the end of the year. "Looking to the future, we are pleased to announce that Kerry Kramp, our Company's President, has also been appointed Chief Operating Officer in recognition of his continuing strong contribution to our Company. Kerry and his operations team have done an outstanding job in positioning our Company for the future. Dennis Scott, co-founder of Buffets will continue as Vice Chairman and take on additional new development and construction responsibilities." In conclusion, Mr. Hatlen stated, "We are looking forward to the balance of the year, including competing against results from the TV marketing program which we put in place last year at the end of the second quarter. Our Company continues to improve financially and with over 80 million dollars of cash on hand, we are in an even stronger position to take advantage of opportunities that come our way." Buffets, Inc. currently operates 378 restaurants (248 Old Country Buffet(R), 115 HomeTown Buffet(R), 9 Country Harvest(SM), 4 Original Roadhouse Grill(SM), 1 PIZZAPLAY(SM), and 1 Country Roadhouse Buffet & Grill(SM)) in 35 states and franchises 24 restaurants (5 Old Country Buffet and 19 HomeTown Buffet) in ten states. This press release contains forward-looking statements, including statements regarding expected restaurant development levels, and the perceived success of the Company's marketing programs and new and converted restaurant concepts. In addition to the factors discussed above, other factors that could cause actual results to differ materially include changes in the cost and supply of food and labor, weather conditions, health and regulatory developments and general economic conditions. In addition, the ability of the Company to open new restaurants depends on a number of factors, including its ability to find suitable locations and negotiate acceptable leases and land purchases, its ability to attract and retain qualified restaurant managers and the availability of capital. In an effort to enhance the timeliness and efficiency of our quarterly stockholders communications, Buffets, Inc. is offering automated shareholder information toll-free. To hear a recording of the quarterly financial results, call 1-888-731-9401. http://www.buffet.com Financial Highlights Follow Buffets, Inc. and Subsidiaries Results of Operations July 15, 1998 (Unaudited) Twenty-Eight Weeks Ended (In thousands, except for per share amounts and average weekly sales) July 16, July 15, 1997 Percent 1998 Percent Restaurant sales $431,277 100.0% $461,408 100.0% Restaurant costs: Food costs 147,531 34.2% 150,029 32.5% Labor costs 129,913 30.1% 138,689 30.1% Direct and occupancy costs 104,719 24.3% 106,838 23.1% Total restaurant costs 382,163 88.6% 395,556 85.7% Restaurant profits 49,114 11.4% 65,852 14.3% Selling, general and administrative expenses 24,111 5.6% 31,455 6.8% Other site closing costs 200 0.1% 25,003 5.8% 34,197 7.4% Other (expense) income (632) -0.2% 697 0.2% Earnings before income taxes 24,371 5.6% 34,894 7.6% Income taxes 9,504 2.2% 13,435 2.9% Net earnings $14,867 3.4% $21,459 4.7% Earnings per share: Basic $0.33 $0.47 42.4% Diluted $0.32 $0.45 40.6% Weighted average common shares assumed outstanding: Basic 45,203 45,471 Diluted 49,028 49,972 Number of Company-owned restaurants open at end of period 357 376 5.3% Average weekly sales of Company-owned restaurants open at end of period $44,139 $45,312 2.7% Twelve Weeks Ended (In thousands, except for per share amounts and average weekly sales) July 16, July 15, 1997 Percent 1998 Percent Restaurant sales $190,536 100.0% $204,579 100.0% Restaurant costs: Food costs 63,752 33.5% 65,473 32.0% Labor costs 56,112 29.4% 60,178 29.4% Direct and occupancy costs 45,768 24.0% 46,966 23.0% Total restaurant costs 165,632 86.9% 172,617 84.4% Restaurant profits 24,904 13.1% 31,962 15.6% Selling, general and administrative expenses 10,841 5.7% 13,562 6.6% Other site closing costs 14,063 7.4% 18,400 9.0% Other (expense) income (147) -0.1% 453 0.2% Earnings before income taxes 13,916 7.3% 18,853 9.2% Income taxes 5,424 2.8% 7,259 3.5% Net earnings $8,492 4.5% $11,594 5.7% Earnings per share: Basic $0.19 $0.25 31.6% Diluted $0.18 $0.24 33.3% Weighted average common shares assumed outstanding: Basic 45,219 45,567 Diluted 49,070 50,506 Number of Company-owned restaurants open at end of period 357 376 5.3% Average weekly sales of Company-owned restaurants open at end of period $45,543 $46,532 2.2% Condensed Consolidated Balance Sheet (Unaudited) Assets December 31, July 15, 1997 1998 (in thousands) Current assets $65,111 $101,994 Property and equipment (net) 330,647 329,836 Goodwill (net) 5,624 8,958 Other assets 2,194 1,914 $403,576 $442,702 Liabilities and Stockholders' Equity Current liabilities $85,528 $101,671 Long-term debt 44,454 43,272 Deferred income 212 Deferred income taxes 6,695 6,522 Stockholders' equity 266,687 291,237 $403,576 $442,702
SOURCE Buffets, Inc.
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