CLEVELAND, June 4, 2013 /PRNewswire/ -- Morgan's Foods, Inc. (OTC: MRFD) June 3, 2013, today announced fourth quarter and year end fiscal 2013 results.
Results of Morgan's Foods, Inc. and its consolidated subsidiaries for the fourth quarter and year end of 2013 and 2012 are summarized below. (Dollar amounts are in millions, except for per share amounts).
| Fourth Quarter Ended |
Fiscal Year Ended |
|||
| March 3, 2013 |
February 26, 2012 |
March 3, 2013 |
February 26, 2012 |
|
| Revenues |
$ 25,850,000 |
$ 23,884,000 |
$ 86,866,000 |
$ 82,237,000 |
| Adjusted EBITDA* |
1,589,000 |
1,122,000 |
6,767,000 |
4,744,000 |
| Cash Flow from Operations |
(518,000) |
1,133,000 |
1,615,000 |
1,555,000 |
| Cash Balance |
2,971,000 |
3,455,000 |
2,971,000 |
3,455,000 |
| Bank Debt |
8,216,000 |
8,406,000 |
8,216,000 |
8,406,000 |
| Shares Outstanding |
2,934,995 |
2,934,995 |
2,934,995 |
2,934,995 |
| Comparable Restaurant Revenue |
2.6% |
7.3% |
5.7% |
2.3% |
| Total Restaurants |
74 |
76 |
74 |
76 |
The Company recorded comparable restaurant revenue increases of 2.6% in the fiscal quarter ended March 3, 2013 and 5.7% for the full fiscal year. These increases were partially offset by certain temporary and permanent restaurant closings.
*Adjusted EBITDA is presented as a performance measure because management believes that it best represents the operating metrics of the Company without the potentially distortive effects of financing and fixed asset levels. The adjustments were made to remove non-operating, non-recurring items from EBITDA to improve comparability. These adjustments are outlined in the reconciliation attached to this release.
Cash balances as shown do not include restricted cash. Cash flow from operations is taken from the Company's financial statements and includes a number of working capital reconciling items such as changes in accruals, prepaids and accounts payable. In the Company's payment cycle, many payments are made on the first of the calendar month and thus can impair cash flow from operations when the period end changes from a date prior to the first of the month to a date after the first as it did in the fiscal period ending March 3, 2013.
The Company reported pre-tax net income for fiscal 2013 of $237,000 compared to a pre-tax loss of $1,290,000 in fiscal 2012. The improvement in net income reflects better restaurant operating metrics, accounting for an increase in restaurant profitability of 1.3% of sales and a reduction of general and administrative expense of $370,000. These improvements were partially offset by an increase of $710,000 in bank and capitalized lease interest in fiscal 2013 compared to fiscal 2012 due to the sale/leaseback of 29 restaurants by the Company in December 2011.
About the Company
Morgan's Foods, Inc. operates 57 KFC restaurants, 4 Taco Bell restaurants, 9 KFC/Taco Bell "2n1's" and 3 Taco Bell/Pizza Hut Express "2n1's".
Forward-Looking Statements and Use of Non-GAAP Financial Metrics
This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures in accordance with Regulation G are included herein.
Statements in this release that are not historical in nature are forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied in this release. The forward-looking statements reflect the Company's current expectations based upon data available at the time of the statement. Such risks and uncertainties include both Company risks and uncertainties and general economic and industry risks and uncertainties. Such risks and uncertainties include, but are not limited to, the Company's debt covenant compliance, actions that lenders may take with respect to any debt covenant violations, if necessary, the Company's ability to obtain waivers of any debt covenant violations or to pay all of its current and long-term obligations and those risks described in Part I Item 1A.("Risk Factors") of the Company's Form 10-K for the fiscal year ended March 3, 2013. Economic and industry risks and uncertainties include, but are not limited to, franchisor promotions, business and economic conditions, legislation and governmental regulation, competition, success of operating initiatives and advertising and promotional efforts, volatility of commodity costs and increases in minimum wage and other operating costs, availability and cost of land and construction, consumer preferences, spending patterns and demographic trends. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this release.
| MORGAN'S FOODS, INC. |
||||
| SELECTED FINANCIAL INFORMATION |
||||
| Fourth Quarter Ended |
Fiscal Year Ended |
|||
| March 3, 2013 |
February 26, 2012 |
March 3, 2013 |
February 26, 2012 |
|
| Revenues |
$ 25,850,000 |
$ 23,884,000 |
$ 86,866,000 |
$ 82,237,000 |
| Cost of sales: |
||||
| Food, paper and beverage |
8,566,000 |
7,852,000 |
28,335,000 |
27,238,000 |
| Labor and benefits |
7,749,000 |
7,026,000 |
25,010,000 |
23,794,000 |
| Restaurant operating expenses |
6,602,000 |
6,315,000 |
21,935,000 |
21,298,000 |
| Depreciation and amortization |
967,000 |
810,000 |
2,836,000 |
2,598,000 |
| G&A expenses |
1,417,000 |
1,579,000 |
4,941,000 |
5,311,000 |
| Loss on restaurant assets |
155,000 |
140,000 |
719,000 |
766,000 |
| Early Extinguishment of Debt |
- |
372,000 |
- |
405,000 |
| Operating income |
394,000 |
(210,000) |
3,090,000 |
827,000 |
| Interest Expense: |
||||
| Bank debt and notes payable |
(279,000) |
(349,000) |
(926,000) |
(1,703,000) |
| Capital leases |
(537,000) |
(493,000) |
(2,049,000) |
(562,000) |
| Other income and expense, net |
75,000 |
11,000 |
122,000 |
148,000 |
| Income before income taxes |
(347,000) |
(1,041,000) |
237,000 |
(1,290,000) |
| Income tax provision (benefit) |
161,000 |
72,000 |
375,000 |
390,000 |
| Net Income (loss) |
$ (508,000) |
$ (1,113,000) |
$ (138,000) |
$ (1,680,000) |
| Basic net income (loss) per common share |
$ (0.17) |
$ (0.38) |
$ (0.05) |
$ (0.57) |
| Diluted net income (loss) per common share |
$ (0.17) |
$ (0.38) |
$ (0.05) |
$ (0.57) |
| Basic average number of shares outstanding |
2,934,995 |
2,934,995 |
2,934,995 |
2,934,995 |
| Diluted average number of shares outstanding |
2,934,995 |
2,934,995 |
2,934,995 |
2,934,995 |
| March 3, 2013 |
February 26, 2012 |
|||
| ASSETS |
||||
| Current assets |
$ 6,049,000 |
$ 8,172,000 |
||
| Property and equipment, net |
34,401,000 |
$ 33,848,000 |
||
| Other assets |
411,000 |
$ 513,000 |
||
| Intangibles |
9,639,000 |
9,893,000 |
||
| Total assets |
$ 50,500,000 |
$ 52,426,000 |
||
| LIABILITIES AND SHAREHOLDERS' EQUITY |
||||
| Current liabilities |
$ 8,279,000 |
$ 8,604,000 |
||
| Long-term debt |
7,338,000 |
8,220,000 |
||
| Long-term capital lease obligations |
22,079,000 |
22,505,000 |
||
| Other long-term liabilities |
10,812,000 |
11,280,000 |
||
| Deferred tax liabilities |
3,175,000 |
2,862,000 |
||
| Total shareholder's equity |
(1,183,000) |
(1,045,000) |
||
| Total liabilities and shareholders' equity |
$ 50,500,000 |
$ 52,426,000 |
||
Reconciliation of Non-GAAP Measures
| Fourth Quarter Ended |
Fiscal Year Ended |
|||
| March 3, 2013 |
February 26, 2013 |
March 3, 2013 |
February 26, 2013 |
|
| Net loss from continuing operations |
$ (508,000) |
$ (1,113,000) |
$ (138,000) |
$ (1,680,000) |
| Provision for income taxes |
161,000 |
72,000 |
375,000 |
390,000 |
| Interest expense, bank debt |
279,000 |
349,000 |
926,000 |
1,703,000 |
| Interest expense, capitalized leases |
537,000 |
492,000 |
2,049,000 |
562,000 |
| Depreciation and amortization |
966,000 |
810,000 |
2,836,000 |
2,598,000 |
| EBITDA |
$ 1,435,000 |
$ 610,000 |
$ 6,048,000 |
$ 3,573,000 |
| Loss (gain) on restaurant assets |
154,000 |
140,000 |
719,000 |
766,000 |
| Early Extinguishment of Debt |
- |
372,000 |
- |
405,000 |
| Adjusted EBITDA |
$ 1,589,000 |
$ 1,122,000 |
$ 6,767,000 |
$ 4,744,000 |
The above chart outlines the financial statement line items that reconcile the Company's net loss to EBITDA (earnings before interest, taxes, depreciation and amortization). Additionally, non-recurring, non-operating items are removed to arrive at Adjusted EBITDA. As a result, Adjusted EBITDA improves the comparability of EBITDA as a relative measure of the Company's performance from period to period.
SOURCE Morgan's Foods, Inc.
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