February 8, 2012 · 0 Comments
MIAMI, Feb. 8, 2012 (www.hospitalitybusinessnews.com) — Benihana Inc., operator of the nation’s largest chain of Japanese theme and sushi restaurants, today reported financial results for its twelve-week fiscal third quarter 2012, ended January 1, 2012.
Highlights for the fiscal third quarter 2012 relative to the year-ago quarter include:
· Company-wide comparable restaurant sales increased 7.0%, due primarily to traffic and led by the Benihana Teppanyaki concept, which reported 8.2% comparable restaurant sales growth and a 6.4% increase in dine-in guest counts;
· Total revenues increased 5.6% to $77.0 million from $72.9 million, driven by restaurant sales growth;
· Income before income taxes increased 36.7% to $1.5 million, compared to $1.1 million;
· Net income was $1.0 million, or $0.06 per diluted share, compared to $1.9 million or $0.12 per diluted share;
· Restaurant segment operating income increased 13.1% to $7.9 million from $7.0 million;
· Restaurant level EBITDA margin increased to 17.6% of sales as compared to 17.4%, in spite of a 0.4% increase in food and beverage costs resulting from higher commodity costs;
· As previously announced, stockholders approved the reclassification of each share of Class A Common Stock into one share of Common Stock; and
· Also as previously announced, the Company declared a quarterly dividend of $0.08 per share.
Richard C. Stockinger, Chairman, President and Chief Executive Officer, said, “We are delighted with the continued momentum in our business, and in particular the consistency of our comparable sales increases. Reporting eight consecutive quarters of increases in comparable sales that are at or near the top of the industry, particularly at the Benihana Teppanyaki concept, reflects the strength of the brand and the importance and sustainability of the initiatives undertaken in connection with the Renewal Program. We are also pleased that we are generating growth in restaurant segment operating income from these sales increases, more than offsetting the impact of higher commodity costs and consumers’ continued focus on value propositions. And our debt-free balance sheet and strong operating cash flow positions us very well as we actively work to identify acceptable sites and begin implementing our unit growth plans.”
Mr. Stockinger added, “We are also very pleased that stockholders elected the proposed slate of directors at our recent Annual Meeting to a three-year term. We welcome new members Richard Snead and Michael Kaufman to the Board and congratulate Ronald Castell on his reelection. We also thank the directors who are stepping down, Lew Jaffe and Joseph West, for their service to the Company and stockholders, and a special thanks to director Darwin Dornbush who is retiring after a longstanding term of service to the Company.”
Fiscal Third Quarter 2012 Financial Results
Net income for the third quarter of fiscal 2012 was $1.0 million, or $0.06 per diluted share, compared to $1.9 million, or $0.12 per diluted share, in the same quarter of the prior year. Restaurant segment income from operations increased 13.1% to $7.9 million for the third quarter of fiscal 2012 from $7.0 million in the same quarter of the prior year.
Excluding stock-based compensation expenses and certain non-recurring general and administrative expenses in both years, income from operations for the third quarter of both fiscal 2012 and fiscal 2011 was $2.5 million.
For the fiscal third quarter of 2012, total revenues increased 5.6% to $77.0 million from $72.9 million in the same prior year quarter, primarily driven by a 5.8% increase in total restaurant sales.
Company-wide comparable restaurant sales increased 7.0% during the quarter, including increases of 8.2% at Benihana Teppanyaki restaurants, 4.8% at RA Sushi, and 3.7% at Haru. This represented the eighth consecutive quarter of company-wide comparable sales increases.
During the quarter, Benihana Teppanyaki represented approximately 68.7% of consolidated restaurant sales, while RA Sushi and Haru accounted for 21.7% and 9.6%, respectively. There were a total of 1,144 store-operating weeks in the fiscal third quarter of 2012 compared to 1,158 in the same prior year quarter.
Cost of food and beverage sales for the fiscal third quarter of 2012 totaled $18.9 million, or 24.7% of restaurant sales, compared to $17.6 million, or 24.3% of restaurant sales, in the fiscal third quarter of 2011. The increase as a percentage of restaurant sales resulted from escalating commodity costs that more than offset certain menu pricing increases and shallowing of discounts taken at the beginning of the current fiscal year.
Restaurant operating expenses for the fiscal third quarter of 2012 increased $2.0 million, but decreased 0.8% as a percentage of restaurant sales, compared to the same prior year period. The decrease as a percentage of restaurant sales was due to decreased marketing expense during the quarter, fixed cost leverage on higher sales volumes, and reduced depreciation (primarily due to certain prior year retirements), partially offset by increases in certain labor-related costs. Additional marketing costs were incurred during the quarter related to the production of a commercial which was not shown until subsequent to quarter end, and, accordingly, those costs will be recognized in the fiscal fourth quarter.
General and administrative expenses for the fiscal third quarter of 2012 totaled $7.7 million, compared to $7.3 million for the same period in the prior year. The current year quarter included $0.5 million of non-recurring expenses related to the special shareholders’ meetings and $0.4 million of stock-based compensation expenses. The prior year quarter included $0.9 million of non-recurring expenses consisting of $0.7 million incurred in conjunction with the board’s assessment of strategic alternatives, including a possible sale of the Company; $0.1 million related to various financial and operational consulting agreements; and $0.1 million of costs incurred in conjunction with the execution of our accounting and payroll function outsourcing agreement. The prior year quarter also included $0.2 million of stock-based compensation expenses. In connection with the evaluation of strategic alternatives, the potential sale process was terminated in May 2011.
Recurring general and administrative expenses were $6.8 million for the fiscal third quarter of 2012, an increase of $0.7 million or 0.5% when expressed as a percentage of total revenues, compared to the same prior year quarter. The increase was due primarily to higher legal and professional fees associated with litigation involving wage and hour laws in both California and New York.
Income from operations improved to $1.6 million for the fiscal third quarter of 2012 from $1.3 million for the same period in the prior year. Interest expense was slightly lower at $0.1 million for the current year quarter, compared to $0.2 million for the prior year quarter, as a result of higher outstanding borrowings in the prior year.
The income tax provision was $465,000 for the fiscal third quarter of 2012 (an effective rate of 30.9%), compared to a benefit of $1.1 million for the same period in the prior year (an effective rate of negative 98.1
%). The current quarter provision increased approximately $310,000 as a result of items identified during the reconcilement of the prior year tax provision to actual tax returns as prepared and filed during the quarter. Excluding these reconciling adjustments, the effective tax rate for the quarter was 10.3%, due to the level of tax credits relative to taxable income.
Net income for the fiscal third quarter of 2012 was $1.1 million, or $0.06 per diluted share, compared to $1.9 million, or $0.12 per diluted share, for the same period in the prior year.
Net income for the ten periods comprising the first three fiscal quarters of 2012 was $3.9 million, or $0.20 per diluted share, compared to breakeven results for the same period in the prior year.
Capital expenditures were $7.1 million for the first three fiscal quarters of 2012, compared to $6.8 million for the same period in the prior year. We expect fiscal year 2012 capital expenditures to be approximately $13 million.
As previously announced, at a special meeting of stockholders on November 17, 2011, the stockholders approved the reclassification of each outstanding share of Class A Common Stock into one share of Common Stock. In connection with the reclassification, the number of authorized shares of Common Stock was increased from 12 million to 24 million shares. Additionally, our shareholder rights plan, under which a preferred share purchase right is represented by outstanding shares of our Common Stock and Class A Common Stock, automatically expired in connection with the reclassification.
Also as previously announced, on January 3, 2012, the Board of Directors authorized and declared a quarterly dividend in the amount of $0.08 per share of Common Stock. The dividend was paid in cash on January 30, 2012, to stockholders of record at the close of business on January 13, 2012.