El Pollo LoCo Holdings Inc (NASDAQ:LOCO) announced financial results for the 13-week ended April 1, 2015.
Highlights for the first quarter ended April 1, 2015, compared to the first quarter ended March 26, 2014 were as follows:
- Total revenue increased 11.1% to $90.4 million compared to $81.4 million.
- System-wide comparable restaurant sales grew 5.1%, including a 3.5% increase for company-operated restaurants, and a 6.2% increase for franchised restaurants.
- Net income was $6.8 million, or $0.17 per diluted share, compared to net income of $5.5 million, or $0.18 per diluted share.
- Pro forma net income(1) increased 40.1% to $7.1 million, or $0.18 per diluted share, compared to $5.0 million, or $0.13 per diluted share.
- Adjusted EBITDA(1) increased 11.6% to $16.6 million.
(1) Pro forma net income and adjusted EBITDA are non-GAAP measures. A reconciliation of GAAP net income to each of these measures is included in the accompanying financial data. See also “Non-GAAP Financial Measures.”
Steve Sather, President and Chief Executive Officer of El Pollo Loco Holdings, Inc., stated, “We are very pleased with our first quarter results, which once again demonstrate strong operating momentum through solid sales and earnings growth. Our Crazy You Can Taste authentic Mexican inspired cuisine continues to resonate with guests, as evidenced by our system-wide comparable restaurant sales growth of 5.1%, which extended our track record to 15 consecutive quarters of positive comparable restaurant sales growth.”
Sather added, “We remain excited about the opportunity ahead to expand in both new and existing markets, and look forward to showcasing our freshly prepared authentic cuisine, particularly our signature fire-grilled chicken, to customers across the country.”
First Quarter 2015 Financial Results
Company-operated restaurant revenue in the first quarter of 2015 increased 11.2% to $84.7 million, from $76.2 million in the same period last year. The growth in company-operated revenue was driven largely by 12 new units opened during and subsequent to the first quarter of 2014.
Comparable company-operated restaurant sales in the first quarter increased 3.5%, driven by a 3.4% increase in average check and a 0.1% increase in traffic.
Franchise revenue in the first quarter of 2015 increased 9.2% to $5.7 million, from $5.2 million in the first quarter of 2014. Franchised comparable restaurant sales increased 6.2% during the quarter.
Restaurant contribution increased 12.2% to $18.9 million, from $16.8 million in the first quarter of 2014. As a percent of company-operated restaurant revenue, restaurant contribution margin improved 20 basis points to 22.3%. The improvement in restaurant contribution margin was driven by leverage of comparable company-operated restaurant sales.
Net income for the first quarter of 2015 was $6.8 million, or $0.17 per diluted share, compared to net income of $5.5 million, or $0.18 per diluted share in the first quarter of 2014.
Pro forma net income increased 40.1% to $7.1 million, or $0.18 per diluted share during the first quarter of 2015, compared to $5.0 million, or $0.13 per diluted share during the first quarter of 2014. A reconciliation between GAAP net income and pro forma net income is included in the accompanying financial data.
The Company expects 2015 pro forma diluted net income per share ranging from $0.67 to $0.71. This compares to pro forma diluted net income per share of $0.55 in 2014. The Company’s 2014 pro forma results included an estimated $0.01 per share positive impact due to a 53rd week during the fiscal year.
Pro forma net income guidance for fiscal year 2015 is based, in part, on the following annual assumptions:
- System-wide comparable restaurant sales growth of approximately 3.0% to 5.0%;
- The opening of 16 new company-owned restaurants and 11 new franchised restaurants;
- Restaurant contribution margin of 21.7% to 22.0%;
- Pro forma income tax rate of 40.5%.
- G&A expenses of between 8.2% and 8.4% of total revenue
- Adjusted EBITDA of between $66.5 and $69.2 million
The following definitions apply to these terms as used in this release:
Comparable restaurant sales reflect the change in year-over-year sales for the comparable company, franchised and total system restaurant base. The comparable restaurant base is defined to include those restaurants open for 15 months or longer. At April 1, 2015, there were 159 restaurants, in our comparable company-operated restaurant base and 396 restaurants in our comparable system restaurant base.
Restaurant contribution and restaurant contribution margin are neither required by, nor presented in accordance with, GAAP. Restaurant contribution is defined as company-operated restaurant revenue less company restaurant expenses, which are food and paper costs, labor and related expenses and occupancy and other operating expenses. Restaurant contribution margin is defined as restaurant contribution as a percentage of net company-operated restaurant revenue. See also “Non-GAAP Financial Measures.”
EBITDA and adjusted EBITDA are neither required by, nor presented in accordance with, GAAP. EBITDA represents net income before interest expense, provision for income taxes, depreciation, and amortization, and adjusted EBITDA represents EBITDA before items that we do not consider representative of our ongoing operating performance, as identified in the GAAP reconciliation in the accompanying financial data. See also “Non-GAAP Financial Measures.”
Pro forma net income is neither required by, nor presented in accordance with, GAAP. Pro forma net income reflects (i) the net decrease in interest expense resulting from the repayment of our second lien term loan facility with the proceeds from our IPO (ii) the elimination of fees payable under the management agreement between us and affiliates of our sponsors, less sponsor expenses that were replaced with board of director costs after our IPO (iii) providing for an estimate of recurring incremental legal, accounting, insurance and other compliance costs we expect to incur as a public company for those periods where they had not yet been incurred (iv) costs related to loss on disposal of assets and asset impairment and closed store costs (v) amortization expense incurred on the Tax Receivable Agreement (“TRA”) completed at the time of the IPO and (vi) provision for income taxes at a normalized tax rate of 40.5%, which reflects our estimated long-term effective tax rate, including both federal and state income taxes. See the GAAP reconciliation in the accompanying financial data and “Non-GAAP Financial Measures.”
Pro forma weighted-average share and per share data reflects the 8,214,286 additional shares of common stock issued in the IPO as if they had been issued on December 26, 2013. See also “Non-GAAP Financial Measures.” (Original Source)
Shares of El Pollo LoCo closed today at $26.19, down $2.03 or 7.19%. LOCO has a 1-year high of $41.70 and a 1-year low of $18.48. The stock’s 50-day moving average is $27.01 and its 200-day moving average is $26.51.
On the ratings front, El Pollo LoCo has been the subject of a number of research reports today. Robert W. Baird analyst David Tarantino upgraded LOCO to Buy, and Jefferies’s Andy Barish also upgraded the stock to Buy .
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, David Tarantino and Andy Barish have a total average return of 14.1% and 13.1% respectively. Tarantino has a success rate of 63.3% and is ranked #698 out of 3602 analysts, while Barish has a success rate of 63.2% and is ranked #442.
Overall, 2 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $28.78 which is -2.7% under where the stock opened today.
El Pollo Loco Holdings Inc operateslimited service restaurant. The Companythrough its indirect subsidiary, El Pollo Loco, Inc. , which develops, franchises, licenses and operates quick-service restaurants under the name El Pollo Loco.