USA: Mexican Restaurants announces year-end results, fiscal 2002 outlook
Houston-based Mexican Restaurants has announced its results for the fiscal year ended 30 December 2001.
The company also announced that it was providing an earnings range estimate for fiscal 2002 of US$0.42 to US$0.46, and that the board of directors will consider during the fiscal year the adoption of a stock repurchase program in a manner permitted under its bank financing agreement.
For the full year, the company reported net income of US$848,676, US$0.24/share, compared with $867,190, US$0.24/share in fiscal year 2000. For the Q4 ended 30 December 2001, after impairment charges related to the disposition of non-core assets, the company reported a net loss of US$285,150 or US$0.08/share compared with net loss of US$218,428 or US$0.06/share for the same quarter a year ago.
In the Q4 results, the company recorded asset impairment and restaurant closure costs of US$971,885. These costs related to the closure of three restaurants located in Boise, Idaho, and to the impairment of the carrying value of previously closed restaurants due to their sale or sublease. Excluding impairment and restaurant closure costs, net earnings would have been US$137,601 or US$0.04/share for the quarter, and US$1,271,457 or US$0.36/share for the full fiscal year.
Commenting on the year end results, CEO Curt Glowacki stated: "I am quite pleased with the operational performance of our Company. Our revenues for fiscal 2001 totalled US$63.2m, compared to US$63.2m in the prior fiscal year. Same-restaurant sales increased 2.2%, marking our eighth straight quarter of positive same-restaurant sales.
"Restaurant controllable profit margins improved 60 basis points due to cost of sales and labor efficiencies that more than offset cost pressures from utilities and insurance."
Glowacki added: "The closure and subsequent subleasing of the restaurants in Boise, Idaho, along with the sale or subleasing of previously closed restaurants puts all of the under performing, non-core restaurant problems behind us. This is a great development for the future success of our company that allows management to focus on the remaining fifty, profitable company operated restaurants, and supporting our 34 existing franchise restaurants."
The company's chairman of the board, Louis P. Neeb, further commented: "These results reinforce the board's recent decision to not sell the company, but to focus instead on operations, and to apply free cash flow to pay down debt. During fiscal year 2001, the company paid down US$1.7m in debt.
"As of 30 December 2001, outstanding debt was US$6.6m. The company expects debt to fall below US$5m by the end of fiscal year 2002."
The fiscal year 2002 guidance of US$0.42 to US$0.46/share includes the change in accounting rules, FASB Statement 142, Goodwill and Other Intangible Assets, that requires that goodwill and other intangible assets with indefinite lives no longer be amortized. Management estimates the adoption of FASB Statement 142 will result in the elimination of annual amortization expense related to goodwill in the amount of approximately US$329,468. The guidance represents a comparable increase over fiscal year 2001, excluding impairment and restaurant closure costs and gains on sale of assets, of US$0.04 to US$0.08 cents per share, or an increase of 13.5% to 24.3% per share.
During the Q2 2002, the company plans to seek permission from its board of directors to begin a stock repurchase program. Such a program would be established in a manner permitted under the current bank financing agreement. However, there is no assurance that any shares will actually be repurchased during fiscal 2002.
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