USA: Mexican Restaurants sees Q2 income up despite sales drop
Houston-based Mexican Restaurants Inc. has posted net income of US$593,995 (US$0.17/share) for its Q2 ended 30 June, up from US$382,235 (US$0.11/share) year on year.
For the H1 ended 30 June, net income was US$1.09m (US$0.31/share) compared to US$766,878 (US$0.22/share) year on year. Yearly comparisons are affected however by the company's recent adoption of the SFAS 142 "Goodwill and Other Intangible Assets". Adjusted Q2 net income is therefore US$435,774 (US$0.12/share) and H1 net income is US$873,955 (US$0.24/share).
The company's Q2 sales fell 2% to US$15.6m year on year, with restaurant sales down to US$15.3m due to a decrease in the number of restaurants. Three outlets were closed and one franchise restaurant was acquired during the past year. Total system sales at restaurants operating in both fiscal quarters increased 1.4%. Company-owned same-store sales decreased 0.9%, while Franchise-owned same-store sales for the quarter increased 4.4%.
Curt Glowacki, president and CEO, said: "I continue to be pleased with the operational performance of our company. Restaurant controllable profit margins improved 150 basis points compared with the Q2 one year ago. While a small portion of the improvement is due to the disposition of under-performing restaurants, most of the improvement is the result of operational efficiencies in cost of sales, labour and controllable expenses, especially utilities."
Glowacki added: "Given that profits have exceeded our expectations of two quarters in a row, I feel it is necessary to revise our earlier FY 2002 guidance of US$0.42 to US$0.46 per share to US$0.46 to US$0.50 per share. I'm also pleased that at the end of the Q2 debt was paid down to US$5.6m, down US$950,000 for the 26-week period. We expect to pay down an additional US$1m in the H2."
Chairman Louis P. Neeb said: "These results continue to reinforce the board's recent decision to focus on operations, to apply free cash flow to pay down debt, and to repurchase shares of the company's common stock. During the Q2, the company substantially completed the first phase of its stock repurchase programme with the acquisition of 78,500 shares of its outstanding common stock for US$337,731. The company believes that the repurchase programme is an excellent use of capital for its shareholders."
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