- Comparable store sales growth of 1.8%
- Delivery +.8%; Restaurants +2.1%
- Re-imaged restaurants accounted for 2.4% of the comp sales growth for the quarter
- 1Q eps of $.29 per diluted share, before facility actions, exceeds prior year’s $.27
- 64-unit acquisition completed June 8th is tracking with management’s expectations
The Company’s earnings conference call will be simulcast on the
Internet July 25, 2000, at 8:30 a.m. CT. Go to
www.npcinternational.com and click on Street Events logo in the
investor information section or go to www.streetevents.com.
NPC International, Inc. (Nasdaq:NPCI – news), today announced results for its first fiscal quarter ended June 27, 2000.
Net income for the quarter, before facility action charges, was $6,442,000 or $.29 per diluted share compared to $.27 per diluted share, before facility action charges and cumulative effect adjustments, reported in the same period of the prior year. Including pre-tax charges from facility actions of $940,000, the Company earned net income of $5,831,000 or $.26 per diluted share for the quarter. Consolidated revenue for the first quarter increased by 12.3% over the same quarter a year ago to $120,886,000 due to an increase in the number of restaurants operated by the Company and comparable store sales growth across all asset types. The full time equivalent number of units operated by the Company increased 8% over the same period of the prior year due to the 70-unit acquisition completed on July 21, 1999, and the 64-unit acquisition completed on June 8, 2000.
— Comparable store sales increased 1.8% while lapping strong comparable sales growth of 5.4% last year. The Company’s growth was driven by the continued success of the Company’s asset re-imaging program which has consistently driven post re-imaging unit sales gains of 30% or greater. Forty-one restaurants re-imaged in the last 18 months accounted for 2.4% of the Company’s comparable store sales growth for the quarter. The favorable impact of this program is primarily reflected in the Company’s dine-in restaurants, which had revenue of $94.6 million and increased comparable store sales by 2.1% while lapping healthy growth of 4.7% last year. Our delivery business generated revenue of $26.3 million and recorded comparable store sales growth of .8% while rolling over strong growth of 7.1% last year.
— Store level margins were 18.1%, a decline of 60 basis points from the prior year. Cost of sales declined 50 basis points from the prior year due to an 18% reduction in cheese costs and the favorable effect of a new beverage contract. These decreases were partially offset by increases in meat ingredient costs and product mix changes. Labor costs increased by 30 basis points due to increasing wage rates that were not fully offset by productivity gains and higher labor costs in the 64 stores acquired on June 8th. Other operating expenses increased 80 basis points due to higher royalty expense resulting from recent acquisitions, an increase in occupancy costs for re-imaged assets, and increases in certain other operating costs.
— General and administrative expenses were 5.1% of sales compared to 4.9% last year during the comparable quarter. The increase in these costs was primarily due to the addition of field infrastructure to support the units acquired a year ago.
— Depreciation, amortization and pre-opening costs increased to 2.4%of revenue compared to 2.2% last year largely due to an increase of $376,000 in pre-opening costs associated with the Company’s asset re-imaging program. Pre-opening expenses totaled $527,000 or $.02 per diluted share during the quarter.
— Facility actions at 17 locations resulted in a pre-tax charge of $940,000 associated with the continuation of the Company’s asset re-imaging program. The net facility actions charge reduced diluted earnings per share by $.03 to the $.26 reported. During the same quarter last year, facility actions at four locations resulted in a pre-tax charge of $270,000.
— Early results from the 64 units acquired on June 8th have been consistent with management’s expectations during the early stages of the assimilation and training process. While the margins in these restaurants remain considerably below that of our core stores, we are encouraged by the early performance and modest sales gains (+1.5%) since our acquisition. Acquisition stores are not included in the Company’s comparable store sales base until the anniversary of their acquisition.
— The Company continued to pursue its asset re-imaging plan during the quarter, opening seven main path units, nine dine-in units, and one delivery unit. We have opened three dine-in units since the end of the quarter and have two main path and eleven dine-in units currently under construction.
Gene Bicknell, Chairman and CEO, said: “We are pleased with our performance for the first fiscal quarter. Our asset re-imaging program is a major factor in our growth, as we are exceeding our re-image growth target of 30%. We remain committed to the revitalization of this brand through the continued execution of this program.”
Jim Schwartz, President and COO, stated: “Our operations teams performed admirably during the quarter, maintaining focus upon our core operations while opening 17 re-imaged units and assimilating 64 acquired units. Our comparable store sales, driven by growth in re-imaged assets, are growing around 3% during the first few weeks of our second quarter. However, our base restaurant (non-re-imaged) business is currently below our expectation for this quarter as our recent Meat Lover’s promotion did not drive the incremental traffic that we have experienced in previous campaigns. We will remain focused upon driving sales in our base business during the balance of the quarter in our effort to regain restaurant sales momentum. We are optimistic about the promotional calendar for our third quarter and the balance of our fiscal year with Pizza Hut‘s innovative positioning.”
With the exception of historical information, certain of the matters discussed in this news release are forward-looking statements that involve estimates, risks and uncertainties including, but not limited to, economic conditions, consumer demand, the level of and the effectiveness of marketing campaigns by the Company and Pizza Hut, Inc., competitive conditions, food cost, availability of food ingredient supply and distribution of product, labor costs, new product introductions, product mix and pricing and other risks indicated in the Company’s most recent 10-K and other filings with the Securities and Exchange Commission.
NPC International, Inc. is the world’s largest Pizza Hut franchisee and currently operates 841 Pizza Hut restaurants and delivery kitchens in 27 states.
(Unaudited, Dollars in thousands except per share data)
Thirteen Weeks Ended
June 27, 2000 June 29, 1999
Net Revenue $ 120,886 $ 107,676
before facility actions $ 12,808 $ 12,439
Facility action charges 940 270
Operating Income $ 11,868 $ 12,169
Income before facility action charges and
cumulative effect of change in
accounting principle $ 6,442 $ 6,853
Earnings per share — basic $ .29 $ .28
Earnings per share — diluted $ .29 $ .27
Income before cumulative effect
of change in accounting principle $ 5,831 $ 6,677
Earnings per share — basic $ .26 $ .27
Earnings per share — diluted $ .26 $ .27
shares outstanding — basic 22,357,606 24,540,731
shares outstanding — diluted 22,501,412 25,106,736
For more information, contact Troy D. Cook, Senior Vice President, Finance, and Chief Financial Officer, NPC International, Inc., 14400 College Boulevard, Suite 201, Lenexa, Kansas 66215; telephone number: 913/327-3109.