Q2 2013 Financial Resultss2.q4cdn.com/667477022/files/doc_presentations/...Aug 15, 2013 · Q2 2012...
Transcript of Q2 2013 Financial Resultss2.q4cdn.com/667477022/files/doc_presentations/...Aug 15, 2013 · Q2 2012...
© 2013 by Diversified Restaurant Holdings, Inc.
NASDAQ: BAGR www.diversifiedrestaurantholdings.com
Q2 2013 Financial Results August 15, 2013
David G. Burke Chief Financial Officer & Treasurer
Michael Ansley President & Chief Executive Officer
NASDAQ: BAGR
© 2013 by Diversified Restaurant Holdings, Inc.
© 2012 by Columbus McKinnon Corp.
Safe Harbor Statement
This presentation may contain forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended). Any such statements are based upon management’s current expectations that involve risks and uncertainties. Any statements that are not statements of historical fact or that are about future events may be deemed to be forward-looking statements. For example, words such as “may”, “will”, “should”, “estimates”, “predicts”, “potential”, “continue”, “strategy”, “believes”, “anticipates”, “plans”, “expects”, “intends” and similar expressions are intended to identify forward-looking statements. The Company’s actual results or outcomes and the timing of certain events may differ significantly from those discussed in any forward-looking statements. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: fluctuations in the machine tool business cycles, changes in general economic conditions in the U.S. or internationally, the mix of products sold and the profit margins thereon, the relative success of the Company’s entry into new product and geographic markets, the Company’s ability to manage its operating costs, actions taken by customers such as order cancellations or reduced bookings by customers or distributors, competitor’s actions such as price discounting or new product introductions, governmental regulations and environmental matters, changes in the availability of cost of materials and supplies, the implementation of new technologies and currency fluctuations. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
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© 2013 by Diversified Restaurant Holdings
MICHAEL ANSLEY P R E S I D E N T AN D C E O
Growth Plans and Strategy
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© 2013 by Diversified Restaurant Holdings
($ in millions)
$77.4 $97.0
2012 Q2 2013 TTM
Annual Results
Q2 2013 revenue of $27.0 mm up $10.2 mm, or 61.2%, over Q2 2012
18 new restaurants over the twelve month period ended June 30, 2013
Comparable store growth 6.7% in Q2 2013 Brand awareness
Pricing
National sporting events
Expanding Revenue
NASDAQ: BAGR 4
$16.7
$27.0
Q2 2012 Q2 2013
Quarterly Results
© 2013 by Diversified Restaurant Holdings, Inc.
Advancing our Growth Strategy
Track record of growth
Opened four new restaurants so far this year, three of which opened in Q2 2013
Broadening geographic footprint – second Indianapolis market location opened in July
Six additional locations planned in second half of 2013
Concentrating locations to increase brand awareness – expect to add two more locations in Indianapolis market by year end
Appealing to a broader demographic
Delighting our guests with diverse and new menu options
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© 2013 by Diversified Restaurant Holdings, Inc.
Opportunity Drivers
Opportunities to expand in previously established stores
Testing extended hours to reach late night segment
Adapting to meet guests’ wants/needs
Changed from a’la carte menu to plattering model (i.e., price of burger and signature sandwiches now includes fries or chips)
Mac & Cheese New buns
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BAGGER DAVE’S Q2 2013 DAY PART MIX
BAGGER DAVE’S Q2 2013 SALES MIX
Lunch, 28.7%
Happy Hour, 23.1%
Dinner, 44.0%
Late Night, 4.2%
Food 78.5%
Beverage 8.1%
Alcohol 13.4%
© 2013 by Diversified Restaurant Holdings
Financial Performance
7
DAVID G. BURKE C F O & T R E AS U R E R
NASDAQ: BAGR
© 2013 by Diversified Restaurant Holdings
Food, Beverage and Packaging Compensation
$5.2
$8.0
Q2 2012 Q2 2013
$4.3
$6.9
Q2 2012 Q2 2013
Restaurant Operating Costs
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Improved 150 basis points as a percent of total revenue
Favorable chicken wing pricing in Q2 2013
Increased staffing consistent with new restaurant locations
25.5% of revenue comparable with prior-year period
($ in millions, % of revenue)
31.2% 29.7% 25.5% 25.5%
© 2013 by Diversified Restaurant Holdings
Adjusted General & Administrative Pre-opening Expenses
$1.4 $1.8
Q2 2012 Q2 2013*
$0.2
$0.8
Q2 2012 Q2 2013
Operating Expenses
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Increased marketing expense consistent with higher sales
Unusual costs in the recent quarter
One store opened in Q2 2012 versus three in recent quarter
Increase also reflects new locations under construction
* G&A adjusted for Q2 2013 to exclude a $131 thousand non-recurring expense associated with the Company’s listing on NASDAQ in April of this year
($ in millions, % of revenue)
8.7% 6.8%
© 2013 by Diversified Restaurant Holdings
Adjusted EBITDA Restaurant-Level EBITDA
$1.5
$3.3
Q2 2012 Q2 2013
$3.0
$5.2
Q2 2012 Q2 2013
Adjusted EBITDA & Margin
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More than doubled year-over-year
320 basis point margin improvement
Increased 73.2% over Q2 2012
Margin expanded 130 basis points
* See supplemental information for EBITDA reconciliation
9.1% 12.3% 17.8% 19.1%
($ in millions, % of revenue)
© 2013 by Diversified Restaurant Holdings, Inc.
© 2012 by Columbus McKinnon Corp.
Adjusted Net Income Improvement
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$(84)
$4
$149
Q2 2012 Q2 2013
Adjusted Reported
GAAP net income was slightly above break even compared with a net loss in Q2 2012
Adjusted net income excludes non-recurring costs, and the tax impact adjustments, associated with the NASDAQ listing and financing costs for the debt restructuring
($ in thousands)
* See supplemental information for net income reconciliation
© 2013 by Diversified Restaurant Holdings
$2.7
$22.4
12/30/2012 6/30/2013
Cash , Cash Equivalents and Investments
$2.7
$9.9
6/24/12 YTD 6/30/13 YTD
Capital Expenditures
Flexibility for Growth
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$1.5
$34.0
12/30/2012 6/30/2013
Stockholders' Equity Completed follow-on equity offering raising gross proceeds of $34.5 mm
Used $10 million to pay down debt
CapEx focused on new restaurant development
Total Debt to Equity was 1.2x compared with 30.0x in prior-year
* See supplemental information for EBITDA reconciliation
($ in millions)
© 2013 by Diversified Restaurant Holdings
Fiscal 2013 Guidance Revenue $110 million to $115 million Restaurant-Level EBITDA $21 million to $22 million Adjusted EBITDA $13.5 million to $14.5 million Capital Expenditures Up to $29.0 million
Outlook & Fiscal 2013 Guidance*
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* Guidance provided on 8/14/2013
© 2013 by Diversified Restaurant Holdings, Inc.
NASDAQ: BAGR www.diversifiedrestaurantholdings.com
Q2 2013 Financial Results August 15, 2013
NASDAQ: BAGR
© 2013 by Diversified Restaurant Holdings
Supplemental Information
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© 2013 by Diversified Restaurant Holdings, Inc.
© 2012 by Columbus McKinnon Corp.
EBITDA Reconciliation
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* See next slide for footnotes and references regarding EBITDA
Three Months Ended Six Months Ended June 30
June 24 June 30 June 24
2013 2012 2013 2012
Net income (loss) attributable to DRH, as reported $ 3,637 $ (84,477) $ 242,037 $ 561,911
+ Income tax provision (benefit) (35,190) 86,155 66,630 335,545 + Change in fair value of derivative instruments - 64,050 - 43,361
+ Interest expense 585,637 253,103 1,054,848 565,644 + Other income, net (22,224) (13,966) (24,543) (47,739) + Loss on disposal of property and equipment 25,667 6603 60,741 6,603
+ Depreciation and amortization 1,813,549 957,357 3,469,033 1,930,415 + Income attributable to noncontrolling interest - 38,916 - 78,726
EBITDA $ 2,371,076 $1,307,741 $4,868,746 $3,474,466 + Pre-opening costs 803,798 218,615 1,396,524 266,486 + Non-recurring expenses 131,000 - 271,000 -
Adjusted EBITDA $ 3,305,874 $1,526,356 $6,536,270 $3,740,952 Adjusted EBITDA margin (%) 12.3% 9.1% 12.1% 10.9% + Adjusted General and administrative 1,844,825 1,447,542 3,368,955 2,722,060
Restaurant–Level EBITDA $ 5,150,699 $2,973,898 $9,905,225 $6,463,012 Restaurant–Level EBITDA margin (%) 19.1% 17.8% 18.3% 18.7%
© 2013 by Diversified Restaurant Holdings, Inc.
© 2012 by Columbus McKinnon Corp.
EBITDA Reconciliation
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Restaurant-Level EBITDA represents net income (loss) attributable to DRH plus the sum of non-restaurant specific general and administrative expenses, restaurant pre-opening costs, loss on property and equipment disposals, the change in fair value of derivative instruments, depreciation and amortization, other income and expenses, interest, taxes, income attributable to noncontrolling interest and non-recurring acquisition related expenses in Q1 2013 and non-recurring expenses related to the NASDAQ listing in Q2 2013. Adjusted EBITDA represents net income (loss) attributable to DRH plus the sum of restaurant pre-opening costs, loss on property and equipment disposals, the change in fair value of derivative instruments, depreciation and amortization, other income and expenses, interest, taxes, income attributable to noncontrolling interest, and non-recurring expenses. We are presenting Restaurant-Level EBITDA and Adjusted EBITDA, which are not presented in accordance with GAAP, because we believe they provide an additional metric by which to evaluate our operations. When considered together with our GAAP results and the reconciliation to our net income, we believe they provide a more complete understanding of our business than could be obtained absent this disclosure. We use Restaurant-Level EBITDA and Adjusted EBITDA, together with financial measures prepared in accordance with GAAP, such as revenue, income from operations, net income, and cash flows from operations, to assess our historical and prospective operating performance and to enhance the understanding of our core operating performance. Restaurant-Level EBITDA and Adjusted EBITDA are presented because: (i) we believe they are useful measures for investors to assess the operating performance of our business without the effect of non-cash depreciation and amortization expenses; (ii) we believe investors will find these measures useful in assessing our ability to service or incur indebtedness; and (iii) they are used internally as benchmarks to evaluate our operating performance or compare our performance to that of our competitors. Additionally, we present Restaurant-Level EBITDA because it excludes the impact of general and administrative expenses and restaurant pre-opening costs, both which are non-recurring at the restaurant level. The use of Restaurant-Level EBITDA thereby enables us and our investors to compare our operating performance between periods and to compare our operating performance to the performance of our competitors. The measure is also widely used within the restaurant industry to evaluate restaurant level productivity, efficiency, and performance. The use of Restaurant-Level EBITDA and Adjusted EBITDA as performance measures permits a comparative assessment of our operating performance relative to our performance based on GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Companies within our industry exhibit significant variations with respect to capital structure and cost of capital (which affect interest expense and tax rates) and differences in book depreciation of property and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. Our management team believes that Restaurant-Level EBITDA and Adjusted EBITDA facilitate company-to-company comparisons within our industry by eliminating some of the foregoing variations. Restaurant-Level EBITDA and Adjusted EBITDA are not determined in accordance with GAAP and should not be considered in isolation or as an alternative to net income, income from operations, net cash provided by operating, investing, or financing activities, or other financial statement data presented as indicators of financial performance or liquidity, each as presented in accordance with GAAP. Neither Restaurant-Level EBITDA nor Adjusted EBITDA should be considered as a measure of discretionary cash available to us to invest in the growth of our business. Restaurant-Level EBITDA and Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies and our presentation of Restaurant-Level EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual items. Our management recognizes that Restaurant-Level EBITDA and Adjusted EBITDA have limitations as analytical financial measures, including the following:
•Restaurant-Level EBITDA and Adjusted EBITDA do not reflect our current capital expenditures or future requirements for capital expenditures; •Restaurant-Level EBITDA and Adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, associated with our indebtedness; •Restaurant-Level EBITDA and Adjusted EBITDA do not reflect depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, nor do Restaurant-Level EBITDA and Adjusted EBITDA reflect any cash requirements for such replacements; •Restaurant-Level EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; •Restaurant-Level EBITDA and Adjusted EBITDA do not reflect disposals or other non-recurring income and expenses; •Restaurant-Level EBITDA and Adjusted EBITDA do not reflect changes in fair value of derivative instruments; •Restaurant-Level EBITDA and Adjusted EBITDA do not reflect restaurant pre-opening costs; and •Restaurant-Level EBITDA does not reflect general and administrative expenses.
NASDAQ: BAGR
© 2013 by Diversified Restaurant Holdings, Inc.
Net Income Reconciliation
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Three Months Ended Six Months Ended
June 30 June 24 June 30 June 24
2013 2012 2013 2012 Net income (loss) attributable to DRH, as reported $ 3,637 $ (84,477) $ 242,037 $ 561,911
NASDAQ listing expenses, net of tax (1) 91,700 - 91,700 - Financing fees, net of tax (2) 53,900 - 53,900 -
Adjusted net income (loss) $ 149,237 $ (84,477) $ 387,637 $ 561,911
Adjusted basic earnings per share $ 0.01 $ 0.00 $ 0.02 $ 0.03
Adjusted diluted earnings per share $ 0.01 $ 0.00 $ 0.02 $ 0.03
Weighted average number of common shares outstanding: Basic 24,680,247 18,950,153 21,820,046 18,945,930 Diluted 24,810,611 19,115,453 21,931,879 19,078,126
Notes to reconciliation of GAAP Net Income (Loss) to Adjusted Net Income (Loss):
(1) Reflects 131,000 of non-recurring fees associated with the Company listing on the NASDAQ exchange, net of an estimated 30.0% effective tax rate.
(2) Reflects $77,000 of non-recurring expenses associated with the Company’s debt restructuring activities, net of an estimated 30.0% effective tax rate.